Misconceptions around payroll outsourcing could be holding back your business. Our customers find that moving to a managed payroll service pays them back dividends, driving productivity, increasing ROI and giving payroll teams the opportunity to focus on strategic rather than tactical initiatives. That's just the start, there are several other benefits that make outsourced payroll so compelling.
We understand that managed payroll can be a daunting topic, so we’ve put together some useful information to help you make an informed choice about your payroll strategy.
Managed payroll means that an external specialist manages your business payroll functions. Many business owners favour this over an in-house payroll team as it's more cost-effective, saves time and ensures PAYE legislation compliance.
The effects of recent years have resulted in a lot of changes to payroll and the workplace. Widespread remote working and constant iterations to legislation and payroll policies have accelerated the need to have resilient, reliable and secure payroll solutions.
Workers are looking for increased flexibility, transparency, and personalised packages from employers. Forward thinking companies are prioritising their employee’s financial wellbeing by investing in the right payroll technology.
By moving to managed payroll, also referred to as outsourced payroll, you can hand much of the payroll function over to experienced professionals. The provider contractually agrees to deliver one or more HR or Payroll services in accordance with defined service levels and volumes of work. They also take on risk and accountability, including processing, compliance, scalability, and all the complex and time-consuming administrative work that goes with it. But don't worry, switching to an outsourced payroll service doesn't mean you'll lose all of your in-house payroll experience. In some cases it can actually help you to retain knowledge within the business.
Payroll outsourcing can benefit all sorts of businesses across multiple industries. Whether you’re a mid-market company with 500 employees or a large enterprise organisation with 100,000 people, you have a common interest to look after the financial wellbeing of your employees by ensuring they get paid accurately and on time.
The opportunity to move to simplified and standardised processes improves contingency planning and business continuity – as in-house payroll knowledge is often contained within one or two key staff members.
There are many different reasons why moving to managed payroll could suit your business now and in the future. It’s wise to look at the value that outsourcing brings, including compliance, employee engagement, cost saving, accuracy, tighter controls and guaranteed service levels.
If in-house payroll vs. managed service is keeping you awake at night, or you’re just starting to research the options, here are the key differences:
There are pros and cons for both outsourcing payroll and in-house managed service. The burning question is what suits your business and culture? Regardless of any payroll outsourcing myths, hearsay or preconceptions, we encourage you to think about your own situation and explore what would make a real difference to your Payroll & HR delivery.
The advantages for organisations outsourcing payroll are numerous and span across efficiency, productivity and confidence that your payroll is in the right hands. Many businesses find that outsourcing takes the risk out of payroll. Here are some of the main benefits of switching to a managed payroll service:
HMRC paperwork and returns require careful attention, as any mistakes or late submissions could result in a penalty. HMRC will charge you a penalty if you submit any paperwork that contains errors, or misrepresents your tax liability, equally if a HMRC assessment understates your tax liability, you can also face a penalty if you don't inform them.
Financial compliance is one of the toughest areas to manage, especially if you’re running global payroll. Employment legislation and HMRC requirements are always changing and it’s a constant battle to keep up to date. Working with a managed service specialist means you, the customer, can rely on the provider’s ISAE3402 financial compliance controls, plus investment in on-going payroll training and career development.
Outsourcing offers a variable payroll cost base which is much more elastic with a greater ROI and is scalable as your business grows. You may consider your business model to very predictable with a fixed workload processing cycle, but in light of recent disruption to the global economy and working arrangements, we should all be expecting the unexpected. Is your current payroll agile enough to cope with drastic change overnight?
Outsourcing is an investment and can be financially justified to stakeholders. When you consider the direct costs a reliable payroll provider can absorb such as infrastructure and data security, plus the indirect costs like compliance and Payroll/HR expertise, you can reduce your Total Cost of Ownership by at least 20%.
Managed payroll solutions are designed to save time, which also saves money. A solution from an expert supplier will accurately inform financial decision-making across the business thanks to real-time calculations and powerful analytics.
Having an managed payroll solution can enhance security. The costs and resources that are involved are sometimes difficult for organisations to manage internally to ensure absolute security and accuracy. At the heart of the solution of a reliable provider is the confidentiality, storage and protection of customer data in compliance with legislation such as GDPR.
What makes a quality payroll provider stand out from others? Look for the ISO27001 certification, an international standard and a key indicator that the payroll provider takes security of information and processing your data seriously.
Ultimately, managed service gives you peace of mind that your payroll and people are being looked after. With changing work patterns and pay frequencies on the horizon, you should feel confident to offer your people personalised, flexible packages that payroll can keep up with.
If you already have a Human Capital Management (HCM) system that works for your business, it can seem like a lot of work to change things. So, what do you do if you want to keep your HR solution but outsource your payroll?
A reputable managed payroll provider will have the technology and knowledge to integrate with your HR partner or system, whether you’re using a global HR solution or a local HR system.
Stronger together, an integrated Payroll and HR system enables businesses to become agile and competitive through gaining a ‘single source of truth’ relating to employee data. Successful integration enriches the employee experience and provides invaluable business intelligence.
What do you do if you want to keep your HR solution but outsource your payroll? A reputable managed payroll provider will have the technology and knowledge to integrate with your HR partner or system, whether you’re using a global HR solution or a local HR system.
We have been a Workday GPC Partner since 2014, originally with a PICOF now PECI certification. This certification means the end-to-end (Workday to Payroll) scenarios have been validated by Workday.
SD Worx managed payroll effortlessly integrates with SAP HCM services through an AFI connection.
SD Worx managed payroll integrates with Oracle in a seamless manner through an AFI connection.
There is no one-size-fits-all when it comes to the cost of payroll outsourcing, as this will depend on the payroll provider and the size of your business. However, most payroll providers will charge a set-up (or implementation) fee to transfer all your payroll data onto their technology and get up and running. They will also charge a fee per employee processed per month (PEPM) or per payday depending on your payday frequency. In addition, you might pay a bit more if you opt for additional payroll services like P11D.
Your managed payroll service is only as good as the vendor providing it for you. With so much at stake, ensuring your payroll is working for your organisation should be a priority. If you’re considering a new system, we’ve pulled together some questions to ask potential suppliers.
Your payroll vendor, as a data processor, needs to demonstrate that they have stringent controls in place to comply with data security and privacy legislation in different regions, such as GDPR.
Before you sign the contract, get clarity on the implementation process. You’ll want to start reaping the benefits of managed payroll as soon as possible, especially if you’ve got stakeholders to impress.
Access to global HR experts with local knowledge can really add value to the service. Payroll legislation is ever-changing and can be very complex, but a great payroll provider goes beyond providing compliance – they help you understand it too.
It’s crucial that your chosen provider can be trusted to pay your people, so dig a little deeper into their credentials and client history, especially if you have complex payroll requirements.
Your managed payroll partner should act and feel like an extension of your own team, always reachable and supportive of your needs.
These questions will help you build up a picture of your chosen supplier. Ensure they are experienced, credible and easy to work with – after all they will be an extension of your payroll team, so a good relationship goes along way.
Seamless integration with your chosen HR or workforce management (WFM) solution is a must for competitive and agile businesses. Make sure that your managed payroll provider can facilitate your integration needs.
It’s common for businesses to put off making the switch to a new managed payroll provider for fear of downtime during the set up and implementation phase. After all, you want to ensure that your employees get paid accurately and on time.
Implementation might sound scary but moving your payroll from an in-house model to a managed service doesn’t take nearly as much time and effort as you might have imagined as long as you follow the right implementation approach. For example, if you decide to move to SD Worx’s managed payroll service you could expect to be live in just 14-18 weeks depending on your business and how many parallel runs you require. The implementation timeline is detailed below, but click here for a visual example.
You’ll be assigned a project manager to guide you through the entire process. They will make sure you are engaged with the SD Worx Implementation team so that you have a shared view of what is being delivered by who and when.
Now is the time to consider your payroll growth strategy and identify gaps that will eventually need to be addressed. Could outsourcing help you achieve future growth?
Outsourcing your payroll may seem like a big step and met with resistance, but we are here to help you make the right decision. To thrive in a digital and people-first workplace, your organisation needs to invest in the payroll function to meet the needs of the future workforce sustainably.
There are strong commercial justifications for outsourcing your payroll with immediate and long-term benefits for not just HR and payroll teams, but for the wider business. Reducing your total cost of ownership, turning fixed costs into variables and increasing accuracy and compliance are just some of the reasons that outsourcing payroll will transform your business and lead you closer to your growth goals.
Our dedicated and friendly payrollers know everything there is to know about managed payroll. So, if you need some more advice, or you’d like to chat about your business priorities, we’ve got your back. Or if you’ve already made your mind up and have decided payroll outsourcing is for you, then we can help you create a solid business case to convince even the most sceptical of business leaders.
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Navigating the complexities of payroll and HR can be challenging, but with Payroll Question Time, you don’t have to do it alone.
This SD Worx exclusive monthly webinar is your trusted resource for staying up-to-date with the latest legislative changes, compliance strategies, and best practices in payroll management.
Each session features insights from leading experts, turning complex topics into practical advice that you can apply immediately.