The complexity of managing several units of business today is becoming enormous and laborious, unfortunately, brain drain, high cost for SMEs to get competent personnel and other issues to manage this challenges are causing barriers to solve these issues. For business manager/owners to solve this problem, it has become imperative to outsource essential services and concentrate on their core to enhance productivity. Outsourcing payroll allows companies to focus on core competencies and leave the complexities of systems and compliance to experts in the field.
With careful planning, the benefits of outsourcing payroll capabilities can be realized almost immediately.
1. Cost Effective:
Fewer full-time personnel can cause a ripple effect on cost savings throughout an organization, from HR, IT and Payroll Staff through to office space and utilities. The savings in outsourcing payroll services starts with eliminating costly IT infrastructure.
Even in organizations of thousands of employees, investing in customized software solutions is increasingly being replaced by cloud-based solutions. Payroll services providers manage, maintain and improve secure platforms with highly skilled and specialized engineers and business process managers. Even for a large organization, the cost of hiring and retaining specialized staff is expensive and increasingly seen as unnecessary.
2. Time Saving:
The key to saving time with any outsourced business function is a detailed scope of requirements, roles and responsibilities. Time spent on compliance, regulations and training staff on using internal systems is eliminated. Cloud-based payroll services can also give more control to employees, eliminating time spent by HR updating entitlements, leave and benefits.
Time previously occupied by data entering can also be saved when payroll and HR systems are able to access the same data. With fewer mistakes, time spent coordinating and cross-checking information is eliminated.
3. Avoid Technology Advancement Costs:
A constant question for small business owners is whether they have the latest version of their payroll software and the most recent tax tables installed on their computer. Using the wrong tax tables can result in stiff penalties. Paying a maintenance fee and having to upgrade software is a fixed cost ongoing. Outsourcing payroll removes those costs / headaches and keeps payroll running smoothly.
4. Focus on Your Core Business:
What began as a trend has become the status quo. Majority of SMEs already outsources at least one critical function: telephony and internet access. Websites are hosted externally; email services, accounting software, sales and inventory management have proven invaluable as outsourced products and services. Outsourcing payroll services allows an organization to focus on the business functions that generate revenue and invest in strategic resources that increase value and drive growth.
When payroll is not a core competency, the complexity of work place agreements and labour related negotiations virtually guarantees costly errors within an organization. The Nigerian Labour Law provides a frame of reference for minimum compliance that requires vigilance and expertise to remain compliant. One of the functions of a payroll provider is to ensure that the minimum standards are adhered to and, in concert with HR, are communicated effectively to all employees.
6. Improved Security:
Since banks have become impenetrable, criminals have moved on to payroll and invoicing. Payroll systems are particularly lucrative, with identity information providing an added bonus to the vast sums being stolen. Online and digital security is complex and costly. Payroll outsourcing providers invest in highly skilled specialist staff to maintain robust payroll systems that are fully secure.
7. Avoid Losing Payroll Expertise during Staff Migration:
By outsourcing the functions of your payroll department, you can eliminate the need for costly transfer of information between former and new employees. Outsourced payroll services can be relied on to maintain a consistent approach to payroll management. There’s no need to induct employees on logic or how technology platforms operate. Role transfer can be reduced to the functions and outputs of the payroll service.
8. Simplify Reporting:
With complete transparency and immediate access to accurate information that do not need to be verified, management can be more effective to plan for growth and predict changes to staffing needs.
9. Offer Direct Deposit:
Providing direct deposit to employees is difficult if a company does not use an outside payroll service. Increasingly, small businesses recognize that employees want direct deposit. Not having to make a trip to the bank is an important convenience for them. More importantly for business owners, direct deposit eliminates time-consuming and error-prone paper handling and the need to reconcile individual payroll checks every month. Using direct deposit reduces the risk of fraud by eliminating the use of paper checks that could be altered or counterfeited.
10. Help to Maintain the Confidentiality of Remuneration:
Unlike a paper check that bears your account numbers for all to see, when you outsource your payroll, account number and payment instructions remains confidential to your financial institution or payroll provider. The details of salary, benefits, reward, increment or deductions are done and kept secret from staff. This will breed mutual respect among workforce as no one can ridicule another on the bases of their salary worth in the organization
Conclusively, when you encounter a business owner or manager who can identify with 1 or more of these 10 factors that prevent productivity and hinder profitability centered around the time and cost associated with administering your own payroll, one can usually find a business case to make the switch for outsourcing payroll.
For more information:
At SOW Professional Services, we understand the benefits of outsourcing payroll and can assist you with the transition. Call us on 07038254989 or request a cost-benefit analysis from our business managers. They can help you determine the right payroll product for your business.