Benefits of payroll outsourcing PAGE 1 Contents Introduction 2 Payroll outsourcing: The facts 4 Why outsource? 5 Bureau or managed payroll? 8 Debunking the myths 10 How to outsource your payroll 13 Benefits of payroll outsourcing PAGE 1
Benefits of payroll outsourcing PAGE 2 Introduction Has anyone in your company ever been paid too much, too little, or even not at all? When your payroll system is running like a well-oiled machine, it goes unnoticed. But when something goes wrong, it suddenly becomes a huge problem. And mistakes DO happen. Even the most experienced, meticulous payroll professionals can make mistakes they re only human after all! With mountains of paperwork, the pressure of providing an essential service and the threat of harsh fines for incorrect submissions, in-house payroll can be a real pain for your HR department. Should you keep your payroll in-house? Do you think in-house payroll is cheaper than an outsourced service? Are you protective of employee pay details and want to manage last minute amendments yourself? Well, in reality, outsourced payroll is not only extremely cost effective, but you ll also get countless additional benefits which will save you a huge amount of time and money, as well as taking some of the pressure off your in-house staff. Benefits of payroll outsourcing PAGE 2
Benefits of payroll outsourcing PAGE 3 As one of your most critical processes, it s essential that your payroll always runs as smoothly, effectively and legally compliant as possible. Ask yourself: z Are you concerned about your compliance with Real Time Information (RTI)? z Does your business experience regular payroll errors? z Is your HR department struggling to cope under the strain of payroll? z Are you looking to cut costs within your payroll department? z Have you been fined by HMRC for incorrect submissions? z Are you spending too long on payroll processing every week/month? z Do you have problems with your in-house payroll software? If you answered yes to any of these questions, read on to find out how your business can benefit from outsourced payroll services and how to implement it. Benefits of payroll outsourcing PAGE 3
Benefits of payroll outsourcing PAGE 4 Payroll outsourcing: The facts z 95% of UK businesses outsource at least one of their business processes z 61% of businesses are open to the idea of outsourcing payroll, given the right price and service levels z 63% of businesses already outsource their payroll operations z The main reason for outsourcing is that a significant part of the cost of managing payroll can be spread across multiple companies z 42.4% of businesses believe the most important benefit of outsourcing payroll is increased cost effectiveness z HMRC says that over 2 million businesses do not keep sufficient records z Businesses which do not meet the required book-keeping standards could be fined up to 3000 z HMRC has increased its income from compliance investigations by 39% *Statistics sourced from a 2010 Accountancy Age Survey on Payroll Outsourcing and from HMRC. Benefits of payroll outsourcing PAGE 4
Benefits of payroll outsourcing PAGE 5 Why outsource? Did you know that outsourcing your payroll is one of the best ways to improve the efficiency of your business? There are dozens of ways that payroll outsourcing can dramatically benefit you and your employees. Here are just a few Cost effective Consider the costs of employee salaries and benefits, National Insurance contributions, the price of your payroll software and the maintenance fees. On top of that, you have time costs for training and processing - not to mention the price of paper, ink and stationery! You ll find outsourcing everything for a monthly or yearly fee is much cheaper. If you re hiring internally, your payroll could cost you 15,000 for someone s salary. Outsourcing can cost as little as 800. Efficient Payroll processing is not only time-consuming but it also stops employees from tending to important tasks. By outsourcing this process, your employees can focus on adding value elsewhere, leaving your provider to use the vast technical resources at their disposal to efficiently process your payroll. Compliant Under new legislation called Real Time Information (RTI), you ll get fined if you fail submit information to HMRC each time an employee is paid. This can be financially damaging to businesses who struggle to keep on top of data or work with an unreliable system. With outsourced payroll, it s all taken care of by your provider, who will fully prepare you for any upcoming changes. Benefits of payroll outsourcing PAGE 5
Benefits of payroll outsourcing PAGE 6 Secure Are you reluctant to switch to an outsourced payroll service because of security concerns? No need to worry! Your sensitive information is held in a secure, backed-up and password protected environment, often with technology which helps you identify payroll fraud. Accountable When it comes to accuracy, your payroll provider is far less likely to make a mistake. But, in this unlikely event, the provider holds complete accountability. If there s a delay, or paperwork is handled incorrectly, it s up to your provider to clean up the mess. If they can t or won t, you can simply take legal action and quickly change provider. If an employee makes the same error, you ll find it difficult to fire them, then replace and train a new recruit in the time it would take to move on from a payroll provider. Benefits of payroll outsourcing PAGE 6
Benefits of payroll outsourcing PAGE 7 Bureau or managed? Every organisation has its own specific payroll needs. And that s exactly why payroll providers offer so many flexible choices to ensure you get exactly what you need, for the right price. You can choose from either a Bureau or Managed payroll service, which offer different levels of service dependent on z How much involvement you want z How many employees you have z How much in-house expertise you have z How much expertise you want to keep in-house z How much visibility you want to maintain z How much you want to spend Bureau requires a joint effort from the payroll provider and the business itself. Managed offers a full service, taking the burden of payroll completely off your hands. Bureau All the benefits of an in-house payroll system, without the hassle With a cost effective Bureau Service, you can take control of your payroll and employee information. Simply send the data to your payroll provider, they ll process the payroll and provide employee payslips and reports so you can make payments to employees, HMRC, pension companies and all other relevant third parties. Benefits of payroll outsourcing PAGE 8
Benefits of payroll outsourcing PAGE 9 You ll be provided with a fully-developed system, saving you time and money, and give you the peace of mind that your payroll is being well looked after. You can even benefit from a self-service cloud-based system where your employees can view their own payslips online. If you prefer a level of control over your payroll functions, Bureau will be perfect for you. While your in-house team takes care of data-entry and reporting, the processing and payslip production is handled externally. Ensure you have a clear idea of the amount of the support you ll receive from your provider so you know the exact skills and level of involvement you ll need in-house. Managed Remove the headache of running your own payroll, so you can get on with running your business If you don t want to worry about your payroll ever again, you can get the full package with Managed Payroll. Your payroll will be completely looked after for you, including data capture, processing, printing, distribution and reporting everything! All you have to do is collect payroll data and pass this on to your provider. Your payroll provider will ensure your employees are paid accurately and on-time - whether that s weekly, fortnightly or monthly. They ll even take care of BACS payments for you - straight into bank accounts or as cheques - and generate of year-end statements and forms. With the introduction of RTI, compliance with HMRC legislation has never been more important. But, with expert payroll professionals managing your payroll for you, RTI worries are a thing of the past. A fully managed solution is typically more expensive than a partial service, though many find that this cost is offset by savings in software and personnel. Benefits of payroll outsourcing PAGE 9
Benefits of payroll outsourcing PAGE 10 Debunking the myths Some business owners are reluctant to outsource their payroll but, in reality, most of the reasons people don t want outsource are just myths. We re here to show you that these myths about outsourcing your payroll have no basis in fact I ll have less control Just because it s handled off-site doesn t mean you ll have any less control than you need. You can still handle the processes, such as who gets paid and how much they get, so you ll still maintain some control. It s less flexible Last minute or unscheduled changes to employee s pay can be handled just as flexibly with a payroll provider. However, this may require using a good provider with a strong customer service team. By building a solid relationship with your account manager, there will really be no difference to having someone sat in your office and any changes can be made with ease. It s impersonal Many payroll providers are not impersonal at all if you select the right one. At Moorepay, for example, we see new client relationships as absolutely crucial. A contact will get to know an organisation personally and gain an understanding of any particular requirements it may have. We ll develop a working knowledge of your payroll and double check all data for accuracy. Benefits of payroll outsourcing PAGE 10
Benefits of payroll outsourcing PAGE 11 It s unreliable An established provider should provide reliable, accurate data processing month on month, year on year. Processing thousands of payslips a month for local and national companies is proof of a reliable service. For example, at Moorepay, we ensure a payslip accuracy of over 99.65% - Can your own in-house payroll department boast the same statistics? It s less secure There is a common misconception that payroll data stored outside the organisation will be vulnerable to access or even get lost. But, in reality, your data will be more secure, since an outsourced payroll provider invests heavily in technology so it s much more robust. Moorepay, for example, uses secure cloud-based software with a full back up and recovery of the systems within 8 hours of any disasters. In contrast, the majority of smaller businesses will have little or no back up or disaster recovery if their payroll system breaks down. Some businesses are also worried about the sensitivity of financial information. But, since the introduction of the Data Protection Act, outsourced payroll data is, in fact, protected and kept safe by law. It s more expensive It is certainly NOT more expensive to hire out your payroll processing. When you consider the cost of an employee s wages and add in benefits payroll costs quickly add up. If you are the owner of a very small company and you are trying to do payroll yourself, the cost of your time is even greater. I m happy with how things are You might well be happy with your payroll set-up, but what happens if the payroll software system breaks down or someone is ill? By not having to think about the monthly grind of payroll, you and your team can focus on other aspects of your business which are more important and more productive. You can avoid dealing with HMRC and forget about changes in payroll legislation - because it s all handled by your provider and it s also fantastic if you are thinking about streamlining your business. Benefits of payroll outsourcing PAGE 11
Benefits of payroll outsourcing PAGE 12 Changing methods is a hassle Even though every organisation has its own specific processes and procedures, a good outsourced payroll provider will absorb any pain of change over. At Moorepay, we work closely with clients at every stage to make the process as easy as possible. Our implementation consultants are responsible for making it all happen. You might expect implementation to be a time-consuming process, but it can take anything from a few hours to 10 days. We still need payroll expertise in-house Some organisations think that having a payroll expert onsite is required to manage both data and the relationship with the payroll provider but this isn t true. All that you ll need is a point of contact with a good understanding of your business. They don t need to know anything about payroll, just where to get the necessary data from. So, with the myths of outsourced payroll exposed and the dust settled why not stop making excuses and find out what to do, which we address in our next section. Benefits of payroll outsourcing PAGE 12
Benefits of payroll outsourcing PAGE 13 How to outsource If you re coming around to the idea that outsourcing your payroll may be the best option for your business, we have put together these simple steps to help you. 1 Assess your current payroll The first step is to assess the current processes, practices, employees and existing costs in your organisation in order to give you a clear picture of your strengths and weaknesses. As a result, your overall decision making will be well-informed and precise. 2 Define your requirements On completing your initial assessment, the next step is to have a clear idea what, and how much, of your processes is to be outsourced. Do you want a managed or bureau solution? 3 Analyse the provider market Once you know what you want, it s time to do your research. Not all payroll providers offer the same service, so it s important to know the processes, activities or even countries you are outsourcing to. 4 Prepare the proposal You need to document your expectations to ensure your payroll provider acts in an efficient and effective way. Face to face discussions can also help in reducing and save excess paperwork, time and effort on both sides. Benefits of payroll outsourcing PAGE 13
Benefits of payroll outsourcing PAGE 14 5 Select a great payroll provider When selecting your outsourced payroll provider you should do a background check on them before making any decisions. At Moorepay, for example, we pride ourselves on: z A variety of integrated solutions to support your payroll, HR and compliance needs - no matter how diverse they may be. z Being prompt to respond to your needs, be it from the initial sales enquiry, through to implementation, delivery and on-going support. z Constantly evolving and updating our systems and processes to provide you with the latest technology available in the marketplace. z Accuracy, delivery and quality of the services and solutions we provide. z A dedicated team of solution experts so you can rest assured your business and employees are in safe hands. Before you make a decision on your provider, it s essential to ensure your payroll provider fulfils these criteria. 6 Prepare a watertight service level agreement When you are preparing your contract, or service level agreement, you should outline z Responsibilities of your provider and staff members z A clear process for resolving potential disagreements z Clearly defined responsibility and accountability in the case of payroll errors z A defined process for identifying errors z Clearly defined deadlines z Scheduled negotiations Benefits of payroll outsourcing PAGE 14
Benefits of payroll outsourcing PAGE 15 7 Implement your strategy in the most efficient way In order to successfully implement your new outsourced payroll, you need to ensure you understand your company s new responsibilities and that your team is efficiently resourced and skilled to deal with them. Depending on the type of outsourcing service you have selected, you ll either have to either input the data into your new system or send it to your provider. There may also be some extra training or employee communication required. After that, it s a simple case of ensuring you and your provider stick to the deadlines you put in place. Then, sit back and relax but know that, should any problems arise, your provider is available to help you. Are you ready to improve your business with an outsourced payroll solution? We can help! Find out more at http://www.moorepay.co.uk or call 0845 184 4615. Sit back and relax! But know that should any problem arise, your provider is available to help rectify the issue Understand how your payroll is currently being processed and why this method was chosen Define your goals for outsourcing. Is it to cut cost? Improve processes? Either input data into your system or send data to your provider (depending on your solution) Choose between a bureau or managed solution and understand the level of information you will be required to pass to your chosen provider Choose a provider. Check: They have a good track record with companies like yours Implement and test the new system Understanding how your provider s performance will be measured and which deliverables should be met Define the requirements to your provider, i.e. the specific requirements of your payroll They utilise the relevant technology They can keep you compliant They are able to provide support and training where necessary Benefits of payroll outsourcing PAGE 15