5 Key Reasons to Outsource Payroll Processing

5 Key Reasons to Outsource Payroll Processing
5 Key Reasons to Outsource Payroll Processing

The fluctuating economic conditions and global uncertainties compel businesses to constantly work on ways to streamline their business processes while remaining cost-effective. Outsourcing time consuming and non-core business process activities can help to boost business productivity by enabling organizations to focus on mission critical tasks.

The importance of payroll processing

Payroll is a particularly critical task for organizations, businesses and enterprises.  Payroll processing on time is critical for ensuring that a company’s employees remain engaged and focused on their work. Not just that, your company’s payroll processing system is also associated with agencies that collect taxes on the salaries you pay to your employees. Thus, a company’s payroll processing system connects its employees, its taxation partners and the business together. It has to be accurate, precise, timely, efficient and accountable. Maintaining accurate payrolls would also make it easier for organizations to manage auditing and tax time ensuring a clear-cut record of transparency which would have positive impact on the reputation of a company.

While many organizations continue to carry out in-house payroll processing on account of a number of reasons such as achieving greater control over internal processes, costs, maintaining confidentiality and other reasons such as achieving greater integration between HR, payroll and financial systems, many are opting to outsource. In-house payroll processing involves 20% more expenditure as compared to outsourced. Therefore, getting control over spiraling costs remain the major driver for the outsourcing of payroll processing, for both small businesses and large. In fact, payroll processing is the fastest growing segment of the global human resource outsourcing market and is predicted by analysts to grow at a CAGR of 4.4% between the years of 2016-2020.

5 Key Reasons to Outsource Payroll Processing:

There are compelling reasons as to why outsourcing payroll processing to an external party can turn out to be beneficial for your small business, organization or enterprise:

  1. No Major Infrastructure Required:

    Implementing and managing payroll management systems in companies can be draining on resources. Effective payroll systems require the purchase and maintenance of extensive infrastructure such as hardware, software, network capabilities and nowadays, cloud technology. These systems require regular maintenance and updates. This may be difficult for businesses to invest in keeping in mind budgetary constraints. Outsourcing to a specialized provider of payroll processing services removes this difficulty.

  2. No Additional Staff Required:

    Maintenance of payroll in-house requires the recruitment and training of staff which can be quite expensive. Outsourcing to a specialized payroll processing services provider can help save these costs and the maintenance issues that come up with maintaining a dedicated in-house payroll processing management system.

  3. Reduced Security Threats:

    Management Payroll process outsourcing and management service providers can often be a nightmare for organizations as there are many security aspects involved. With increasing incidences of financial embezzlements, frauds and other financial crimes happening within companies themselves, companies would be best placed to entrust their payroll data with an expert in payroll processing as they have dedicated infrastructure, storage and security measures in place to safeguard the data of their clients.

  4. Delivers Considerable Time Savings:

    Time is precious and all organizations are aware of this. Time wasted on non-critical yet unwieldy processes can be costly and a significant distraction for companies. As per research conducted by an agency, in-house payroll processing contributes a great deal to wasted time and loss of productivity; nearly 235 hours of productivity was lost to this task by companies that do not outsource payroll processing as compared to those who did. This is inevitable as payroll processing and management requires careful and minute attention to detail. Loss of time constitutes a significant hidden cost of in-house payroll processing. Outsourcing could thus lead to significant cost and time savings for organizations, enabling them to focus on high priority and strategic goals.

  5. Results in Improved Taxation Efficiency and Reduced Arrears:

    The complex nature of payroll processing places additional responsibility on the payroll processing team to ensure compliance with all regulations including payroll regulation and taxation stipulations. Different income slabs invite different taxation schemes which can be complicated. These income tax deductions from the employee payroll need to be done meticulously and accurately. Procedures related to this such as calculating tax obligations, tax returns filing, payroll tax reporting among others can be complex and pose a significant challenge for companies of all kinds grappling with major business objectives to achieve. Outsourcing to a Tax preparation service expert specializing in payroll processing can ensure that this critical process is carried out efficiently and that deductions are made accurately. In addition, professional providers also regularly must keep up with changes in regulations, rules and policies concerning payroll and taxation. This ensures avoidance of penalties and audits on account of improper taxation.

In short, there are a variety of reasons why companies should outsource their payroll processing. Doing so will help free up cash, time and resources that could be used for more critical work that could help in translation of primary business goals. Payroll processing is one such activity that can be outsourced to an expert Finance and Accounting (F&A) BPO Outsourcing Services provider leading to significant enhancement of business efficiency.

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For information on how Invensis Technologies can deliver value to your business through Payroll Processing Outsourcing Services, please contact our team on US +1-302-261-9036; UK +44-203-411-0183; AUS +61-3-8820-5183; IND +91-80-4115-5233; or write to us at sales {at} invensis {dot} net.

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