Payroll; to outsource or not to outsource?

What’s best for you? Payroll software or outsourcing your payroll

At some time, all businesses, whatever their size, have posed this question and tried to deal with the reality of the answer.

Many businesses feel that the right option is to invest in payroll software and staff to manage the payroll in house, but many others feel that the better option is to outsource their payroll.

What are the key considerations?

Time:  Does your business have the time and expertise to take their focus away from their business so that they can deal with payroll weekly or monthly?  Payroll is a task that has natural peaks and troughs throughout the month – will filling this role internally be cost effective for your business?

Reliability: It goes without saying that your staff will require payment on time, every time.  The payroll must be accurate and must be processed when it is due regardless of holiday, sickness or any other unforeseen circumstances

Confidentiality: Payroll is probably the most sensitive subject within a business – an indiscretion can cause huge upset – can the organization be sure that sensitive information is kept confidential?

Flexibility: Changes may need to be made to payroll at any time – will the in house resource always be available to make last minute changes?

Cost: Last but by no means least, cost is a major consideration for businesses when considering outsourcing.  While it may be advantageous to have in house staff available ‘on tap’ as it were, there are costs involved in staffing this role, eg holiday/absence cover, on going training (payroll is an area that is guaranteed to have annual changes – and that’s before whoever is sitting in No 11 decides to be imaginative (remember the computer incentive scheme!), not forgetting the cost of the payroll software, support and annual updates.

We know that different customers have different needs, which is why we offer both payroll outsourcing and payroll software, so take your time to work out what solution suits you and your business the best.

Alison Godwin, Sage Outsource

  • Claire

    I think another consideration, alongside expertise, is the size and difficulty of the payroll. We are a small company of 11 employees, whose payroll is exactly the same each month, with no benefits except for the Director. It takes me minutes to process and pay the wages each month. We brought the payroll inhouse using Sage, when previously it was processed by our accountants and we still had to make the payments ourselves. Our accountants had a flat rate for doing the payroll, which makes it cheaper to do inhouse.

  • Melo Smith

    Thanks for sharing the information about the pros and cons of payroll outsourcing service.