Remuneration, alongside growth, motivates employees to put their best foot forward whenever they undertake an assignment. An employee’s salary involves bonuses, standard tax deductions, statutory deductions, and other components. Maintaining a record of these aspects is both financially and legally important for a company. Payroll helps a company with it. As and when necessary, a firm can retrieve the details for a review or assessment. Plus, payroll is also important to provide employees with payslips.
Payroll management necessitates both specialization and expertise. That is to say, a company needs a specialist to perform this task. For a company, there are two ways to go about it. It can either hire a qualified employee or assign the task to an outsourcing partner. Either way, there are pros and cons but the latter option has gained popularity in recent years.
Pros of outsourcing payroll
Peace of mind
Peace of mind has its value in the professional workspace. Accurate payroll is one of the factors that can ensure both employers and employees alike. In most cases, inaccurate payroll leads to disputes. A trusted outsourcing partner can help you with payroll management. This, in turn, can prevent the chances of legal disputes and attrition of employees due to dissatisfaction with payments at the subsequent stages.
Minimum chances of being penalized or fined
PAYE compliance is one of the imperatives as per the recent RTI regulations. Non-compliance with it can open up Pandora’s Box for companies in the form of penalties and other risks. Bigger companies can afford the luxury of employing skillful and trained professionals for payroll management. But doing so can be challenging for the smaller ones, especially due to their limited resources. Outsourcing the task to a reliable partner can ease up the workload on such companies and allow its workforce to focus on other aspects.
For a smooth and successful operation of business activities, companies need to invest in hardware, software, and security. Most businesses allocate a separate budget for these activities. For efficient management of payroll featuring these elements, a company may need to hire multiple professionals. This requirement can increase the costs for a company. Instead, they can get the job done without exceeding the budget by assigning the task to a trusted outsourcing partner.
Let company focus on its priorities
While budgeting and payrolls constitute the two important tasks for a company, they can also have other priorities. Employing in-house staff members for payroll management necessitates monitoring which can be a time-consuming process for a company. Handing the task to an outsourcing partner can save time which can be utilized for other productive purposes.
Cons of outsourcing payroll
Lack of reliability
Without any doubt, a company can benefit a lot by handing over payroll to a trusted firm. But what if it gets handed over to a partner that is not reliable? Things can go awry and they can lead a company to chaos. Worse, a company may also get entangled in court cases. This possibility cannot be ruled out when a company outsources payroll to another company.
Delay in paycheck delivery
Paying your employees on time is important to maintain the overall morale. As a matter of fact, just two payroll delays could cause your employees to start job hunting. With outsourcing payroll, you would need to plan everything well before so that your employees can get their paychecks in time. That means you have to consider holidays, weekends, etc. so that the outsourcing partner can process payroll on time.
From the above, it stands out that outsourcing payroll to another company has both its advantages and downsides. A company must choose a reliable outsourcing partner to reap the benefits of outsourcing payroll. If you are wondering whether you should do it or not, take both its pros and cons into consideration to make an informed decision.
If you have any queries about payroll, talk to your accountant or our experts from Accrels. We offer you a comprehensive perspective about payroll and how you can make it more streamlined.