The reason most companies look to outsource their payroll is to save money. How much money? Well that depends on a wide variety of factors. Large companies are looking to replace the services of existing full-time payroll officers while smaller companies usually struggle with the cost of payroll software. Any size company stands to save a reasonable amount when outsourcing, but here is a quick guide to saving your company the maximum amount!
Conduct Your Own Cost Benefit Analysis
One of the ways that companies end up saving less than they planned to when outsourcing payroll services is that they neglect to complete a thorough cost-benefit analysis. Before you approach payroll service providers for quotes you should be made aware of the broad range of options on offer. Fully take into account the employee costs of running and administering your existing payroll system as well as the cost of software and record keeping. For example, if your analysis indicates that your IT system is underperforming and costing you money, you may save more money by sourcing a better IT specialist than by outsourcing your entire payroll operation. Expecting to half your current payroll costs by outsourcing is a reasonable expectation but full outsourcing is far from your only choice.
Go With A Company That Excels At Individualization
External managed payroll services are most cost effective when sourced from companies who can handle the full spectrum of pay slip customizations. When shopping around, fully question what degree of customization is on offer besides simple EFT files, pay slips and reports. Think of the most obscure arrangement that you've ever arranged for an employee and ask whether this can be accommodated. Service companies that balk at these requests will end up costing you money in terms of lost time and productivity.
How Important Is The Set-Up Cost?
Besides looking at the cost per employee per pay run, the set-up cost quoted by payroll service companies will vary wildly. It can be a mistake to go with a provider that offers no set-up costs however as they will simply recoup this fee through future billed services. Investigate what technology the provider is using and consider whether a premium set-up costs will bring your company more potential savings. A more efficient payroll provider with a higher start-up cost might give you fewer time management issues and lower cost per employee rates.
Hone In On The Greatest Benefit
Payroll outsourcing is most effective when sourced from companies that offer a wide range of solutions, everything from superannuation payments to tax office payments. Your business can save the greatest amount of money by discuss its payroll service requirements with a company that has the knowledge and expertise to explore a variety of options. Only by finding solutions that are highly relevant to your specific situation will you identify which of those could offer your business the greatest benefit. It makes sense to have already completed your cost benefit analysis to inform your discussion before contacting a payroll service provider. Follow these guidelines to ensure that outsourcing your company's payroll services saves you the maximum amount.
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