Outsourcing the payroll function - considerations?

Outsourcing the payroll function - considerations?

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We are a large company thinking of outsourcing the payroll function; we have concerns that this may lead to a loss of control/decision making ability/authorisation and sight of risks of non-compliance with PAYE issues, as we acknowledge that we cannot outsource our responsibility for PAYE errors.

We would like to review our payroll systems for current risks to establish how comfortable we would be to let it go out in its current form, what types of checks should we focus on and what considerations/concerns should we take into account when deciding the extent to which we outsource?

Thank you
Simon

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By Accounting WEB
31st Oct 2001 13:41

Payroll Outsourcing
A company can either choose to outsource a payroll in its entirety, or just for the processing of payslips and reports.

The onus is on the company to give the bureau the correct information on pay, ie basic, overtime,holiday, bonus, SSP or maternity. The bureau will then process a payroll on the given information, produce payslips and reports and the company remains in control of the payroll legislation.

To outsource the complete payroll, the company would again need to ensure the bureau is given the correct and full information on all matters relating to the current payroll and the bureau will process the payroll to be paid on the date required.

Payroll Bureau's handle a large amount of varied payrolls and are therefore in a better position to ensure legislation is followed and can sometimes highlight where some employers payrolls are perhaps not up to date. The key factor with payroll is making sure the information given is correct.

Smaller payroll bureau's can offer a more personal service where you can discuss your concerns and also keep costs to a minimum.

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By Abacjm
30th Oct 2001 00:27

Outsourcing Payroll
Presumably cost v control is the reason that you wish to outsource. I would suggest taht if cost is a major concern, a smaller PAYE-dedicated agent would be more suitable than the large conglomerates like Centre-file etc.
What you would need to be certain of is that someone(payroll experienced) other than the person lodging the payroll details received a copy of both the lodgement and the resulting audit trail, to ensure duality of control. Similarly, employees would have to be made aware of cut off times for notifying changes in bank details, sickness, holiday etc for compliance with strict early timetable that would have to be in place for a smaller operator to handle such a large payroll project. Ask for references from existing clients.

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