Reasons To Outsource Your Payroll Are Escalating

The profit-and-performance heavies knocking at your office door are urging you to outsource non-core business functions – especially payroll.

Outsourcing non-core services – those you can’t change your customers for, or that don’t deliver services directly to them – is not just a nice to have, but an essential element of your strategy to improve services with minimum hassle and bring new efficiency to reduced budgets.

The shift to outsourced payroll has gained great momentum. The Australian Payroll Association’s survey of over 1,800 organisations found that from 2018 to 2019 the number outsourcing their payroll grew by nearly a third from 24.7 percent to 32.5 percent.

Whether your payroll function is on-premise, SaaS or fully managed, it’s designed to help organisations with limited in-house expertise, or those looking to reduce costs and admin to a regular payment, while ensuring compliance, accuracy and reliability.

Here we outline the six key reasons you need to see how much of your payroll, and other non-core services, you can outsource.

1. Simplify and save with cloud
The uptake of cloud services is booming, and as long as you can control usage (those IT people are like kids in a candy store!) and have a decent internet connection, you save with their incredible economies of scale and can forget about having to manage so much of your own infrastructure – that’s all contained in one fee for your outsourced payroll service.

One of the main sticking points to cloud services is the security aspect and control over data. Increasingly, this is becoming a non-issue. Even risk-adverse government agencies have adopted cloud-first procurement policies; in Australia Microsoft and AWS have come to the party with dedicated, high-security clouds just for government, with all data hosted in Australia.

Amazon Web Services (AWS) data centres and network architecture has been built to meet the requirements of the most security-sensitive organisations and includes best-in-class business continuity and disaster recovery. AWS is regularly audited to a suite of certifications, accreditations and standards, including ISO9001:2015 for a quality management system (QMS), and ISO27001:2013 for an information security management system.

2. Set-up for security
Security is of course vital for payroll. It’s speculated that payroll fraud accounts for 17 percent of all fraudulent disbursements suffered by organisations in Australia, although it’s nearly impossible to accurately quantify.

Having the right payroll systems in place, ensuring that these automate as much as possible to reduce human touch, and keeping systems maintained and current, is an important part of preventing payroll fraud. With less opportunity for staff to intervene in an outsourced system and introduce ‘holes’, your payroll will be more secure.

External scams like ‘phishing’ and insider manipulation of your payroll system like pay-rate alteration is much harder when you outsource to an independent organisation with more oversight and controls than your own organisation can achieve.

3. Ensure legal compliance
The incorrect application of awards has led to a billion-dollar tsunami of wage and superannuation underpayments and turned payroll into a growing source of financial and reputational risk. It’s also sparked intense discussion about the difficulty of compliance with Australia’s layers of federal and state employment and taxation legislation.

Australia payroll solution providers are some of the best in the world. Co-founder of the Australian-owned and developed workforce management platform Tanda, Tasmin Trezise, commented in Business News Australia that “Australia wins the award for the most complicated place in the world to pay staff, so people overseas look at us and say ‘if you can deal with it there, you’ll be fine here’,”.

4. Keep-up with legislation
Implementing new legislation is difficult and a pain to interpret for non-specialised staff. In 2020, just a few of the major changes at a federal and state level include portable long service leave for community services, new reporting and reconciliation for annualised salaries, and one-off schemes like JobKeeper, which can be a nightmare for many employers.

In Australia, single-touch payroll (STP) has been a big change, streamlining superannuation contribution and the government’s collection of tax dollars. You’ll want a payroll service that both integrates with the ATO through an API gateway as well as the handful of major clearing houses for super payments: minimising handling and fees while improving compliance and security.

Those managing their own payroll need to make sure they use all information available to support compliance. The Fair Work Ombudsman provides multiple tools for reviewing compliance, for free, and provide phone and email support for small businesses as a priority.

5. Professional support and development
On that note, a payroll specialist – any B2B specialist worth the name – will act on the vested interest they have in educating their customers about the service they provide (if only to convince you they know what they’re talking about). This is about how to get the most out of your service, but also general education and insights from their expert staff.

By ‘joining the club’ you’ll also have access to your payroll solutions provider’s community of users and library of useful content to help you make the best use of your service, as well as ongoing training and networking opportunities.

6. Integrate related services
There’s great ROI to be had from improved HR service usually offered alongside payroll services. You’ll be surprised by what else your payroll solutions provider or their business partners can offer, such as timekeeping and employee management, which is vastly improved with self-service features, if you can get them.

What’s more, when it comes time to upgrade your payroll service, which most companies do at least every five years, an established, outsourced solutions provider will have deep experience implementing their software into new environments, which minimises hassle and your staff’s time, and gives them more time to work on your core revenue-raising functions.

Read on – Finding the Right Payroll Solutions Provider

About the Author

Nick Ransley - Content CreatorNick Ransley
Content Creator

Nick researches and writes quality content that educates our community about current and emerging Payroll & HR trends. This requires building solid relationships with internal and external stakeholders to understand issues, products, and the wider Payroll & HR landscape.