Outsourced payroll – what to look for when outsourcing your payroll

Apr 19, 2023 | Business support hub, Payroll

An essential guide to outsourced payroll services

Payroll is a key function of every business. However, payroll can present problems, for example when it comes to keeping track of legislation or processing complicated staffing patterns. So where do you start when considering outsourcing your payroll for the first time? Our guide provides an outline of some of the key elements you should look for in your search to find a suitable outsourced payroll provider.

Why outsource your payroll?

In our experience, organisations choose to outsource their payroll function for three main reasons: to save time, to save money and because it provides peace of mind.

The rules and regulations around payroll change frequently and can be complex. There’s pensions auto-enrolment, changing tax and national insurance legislation and Real Time Information to navigate. Make a mistake and you could be liable for some hefty non-compliance penalties.

For many business owners this creates a real pain point, especially trying to keep track of everything. Some don’t feel confident dealing with payroll, and why would they when their expertise lies elsewhere?

Mistakes in payroll can have a negative impact on employee relations and take time to rectify. You need to keep staff right in relation to the correct treatment of benefits and ensure things like holiday pay are accurate.

That’s why payroll is one of the most popular functions businesses owners chose to outsource because they can’t afford to get it wrong. Faced with the cost of employing someone internally to manage their payroll function (think salary, holiday and sickness cover, training, etc) versus a monthly invoice with everything taken care, many choose the latter.

What makes a good payroll bureau?

So what features are most important when it comes to selecting a reputable payroll bureau? It is important your chosen payroll bureau understand the challenges that businesses owners face with payroll and related compliance issues. They should be able to demonstrate their experience, a trusted reputation, the capacity to deliver services even at busy times and clear processes. It’s worth including the following areas in your research.

1.      Choose a regulated provider

Did you know that anyone can set themselves up as a payroll bureau? Quite a thought considering they would have access to your employees’ sensitive data. Check credentials. How long have they been established, what qualifications do they hold and how many clients do they serve? We would recommend choosing a provider like us who is regulated by a professional body like the Association of Chartered Certified Accountants (ACCA) or the Institute of Chartered Accountants of Scotland (ICAS). They will be subject to inspection and operate within ethical guidelines meaning better protection for you. Bureaux offering to pay your staff by BACS must be approved – you can check a bureau’s status on the BACS website under ‘Approved Bureaux’.

Another benchmark that demonstrates a bureau is serious about delivering a quality service is the Chartered Institute of Payroll Professionals Payroll Assurance Scheme (PAS). The scheme is a voluntary accreditation developed in partnership with HMRC, and is only achieved once the practice has completed a rigorous assessment that aims to ‘raise compliance standards through payroll procedures in the profession’. Thomson Cooper achieved accreditation in October 2021.

A reputable bureau will have the breadth and depth of experience to find solutions to your challenges and a comprehensive staff training program to keep knowledge up to date. Can they offer a full range of services such as payrolling of benefits and benefits advice, P11d completion, assistance with termination agreements and dealing with secondees and workers from overseas? Ensure your provider is capable of delivering what your business needs.

2.      Size matters – do they have capacity and contingency?

Make sure your provider has the capacity to take on your payroll, particularly if your pay day is near the end of the month when most payroll work is undertaken. Will they have adequate cover when their staff are on holiday? Do they have robust internal IT support? You need to be reassured that their team is large enough to provide a consistent, reliable service.

Are they well organised? We have a process we follow that is straightforward and robust with reminders and timelines. This is essential so that clients know the deadline to submit information so we can ensure employees are paid on time. Once approved, salary payments are either actioned by clients directly or by one of our team who is authorised to send payments, with data being securely backed up on our servers.

Cost is important to business owners. Warren Buffett famously said “price is what you pay, value is what you get”. Make sure the bureau you choose communicates clearly, not just the cost of their services (for each element of service they are providing), but also the value. Efficiency and value are two of the core reasons our bureau has grown and continues to grow as we scale up to cope with demand.

3.      Teamwork Triumphs

We believe that polite, professional and well organised staff hold the key to satisfied clients. A helpful attitude and a prompt response go a long way to building trust and keeping customers happy. Great payroll providers should put people at the core of their service and that should be reflected in a high client retention rate.

A great team will be structured so that no one works in isolation. Weekly meetings where workloads are discussed and tasks are shared help to ensure any issues are resolved quickly. Clients should feel reassured that their provider has the knowledge and capacity to deliver an accurate, compliant and responsive payroll service all year round.

Our clients state it makes sense for them to outsource their payroll primarily for the peace of mind it provides. ‘De-risking’ the function is what they value. If you want to know more about our bureau, we can arrange a no-obligation chat. Our on-boarding is swift and is delivered with minimum disruption. Contact our Head of Business Support, Partner Elaine Cromwell at ecromwell@thomsoncooper.com or call 01383 628800.

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