If you’ve ever considered outsourcing payroll, I imagine one of the first things to cross your mind is ‘How hard is it to transition to outsourced payroll?’. Whilst I’m not going to say it’s as simple as the click of a button, what I will say is that all professional payroll providers will have managed this transition many times, making them accustomed to working in a way that ensures a smooth transition, in an appropriate time frame.
So, what does the transition look like? What can you expect to happen? Let’s explore.
Transfer of sensitive and complex data
No matter what the size of your business, you’ll likely have concerns surrounding the transfer of sensitive and complex data when switching payroll over to a payroll provider. It may seem daunting but remember, all experienced and professional payroll providers are experts in data handling and current legislation, meaning they’ll have developed processes in line with the law to ensure a safe transfer.
So, what information would we need in the first instance?
- The year to date figures from the current payroll system.
- Previous payroll months figures: gross pay, net pay, Tax, NI contribution details, taxable pay, NI pay, pension contribution details.
Other earnings details such as overtime, allowances and similar payments can also be loaded into some systems, which allows for better reporting.
Testing the process
Once the data has been loaded into the new system, the information is checked to make sure that the information in the system matches the old system, and a complete payroll is run in both systems where the figures will then be compared again to ensure that the data is accurate. This is then sent to you for approval.
Of course, this would be done in a test environment, where one is available, and the payroll data can still be checked and signed off.
Once satisfied that the data matches and then depending on which approach was taken in the test phase, it would be all systems go with the current payroll period.
If this had been done in the test environment, then the same process would be carried out in the live system environment, the checks completed again and once the sign off is completed then the current payroll period would commence.
The benefits you’ll notice
At a time when businesses are reviewing their overheads and looking for more cost-effective options, one of the major benefits of outsourcing payrolling you’ll notice is the reduced cost.
Yes, larger businesses may be able to maintain the cost of running a large payroll department, but it’s likely that if you’re an SME you may be struggling to justify the financial and resource burden, especially as budgets and staff numbers are lower than ever.
If you had an internal payroller on a salary of £20,000 for example, the cost with additional charges would be £22,698 per annum. However, based on our pricing structure of £3.50 plus VAT per payslip/employee, unless you have over 400 employees where it then stops being cost-effective, outsourcing will be a cheaper option.
Let’s say for example you have 100 employees paid monthly. The cost to you would be £420 per month including VAT for outsourced payroll, whereas costs to pay an internal payroller would be £1846 with ON costs per month.
That’s a saving of £1426 per month.
Aside from the impressive savings, if another function within the business has been temporarily managing the payroll, you’re likely to free up resources allowing these employees to focus on essential responsibilities.
Often, HR and Finance Directors take on payroll responsibilities as part of their extended roles but given that this is predominantly what they were hired to do, it’s likely to take up a lot of their time that could be best spent elsewhere. Outsourcing payroll will allow them to dedicate more time to duties that will help your business thrive.
Now that you’ve seen how smooth the process can be, are you thinking about taking the next step in outsourcing payroll? If so, I’d love to chat with you about Cheney Payroll Services’ cost-effective bureau service.
You can drop me an email firstname.lastname@example.org.