If the big beasts can benefit from cost savings, and free up valuable time to concentrate on core competencies, so can SMEs. Smaller entrepreneurs just need to do a little analysis in order to work out whether payroll outsourcing would be an intelligent business move.
Is there a need?
Every so often – but inevitably – SMEs stumble across problems with payroll. It turns out to be less than accurate, or the person responsible for payroll administration (like an office manager or PA – even the MD) simply doesn’t have enough time in reality to devote to it. And if that person isn’t the MD, there’s a strong chance that he or she will walk due to the pressure, leaving even less time and resources for payroll management.
But there are other circumstances which make in-house payroll processing uneconomical or unnecessary – like organisational downsizing or major developments such as take-overs or mergers which effectively eliminate the necessity. If any of these conditions apply, it’s time to consider a viable payroll outsourcing option.
What are the benefits?
With the right package tailored to the needs of SMEs, such as the payroll solutions provided by umbrella companies, a number of palpable benefits become available. Like, for instance, the instantaneous release of employee time, which can be redeployed immediately into more productive tasks. You’ll also be released from the endless need to keep up-to-date with ever-changing employment legislation.
SMEs can also benefit from the cut in overhead costs inextricably linked to employing dedicated in-house payroll staff. And the ever-present nightmare of a smaller firm’s payroll worker going sick or being on holiday at a crucial moment will be eliminated at a stroke.
Most payroll outsourcing solutions for SMEs are scalable, so they can support the business in step with its natural growth. And, should a cyber disaster strike, the payroll information will be safely recoverable: outsourcers always store crucial information on several computer sources. To cap it all, regular and accurate payroll management reports are readily accessible.
What to look for in an SME payroll partner
Make sure the partner you’re considering has employees holding recognised qualifications from the Institute for Payroll and Pensions. As a rule of thumb, the longer a payroll partner has been doing business, the more stable and reliable it’s likely to be.
Don’t be timid about enquiring whether your prospective partner has experience of your industry sector. Agencies that work across a broad range of sectors can readily transfer knowledge gleaned in one sector to others, to the benefit of each.
It’s also desirable to select a partner who can give support every day, not just on the few days each month when payroll is processed.
Above all, make sure that you have a service level agreement and a contract in place. A good outsourced PAYE payroll solution
will analyse the existing payroll practices in your company, advise on efficiency improvements, check that you’re in compliance with employment and tax legislation and show you how to minimise costs (like claiming back maternity pay from government).