The sudden and complete shift to remote work due to the pandemic has meant that the workforce of most organizations is now widely spread out. As a result, organizations are hiring people much further away than they would have previously. This has had a direct impact on how HR departments handle payroll. In essence, payroll is the remuneration or compensation a business must pay to its employees for a set period and on a given date. The entire payroll process is, however, more complicated than you think. The process includes tracking hours worked for employees, calculating pay, and distributing payments via direct deposit or check. Organizations must also perform accounting, record-keeping, set aside funds for medical insurance, calculate taxes, adjust leaves, etc. Furthermore, technology is constantly evolving, so businesses need to keep up with the latest trends and practices in payroll.

Let's check out the top payroll technology trends that will make news this year and ensure a higher recruitment and retention rate.

Below are the top payroll trends to look out for:

• Allowing Payroll Automation: 

With more and more businesses adopting automated payroll processing, manual payroll processing will soon become redundant. Automated payroll software suggests numerous benefits over traditional techniques. For example, it saves time by accelerating the payroll method, and the risk of errors is highly reduced. Automated pcvayroll software also saves money by decreasing the manpower required to manually handle payroll administration.

It also functions as an employee performance management software, allowing performance-based compensation. Automated payroll systems provide performance management features for evaluating employee job performance and monitoring their development so that you may recognize them for their efforts. Additionally, it reduces the need to keep paper files for documenting employee data and action tasks.

• The New Era of AI-driven Payroll:

 Artificial intelligence (AI) is evolving businesses all over, including the payroll industry. Many companies are embracing AI-driven software to store and manage payroll data easily.

AI technology is capable of understanding from experience and carrying out human-like tasks. To leverage the power of AI, many organizations are integrating AI-powered chatbots with their websites to interact with employees and address basic and complicated questions alike. Chatbots may also direct employees to the appropriate department, enhancing employee satisfaction. We will see incredibly advanced chatbots built to answer a broader range of challenging payroll related questions in the coming years.

• Embracing Mobile Payroll Apps:

The growth of mobile payroll applications has been rising in recent years. Aside from allowing HR managers to handle payroll from anywhere globally, mobile payroll applications enable employees to view payroll data 24/7 and track their earnings from the convenience of their iOS or Android device. Furthermore, mobile payroll software provides clear payroll estimations for all employees across departments. It also automates tax calculations and reduces the risk of human errors.

• Payroll Software Integration:

Payroll management is a crucial HR activity requiring accuracy and timeliness. As a result, it is essential to pay attention to even the most minor details of each activity and combine them with payroll to obtain accurate results. For example, automating payroll integration with time and attendance systems may help save time and money while ensuring prompt salary payment and continued employee satisfaction.

Besides saving time and money, integrating payroll software with your existing systems enables the seamless transfer of attendance data to the payroll system. At the same time, it lowers both human involvement and manual errors.

• Increased Use of Cloud-based Payroll Software:

The population of payroll firms using the cloud is expanding. According to a 2021 survey, 40% of companies say they will modernize their payroll systems by 2023.

According to a Global Payroll Complexity Index report, cloud-based payroll platforms made up 61% of payroll solutions in 2020, compared to more manual methods, up by 34% in 2019. Therefore, investing in scalable cloud-based payroll software is a smarter, more modern method of optimizing payroll processes.

Payroll processing is a challenging activity controlled by a slew of laws and regulations. Cloud payroll software helps organizations comply with these requirements and manage tax compliance more easily, while mitigating risks and errors.

Also read: How to Find the Most Reliable Payroll Outsourcing Service in 2022

• Real-Time Payment Distribution on the Rise:

The most significant benefit of cloud-based payroll software is that it allows HR managers to examine or modify payroll at any time, at any location. As a result, all small and medium-sized businesses can use cloud-based payroll software because of its versatility and cost-effectiveness. Millennial employees want to be able to choose when and how they get their payments from their company. In simple words, employees nowadays expect to get paid as soon as they leave the workplace. In addition, digital wallets and email-friendly checks enable immediate satisfaction at the click of a button. Employees now prefer getting paid in real-time rather than waiting for direct deposits or traditional bi-weekly payments. Real-time payments are changing the realities of payroll. It provides instant interbank electronic payment transfer services via multiple channels, including smartphones, desktops, tablets, digital wallets, and even the web.

Payroll services must always be integrated with HRM and finance/accounting software for smooth payments or rewards and support seamless bonus management. Integrating HRM and finance software enables HR personnel to handle all employee and financial information through a single access point. However, multi-application connection is a tricky procedure, and you must choose payroll suites that can quickly connect with other existing apps in your organization. By integrating payroll services with your project management software, you can ensure your employees' efficiency and payment terms.

• Financial Wellness Programs to Improve Job Satisfaction: 

Human resource managers recognize that modern employees choose to work for companies that offer a healthy work culture, retirement plans, and other perks and advantages. According to survey analysis, financial wellness initiatives increase employee security.

As a result, forward-thinking companies of all sizes collaborate with financial sector experts to develop an excellent financial wellness plan for their employees.

Organizations can significantly reduce employee financial stress and increase staff morale by implementing such financial wellness plans and programs. Introducing these programs is also an excellent method to demonstrate to employees that their organization values them.

Why Use Payroll Software?

Payroll software is the technology that assists businesses in automating operations related to employee salary payments. This solution might be a stand-alone system or an HR software suite component. Payroll software contributes to the automation of your business, data consolidation, integration, and customization, and more. Let’s check out the primary benefits listed below of how payroll management software makes life easier for businesses.

• Pay Employees Correctly:

Error-free payroll is essential for a smooth-running business. Mishandled paychecks create tension and waste time, not to mention the damage to your reputation. Payroll software helps keep things running smoothly by automatically incorporating factors like salary grade, benefits, allowances, and deductions into the wage calculation process.

• Build Transparency:

Disputes are quickly and efficiently resolved with access to timesheets, benefits, agreements, and other related data. Payroll systems can break down records to a granular level and identify the points of dispute with great accuracy, be it leaves, absences, expenses, adjustments, collective labor benefits, or other wage-related items.

• Quick Access to Employee Data:

Automating payroll helps keep track of employee data, such as contracts, Collective Bargaining Agreements (CBAs), performance records, leaves, timesheets, and conversations. Employees with the appropriate permissions can access related data from various devices or platforms. Keeping staff records in one place has a variety of benefits.

• Customize Reports:

Automated Payroll can provide customized information based on specific rules and conditions. For example, you can create reports on payslips, benefits, expenses, or historical data. In addition, recurring reports can be generated quickly and scheduled with smart and customizable alerts.

• Added Security:

Today's cloud-based payroll solutions make it easy for you to handle payroll internally. Employee data on payroll management software is protected and accessible only to you and other authorized staff.

Question to ask when selecting a payroll software solution

When you're willing to invest in a payroll system, be certain to seek the following information

• Does the system support every region that your staff is placed in?

Look for providers that offer direct support in each region or have partnerships in place to provide support. In addition, automated payroll systems are crucial for reducing administrative tasks, so you don't want to worry about running payroll manually in any region, now or in the future.

• Does the payroll software integrate with your other core business systems?

It must integrate well with your time and labor management, compensation, financial management, and other business systems.

• Is the software easy to configure?

You don’t want to modify your payroll provider frequently, so make sure you have the flexibility to scale and adapt over time as your business grows and changes. In addition, make sure the software can be configured efficiently, without the requirement for coding or IT involvement.

• Is the software truly easy to use?

It's important to make sure that employees can make changes easily, like updating their bank information or adding dependents, without help from HR. Check the software's built-in features and guidance for new employees to ensure that everything is easy to use.

Finally, to stay ahead of the competition, it is important to be aware of the latest payroll trends. This blog outlines the latest trends and uses that are important in 2022. By staying ahead of the curve, you can ensure that your business is running efficiently and meeting the needs of your employees.

Exela is a one-stop solution for all your payroll challenges. At Exela HR Solutions, we offer instant access to all the solutions you need for your business. As world leaders in global payroll processing and compliance management, we deliver our services to multiple customers across 50+ countries worldwide. Contact us today to get started with innovative, future-proof solutions for your payroll function.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Payroll is one of the most common business functions outsourced today. The complexity of this function and the added fact that it must be legally accurate in terms of calculations make it a resource-intensive business function to manage in-house. Now in this post-pandemic world, with borders diminishing virtually and remote working almost becoming a standard for most open positions, compliance and administrative operations have become even more complex and challenging to manage.

Source: Google Trends

This is why we saw an all-time high search volume for the keyword “payroll outsourcing” on Google during the pandemic. This unfortunate global event forced businesses to cut costs and survive by looking for other alternatives in every direction, not just payroll. As a result, today, smart businesses have a tried and tested method at their disposal that they know works – outsourcing.

In this blog, we will look at the different caveats of payroll outsourcing services and give you, the managers and business owners, tips on how to look for the right thing at the right place before you make any concrete decisions.

• DECISION: The first step to start your research journey is to self-audit your business. The most important reason for you to do this is to get a clear understanding of which business functions you can run in-house vs. which are the ones that need to be outsourced. Each function must be carefully assessed in order to come to a conclusion. If your list contains payroll as a business function that needs to be outsourced, you may dive deeper by deciding which of the following payroll sub-functions you want to keep and which ones need outsourcing.
• Payments processing
• Payroll taxation
• Record-keeping
• Data storage & security
• Employee accessibility portal development and maintenance
• Compliance management
• Legal support

Find a payroll outsourcing provider that offers expertise in all these payroll functions, even if you might not want to avail all the services initially. In our experience, most businesses that start with a few services end up outsourcing all their payroll sub-functions to us.

Also Read: 4 Future Trends in Payroll Technology and Outsourcing That Your Business Needs to Lookout For

• EXECUTIVE SUPPORT: There’s a common saying in the world of investing, “Things that have never happened before, happen all the time.” The Fukushima Daiichi Nuclear Power Plant in Japan was built by some of the brightest engineers on the planet in the late 1960s. They studied the strongest ever earthquakes recorded by humans and built the plant to withstand the peak of the strongest one ever recorded. But when the unforeseen 9.1Mw earthquake hit the Pacific on 11th March 2011, the reactor crumbled within a few minutes. In other words, one must always be prepared for that one unforeseen event that surprises even the smartest and most experienced players in the industry.

When it comes to choosing a payroll partner, it is vital you choose one with the best customer support, more preferably the one which provides executive support. The simple reason is, anything can go wrong at any time – servers may go down at the worst times, online portals may stop responding, data might get misplaced or misrepresented, or deductions may be calculated incorrectly. All of such events affect your employees adversely, which is exactly why you, as a business owner or manager, must have a direct, open line between you and your payroll partner to get these unforeseen situations under control as soon as possible.

• ACCESSIBILITY: While some of the payroll providers you may choose might have good clientele and may get the job done correctly if their interface is below par, then having accomplished everything does not matter. Imagine a large dam at the top of a mountain that has the capacity to store hundreds of millions of liters of water all year round. At the foot of that mountain, there are several small towns and settlements that are suffering from a drought. If there is no mechanism in place to direct that water safely and efficiently to these towns and settlements on a regular basis, the water at the top is virtually useless. Similarly, if there is no safe, efficient, and well-designed interface between you and your partner, the whole operation falls apart.

While in the scouting stage, ask multiple payroll providers to give a detailed demo of how data can be accessed and managed by your employees and management on their systems and portals. It must be easy to use and must give maximum control to the user because the more your employees can self-manage their data in the portal, the fewer CRUD requests HR will receive – a good way to minimize the workload for your human resource team.

• FURTHER ENHANCEMENTS: Speaking of human resources, you must always be on the lookout for further enhancements – golden opportunities to minimize overhead costs without negatively affecting your existing workforce. Once you settle down on that one payroll service provider that ticks all the right boxes, you must quickly identify what other related professional services they might offer. For example, some payroll processing providers like Exela HR Solutions offer their expertise in areas of recruitment, corporate training, compensation and benefits, HRBP services, etc. A full suite of HR services offered by a single, reliable provider opens up multiple opportunities for your business to offload resource-intensive workload, which frees up existing resources that can be utilized to scale the business up significantly.

“Do what you do best, outsource the rest”

CONCLUSION: Not every business needs payroll outsourcing services. Businesses that are comfortable with payroll specialists operating in-house who are getting the job done year-in-year-out may not need outsourcing. However, businesses that are struggling or businesses that are new startups should absolutely consider outsourcing as a great way to leverage manpower towards achieving higher targets quickly and efficiently. Now that you know the main factors to look out for before choosing your payroll partner, you will be well-informed in the discussions you have with your potential payroll partners.

Exela HR Solutions is a world leader in offering end-to-end HR outsourcing services, right from recruitment and global payroll processing to HRBP services and L&D corporate training. We serve clients who are active in multiple industries across the globe. Exela serves a growing roster of more than 4,000 customers throughout 50 countries, including over 60% of the Fortune® 100. With foundational technologies spanning information management, workflow automation, and integrated communications, Exela’s software and services include multi-industry department solution suites addressing finance & accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and public sectors.

Speak with us today if you need help with payroll or any other HR-related function of your business.

Sources: google.com | en.wikipedia.org | reddit.com | groupmgmt.com | businesspartnermagazine.com

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Payroll has been one of the most complex functions of a business ever since businesses have been around. Besides, it must be repeatedly performed every cycle, whether it be month-over-month, weekly, or bi-weekly, making it complex and tedious, especially if everything is done manually each cycle. In this regard, technology has been the greatest contributor in taking a majority of the load off the backs of human beings involved in the process. This has greatly increased the efficiency, productivity, and accuracy of the payroll process over the last decade. With this progress showing no signs of stopping, it is extremely probable that payroll will keep getting newer upgrades in the future, making it even more accurate and fast than it has ever been before. Larger businesses have already started investing in such futuristic solutions, and with the trickle-down effect in play at all times, it will soon be common among every business of every size. But what are these futuristic solutions? How effective are they? Should you adopt now and have the first-mover advantage? Or should you wait? Let us look at the different payroll trends that going make it big in the future and the benefits they offer, should you decide to implement them.

Artificial Intelligence: Most businesses across most industries today are looking at artificial intelligence as a real game-changer – robots taking over humans. But is it really that? The simplistic answer is no. Artificial intelligence today, or in fact in the next 50 years, won’t be anywhere close to taking over the human species, as Naval Ravikant, a great Indian-American thinker, explain on the Joe Rogan Experience. AI, the state in which it is today, is great at recognizing patterns and doing repetitive, condition-based tasks accordingly. This makes it a great tool to be used in payroll processing. Large amounts of financial data can be analyzed quickly to check for aberrations, taxes can be processed and filed automatically, and businesses can be kept in compliance easily without almost any help from professional and expensive compliance experts and legal teams. Moreover, AI-based chatbots can take over customer service by sorting complaints, rerouting them to the right executives while easily guiding employees with non-urgent complaints to a solution without any human intervention. This AI-based approach is cost and time-effective as it circumvents the majority of human involvement, thereby avoiding common human flaws like inefficiency, inaccuracy, etc.

Pay Transparency: Pay transparency has always been an alien concept until recently, as things have begun to change in the right direction. If you were hired a few years ago, you would receive an offer letter that included your gross pay, your deductions, and your net pay – that is it. You couldn’t ask any more questions and businesses reserved the right to keep it a secret while employees had to play along to stay employed. This situation has been rapidly changing in favor of the employees because of two main reasons. Firstly, there is a general awareness today in the workforce across all industries that “the businesses need their employees more than the employees need their jobs,” thanks to the strong labor laws that are in effect in most developed and developing nations. Secondly, businesses are looking to retain their employees for longer times, and they now understand that the fastest way to make that happen is to promote trust. If the employees trust their employers more, they would be less likely to leave, and pay transparency has become one of the most effective ways to promote employee trust. This has resulted in a complete shift in payroll practices. Today, when you land a job at a company that follows pay transparency principles, you will notice these 6 differences in how your pay is communicated to you.

• You will be told the exact amount that will be credited to your account each pay cycle
• You will be told how the company conducted the market study to arrive at that number
• You will be told where you fall on the pay scale when compared to others in the market
• You will be informed about the exact steps that you might require to increase your pay as you spend more time with the company
• You will be informed why you are being paid more or less than the market rate
• Pay information of your team members within the company will be available to you and vice versa

Not just companies but governments too are realizing the importance of pay transparency. For example, Colorado (USA) state now requires employers to make pay transparent for all. This law went into full effect starting January 1, 2021.

Also Read: Payroll Outsourcing – Good Combination? Or Recipe for Disaster?

Inclusion for Gig Workers: Since the pandemic, people have been willing to work remotely more than ever. This has given rise to the gig economy, where instead of working as a permanent employee for an organization, skilled and experienced professionals will dedicate their time and resources to work on different projects for different companies every year. Payroll software applications today need to evolve to accommodate the gig workers and their work schedules. Businesses will often hire gig workers to work on short-length projects because it is cheaper and quicker. Features such as contract management, flexible time-keeping, and scheduled pay release will help companies stay compliant while also making sure they establish a strong relationship with all the gig workers they hire for their projects.

Financial Wellness Packages: If we were to be brutally honest, most of us learn nothing about finance in schools or colleges. This gives rise to unfavorable financial habits like excessive/unnecessary spending, no desire to invest for the future, no desire to build an emergency fund for a rainy day, etc. Lack of good financial habits means that people often fall in financial trenches that are difficult to come out of. Financial debt is an instant recipe for stress, depression, anxiety, alcoholism, and numerous other mental and physical disturbances. All these factors may have a direct combined effect on the performance of an employee which is why more and more companies today are offering financial wellness packages to their employees. Employees are also given access to financial advisors and mental health experts who are well equipped to guide them and even bring them out of not-so-ideal financial and mental situations. Such care packages promote a great sense of trust in the employees while also increasing the overall quality of their lives.

Conclusion: Businesses that choose to implement these changes in their payroll today will have a significant competitive edge over their rivals. Some changes might be more expensive while others might be more difficult to implement, however, companies that still manage to pull it off will notice big, positive changes in terms of employee retention rates, improved work culture, and better employee trust. It works like the butterfly effect – slow but strong changes in the long term. If you are a business owner or a manager, the biggest question you will have by the time you finish reading this blog is the “cost to implement.” It is costly to hire data scientists and machine learning experts in-house to craft that perfect algorithm for your payroll needs, but it doesn’t have to be that expensive at all.

Exela HR Solutions offers instant access to all the solutions you need for your business at a fraction of the cost. We are world leaders in global payroll processing and compliance management and offer our services to multiple clients across different locations worldwide. Get in touch with us and start implementing innovative future-proof solutions to your payroll today.

Sources: google.com | en.wikipedia.org | reddit.com | bamboohr.com | builtin.com/ | youtube.com | cdle.colorado.gov

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Payroll outsourcing has been around since the early 2000s and is flourishing ever since its inception. It has always worked out for the larger companies that have the financial liberty of throwing a few hundred thousand dollars here and there, trying to experiment and find newer ways of cutting overhead and increasing profitability. After finding success early on, word spread like wildfire, and today more than 30% of all businesses in the US outsource some or all of their payroll to experts like Exela HR Solutions.

Today, it seems that two big problems are plaguing the decision-makers of SMBs. The first being, the “not-for-us” problem. Many SMB owners and managers investigate payroll outsourcing on the surface and make up their minds. They conclude that it won’t be a profitable decision for their business to shift to payroll outsourcing and that it is only suitable for larger businesses with many employees across different locations. In reality, that statement carries only half the truth. While it is true that profitability increases as the size of the business increases, most managers and owners fail to recognize that the opposite is also true. The fact of the matter is, even if your business has five employees, you can still find profit in outsourcing your payroll functions.

The second problem is the “delegation” problem. This problem is more evident in newer businesses and startups. Business owners or managers who fall prey to this problem prefer having full control of the entire process, at all times. They find it difficult to delegate responsibilities to others. They might have their reasons that may be valid, but at the end of the day, this mindset acts as a hindrance in the path of growth and efficiency.

Now, let us look at some of the real benefits of payroll outsourcing for small businesses.

• Scalability: Nobody starts a business to watch it consistently undergo losses. People start businesses to grow them as fast as they can, as much as they can. When a new business is starting up, owners might think that they don’t need payroll outsourcing as of this moment, when they have fewer employees. It simply might not make sense. This is a valid reason in the short term but not in the long term. If you have a vision for your business to stay relevant and grow for years to come, scaling up should be the core of your growth strategy. Most people think of “scaling up” as getting new customers; that’s it. However, there’s more to it. The infrastructure around the business must also scale up for the business to support an additional influx of customers. This includes payroll. As the business gets new customers, the number of employees working for the business also increases and with it the complexity of payroll. If you invest time and money today in securing a high-quality partnership with a payroll outsourcing provider like Exela HR Solutions, scalability becomes a cakewalk for your business in the long run. If, for some reason, you decide to invest after a few years, you won’t find enough time to test the partnership at that point in time. Additionally, you will be entering into an agreement at a much higher price point in the future, thanks to continuous economic inflation.
• Compliance: Smaller, especially newer businesses, are all about saving costs. This is their primary focus, as it should be. Unfortunately, too many businesses are too careless about their initial capital and, as a result, burn through it sooner than they would’ve liked to. Sharing office space, having fewer employees, drawing a lesser salary, extending working hours, etc., are just some of the typical sacrifices made to save resources and grow a company in the initial phase of its life cycle. Of these sacrifices, one which stands out in almost every small business is having fewer employees. This translates to the fact that all employees wear multiple hats and are not limited to their domain of expertise. For instance, the web developer is also the designer, the content writer is also an SEO expert, and the HR generalist is also the payroll specialist. This multi-specialty methodology could work in areas like web development or marketing, where the margin of error is large, and mistakes can be absorbed without any real damage. However, in areas like payroll, where compliance laws are strictly enforced by local and international regulatory bodies, any mistake can result in hefty fines or even lawsuits. Moreover, laws keep changing regularly. Keeping up with all laws at all times can be exhausting and risky. Payroll outsourcing providers like Exela HR Solutions have dedicated payroll experts who help SMBs stay compliant and out of trouble. By outsourcing all compliance responsibilities, you de-risk your business substantially at a fraction of the cost. The important thing to remember here is that large companies have the capacity to pay off fines and settle lawsuits outside court simply because of their size, influence, and financial stability, while small businesses may not have such resources at their disposal and may even shut down after getting caught in such cases. Linked Blog

Also Read: 4 Things You Must Consider Before Choosing a Payroll Outsourcing Partner for Your Business

• Opportunity Cost: Every human being, every business, will have only 24 hours every day to get the job done, and one person can do only one task at a time – this is the reality. Therefore, it is imperative to prioritize what matters the most and finish that job first. For example, if you decide “sales” to be the most essential function of your business, you must make sure sales activities are prioritized every single day. On the contrary, you must also ensure other low-priority items do not take up much of your time. HR and administration do not directly contribute to the growth of the company and must be given secondary status when compared to core activities of the business like sales, marketing, R&D, customer service, etc. Imagine your company is growing at a fast pace and you are allocating more and more resources towards payroll processing and compliance to avoid inaccuracies/fines and ensure timely payouts for your employees. You will achieve both objectives without a doubt, but at what cost? Instead, if you decide to invest in a reliable payroll outsourcing provider like Exela HR Solutions, you can scale up effortlessly using our expertise and robust technological infrastructure. All the time, money, and efforts you save by outsourcing can easily be diverted to all the core functions of your business, increasing your growth rate.

Conclusion: Smaller businesses can benefit immensely from a payroll outsourcing provider. It can help them scale, stay compliant, and save on resources that can be channeled to different core functions of the business. If you are the owner or manager of a small business thinking of outsourcing payroll, you don’t have to take a leap of faith all at once. Instead, you can dip your toes in the water to understand if it works for you. Start with outsourcing just “compliance”. Then, if you like the service, outsource “tax processing”. In this manner, you understand if the partnership works or not. Once you gain confidence, you can outsource the entire payroll function eventually.

Exela HR Solutions is a leader in global payroll processing with compliance expertise for different locations worldwide. Contact us today to learn more about our offerings.

Sources: google.com | en.wikipedia.org | payrollvault.com

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

The payroll outsourcing market, as it stands today, is estimated to be valued at around 20 billion dollars. There are many providers in the market, and inversely, about 10 million businesses in the United States find themselves using third-party payroll outsourcing services every month. So, after all, why do so many businesses feel the need to partner up with payroll outsourcing companies?

THE NEED

Many businesses, irrespective of geography, face the same problems when it comes to payroll. Let us have a closer look at what some of these problems are.

• Meeting Deadlines: This is one of the biggest problems for most businesses. Handling payroll in-house is a resource-intensive and demanding task because it requires highly organized and accurate data management. This data management further requires the timely cooperation of multiple team leads and managers across different office locations. This makes it harder for companies to process payroll on time.
• Location-based Direct Deposits: If your company has offices in multiple states or countries, performing direct deposits each week or each month can quickly become a very cumbersome and expensive effort. Moreover, in case of reversals or breakdowns, it becomes even more challenging to solve each case separately.
• Staying in Compliance: If your business is based out of a single location, staying in compliance is more or less a minor headache. However, if your business is operating out of several different states or countries across the seven continents, it is almost impossible to keep track of local laws and their modifications that might occur periodically in the future.

So based on these problems and many others that our clients have experienced over the last few decades, we have come up with a robust checklist for you to refer to whenever you decide to consider partnering up with a payroll outsourcing company.

• Reporting and Information Security: Reporting and information security go hand-in-hand. In fact, this is the number one factor you must consider while weighing the pros and cons of outsourcing payroll. Firstly, you must realize that most of the sensitive financial data related to your company, like employee national identification numbers, employee phone numbers, employee bank account numbers, salaries, and home addresses, will be accessible to your payroll outsourcing partner. You must perform due diligence and create ironclad legal agreements that define how data will be used, and most importantly, how it cannot be misused. After that, you must make sure your payroll outsourcing partner has the proper technological infrastructure to store information. In 2018, the General Data Protection Regulation (GDPR) law was passed in the European Union related to data protection and privacy. A great payroll partner must be GDPR-compliant to eliminate risks associated with data security in your payroll system.

When it comes to global pay data reporting, it is always easier to access and process pay-related information if it is available in one place. Making informed decisions related to workforce spend data becomes easier when data is centralized. Therefore, when it comes to reporting, make sure you ask your payroll outsourcing provider what kind of reporting and analytics tools they offer. Otherwise, it can quickly become an undesirable situation where you have to swim through tons of different reports in multiple formats just to understand what’s going on.

• Local Expertise & Compliance: Spending a considerable amount of time understanding what your payroll outsourcing provider is capable of will pay off in the future. In our findings, we found out that most businesses will work with a payroll outsourcing company to make up for their own lack of knowledge in terms of local laws, tax regulations, etc., and naturally so, because maintaining a legislative awareness for tens of different locations takes a lot of work and expenditure of valuable resources.

Speaking to your provider in great detail about this will give you a complete understanding of the features, benefits, value, limitations, and risks that the provider might offer in the future. If you notice a difference in pricing that multiple providers are offering for rendering the same set of services, more often than not, the difference will be experienced in the level of service and expertise in a particular region or domain. Always discuss and understand why they chose to set their pricing low or high compared to the average rate.

Also read: Human Resource Outsourcing - Helping Businesses Control Operations and Growth

• Scope of Service: The most popular reason businesses choose to outsource their payroll is because of its cost-saving benefits. You pay for a set of services instead of paying a team of people to do the work for you. This brings down the cost drastically. But sometimes, companies in a hurry to outsource the extra burden of work fail to recognize what they are opting for. Firstly, you must understand your own payroll outsourcing needs. Then, after you finalize on your provider, you must confirm if they can process all your needs effectively and on time. Once finalized, you may discuss further opportunities of growth, like, for example, payroll services that the provider might be launching in the future that you may be interested in.

Ask if they have any extra service add-ons that might be included by default in the current service contract. Depending on if you want them, you may ask them to keep or remove those add-ons. Once you understand the full scope of service, you will have a concrete idea of how much you will be spending on outsourcing your payroll in return for the service you are getting. Eliminating unnecessary services can bring down your cost considerably.

• Growth & Expansion: It is vital that you have a clear understanding of your company’s future. Only then will you be fully equipped to discuss growth and expansion strategies with your payroll outsourcing partner. When it comes to payroll expertise in different locations, bigger may not always be better. Sometimes, payroll outsourcing providers may offer their services in only a limited set of countries, and that could very well be because of the higher level of expertise they offer in those locations. Depending on your business’s growth plan, you can be specific with your provider about operating in a particular set of locations and understand their ability to provide their expertise in those parts of the world. You can also do a background check to be extra sure of their presence in those locations.

Unlike Exela HR Solutions, many payroll outsourcing providers do not offer a full suite of HR solutions to their clients. If you choose a provider that offers a full suite of HR solutions, you always have the option in the future to take the leap. For example, in a scenario where you decide to find an HCM provider or an HRBP services provider in the future, it would save your business a lot of time and resources to start hunting for a provider all over again, had you chosen a provider that offers all the relevant HR solutions to their clients. Therefore, making sure the payroll outsourcing company you choose is future-proof will save a lot of time, money, and resources for your business in the long run.

So now, while you lay down the pros and cons of outsourcing your payroll, don’t forget to factor in these important points. These might help you avoid costly mistakes in the future.

Exela HR Solutions is an end-to-end human resource solution capable of serving businesses of all sizes. With our professional HR experts handling everything from talent sourcing and global payroll processing to compensation management and HRBP services, Exela HR Solutions is the complete package for businesses looking to save cost and time by outsourcing some or all of their HR functions.

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Sources: arcoro.com | safeguardglobal.com | google.com | en.wikipedia.org

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.