Payroll Outsourcing is becoming an Accepted Part of Business
Today, outsourcing has become a mainstream model for the running of key business functions, such as payroll and HR. A recent survey of 2,100 companies in the UK found that 68% outsource parts of their business, while 51% agreed it’s become an established way of streamlining key processes and running a business more smoothly.
Probably the most significant finding in the survey is that 64% of respondents said that outsourcing has saved their business valuable time and money. Although these figures are not specific to payroll outsourcing, they serve to highlight just how accepted the outsourcing model is for a range of businesses today.
Increased Demand For Outsourced Payroll Services
There are various reasons why the demand for outsourcing is growing, but in terms of payroll, more and more businesses are recognising the benefits of having dedicated payroll experts in charge of complex and ever increasing payroll legislation.
In recent years, the Auto Enrolment Pension Scheme and Inland Revenue’s e-filing rules and requirements have piled on the pressure for SMEs to ensure the correct processing of their payroll functions. By outsourcing these administrative tasks, they can free up valuable time for employees to concentrate on primary business objectives.
In addition, the cost savings of payroll outsourcing are proving highly beneficial. In the current economic climate, businesses are looking for more ways to keep costs down, improve their efficiency, and gain a competitive advantage. By outsourcing your payroll, your business can dedicate more time and money to the more important functions whilst reducing costs in the long-term.
Hosted Bureau Service
Outsourcing vs. in-house is a common debate when it comes to administrative business functions such as payroll and HR. Whilst outsourcing has become a more widely accepted business model, a number of larger businesses still support in-house payroll departments. Offering a best of both worlds approach is a solution known as a Hosted Bureau Service.
A Hosted Bureau Service is where a dedicated supplier hosts the payroll system on an external server and processes the data for the client. The client still retains all of the benefits of an in-house payroll system but can outsource a select number of the associated labour intensive administration functions.
The Benefits of a Hosted Payroll Bureau Service
This blended model has tremendous benefits. It not only greatly frees up time for businesses to dedicate their resources to other important functions, it also delivers significant cost savings. A Hosted Bureau Service cuts the upfront costs of purchasing payroll software, but also eliminates all IT costs and the need for internal IT support. Furthermore, outsourcing payroll processing to a supplier (who will very likely have a number of clients) means businesses can benefit from economies of scale. This will be passed down from the supplier in the form of fast turnaround times and low service costs.
On the other hand, in-house payroll managers will still be able to access high tech software to input and analyse real time data, whilst having the support of a payroll administrator who can help to deliver a more a streamlined payroll processing service. These payroll administrators are highly qualified individuals, with recognised Chartered Institute of Payroll industry qualifications. They are fully up to date with the latest payroll legislation and are able to provide a continuity of service beyond that of an in-house employee.
How a Hosted Bureau Service Works
Outsourcing the hosting of your payroll systems is a relatively straightforward process in which your needs and requirements are at the core of the transition. The following is a basic guide to understand how a hosted bureau service works:
1. In the first stage, your chosen supplier will review your current payroll processes, identify your requirements and pinpoint key areas where efficiencies and cost savings can be made.
2. Next an external server will be found to install the appropriate payroll system that meets your specific payroll regulations and requirements.
3. The supplier will give you access to the payroll system using a secure data link.
4. Following installation, any data from a third party system will be imported, and your payroll staff will also receive training on how to input payroll data into the system.
5. Before the system goes live, your supplier may recommend carrying out practice runs to confirm that the software is performing well and to your expectations.
6. Once your inputs are finished, any other functions will be run and a payroll will be calculated.
7. If you are pleased with the outcome, your supplier will use the server to access your data and carry out a number of payroll processes. These include the creation of security payslips and standard reports, creation of BACS payments for all employees, and processing the payroll to calculate Gross Pay, Deductions and Net Pay. As well as these processes, your supplier will also be in charge of your business’s year-end processing.
At IRIS FMP we’re specialists in providing part-managed and hosted payroll solutions. Find out how we could save your business time and money on our part managed solutions page.