Looking for Payroll Outsourcing Services: Here’s What you Need to Know

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Payroll outsourcing

If you run your recruitment agency, it’s essential to focus on your main services and products and the administrative side of your operations, like payroll management. It may be tempting to avoid outsourcing this function because it doesn’t directly contribute to your bottom line, but if you do not, it could cost you in more ways than one.

A growing number of recruitment agencies are turning to payroll outsourcing to free up valuable resources and ensure compliance with HMRC. Although this trend has its sceptics, the recent COVID-19 outbreak should be enough to sway even the most sceptical decision-makers into hiring an outside company to handle payroll.

Why Is Payroll Outsourcing So Popular?

The outsourcing industry is more common than you might think. As a result, recruitment agencies are increasingly familiar with all sorts of outsourcing opportunities—which is precisely why payroll outsourcing has become so popular. If you’re not sure what it is, then here’s a quick overview: Payroll outsourcing allows recruitment agencies to take care of their payroll responsibilities without investing in having a large in-house department.

The first thing that should come to mind when you hear payroll outsourcing is cost-saving. Instead of hiring an in-house team of experts to deal with payroll, you can outsource payroll processing, reduce costs and increase operating profits. This method makes sense if your business has grown to a point where you have a large volume of timesheets to be processed weekly and monthly or if your employees’ needs are highly specialised.

Outsourcing payroll function is becoming increasingly popular because it offers several advantages. Not only can agencies save money and time by outsourcing their payroll processing, but they can also avoid expensive mistakes by standardising processes to bring quality and efficiency and improve the accuracy of timesheets processed to avoid payment mistakes.

Is there an alternative to Payroll Outsourcing services?

There are several options that can replace payroll outsourcing; however, they all have their drawbacks. They might not be as convenient as payroll outsourcing, and they may be more expensive than you expect, but it’s still up to you which one works best for your business.

Here are some alternatives to consider

#1 Manual Processing: Processing payroll manually is always an option, although it has many downsides. However, depending on how large your business is and how skilled at administration you are, manual processing could work for you.

#2 Hire Payroll Manager: A dedicated Payroll manager who does nothing else but handle employee paychecks can cost upwards annually in salary and benefits.

#3 Do Nothing: One option you may want to consider is doing nothing at all and continuing with legacy processes without thinking about improving efficiencies. Although some businesses feel they can’t afford payroll outsourcing, there are many other ways agencies manage their employee wages without hiring anyone new or making changes to their current infrastructure.

But if you are looking to take action and optimise your payroll functions, here are the advantages of payroll services. 

Advantages of Payroll Outsourcing

A comprehensive payroll outsourcing solution will allow you to concentrate on your core business while your payroll service provider handles all aspects of administering your payroll. This will enable you to save time and costs on various fronts.

Stay Compliant with HMRC: While many consider cost-saving as the core benefit of outsourcing payroll services, staying compliant matters! Whether you have 5 employees or 500, compliance is critical for processing payroll. Often, tracking every employee’s pay rate, hours, and leaves can lead to errors. In such scenarios, a reliable payroll services provider will provide payroll specialists and ensure that your payroll calculation always meets the rapidly-changing HMRC rules & regulations.

The impetus to Business Growth: There is no one-size-fits-all for growing businesses regarding payroll. You need a payroll service provider who will understand burgeoning business needs and deliver bespoke payroll solutions that work precisely for you. Going ahead with managed payroll services will take care of all your payroll needs right from payroll processing, distribution, reporting, and more, giving you complete peace of mind.

Focus on Critical Tasks: Devote your time and focus on critical tasks related to business development, streamlining business operations, and more.

You won’t have to: spend hours calculating pay rates; calculate overtime pay; work with candidates/contractors/locum workers with varying contracts depending on industry/sector; provide leave benefits such as sick days or bereavement leave to employees; monitor breaks or holidays, or check the HMRC website for changes in legislation.

Outsourcing payroll processing enables your F&A team to focus on the core aspects of your recruitment agency.

Save Costs & Channelise Resources: Outsourcing payroll may help employers save time and money. Stay focused and channelise your resources on growth initiatives while generating considerable cost savings in the long term and minimising costly penalties. In addition, let’s not forget improving contractor/temp worker satisfaction. Remember, processing payroll on or before time adds intrinsic value to your recruitment agency. 

When Should you Outsource Payroll?

There are times when it might make sense to outsource your payroll. Outsourcing may be a good option during busy seasons or when you’re not sure how long you need to hire someone. In addition, if you don’t know all of the ins and outs of payroll, outsourcing might be something that makes sense for your agency. Many agencies have limited resources and don’t have enough staff on hand or can’t afford to add another job title onto their team.

You would essentially bring in outside help from an external company by outsourcing your payroll function.

Payroll: The Future Ahead

Whether it’s for your small business or a large corporation, payroll outsourcing is becoming a necessity rather than an option. The exponential growth of jobs, payroll, and employees makes it impossible for many businesses to handle their payroll in-house. That’s why payroll outsourcing can help you without getting burned in these current economic times.

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