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The Payroll Debate: In-House Vs Outsource

23rd Jul 2020
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The payroll solution that provides all you need for Auto Enrolment.

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Every business must have payroll in some form or other. It is arguably one of the most important responsibilities for any employer. You have to process payslips and payments correctly and on time, every time. Payroll mistakes can leave you at risk of hefty fines from HMRC, and so traditionally, payroll has been one of the most outsourced processes in the business world. 

A simple Google search brings up a number of benefits of outsourcing your payroll:

  • Cost-savings as you are not spending money on training and resources
  • Save time and focus on other aspects of your business
  • Confidence that your employees are being paid correctly
  • Peace of mind that your payroll is compliant
  • Greater security than operating payroll in-house

There is also a number of benefits to bringing your payroll in-house:

  • Cost-savings are possible if you’re using the right payroll software
  • Greater flexibility and control over the payroll data
  • Other HR features may be included at no extra cost
  • Control over data security as there’s no third party access to data

Notice how some of the benefits are contradictory? Advancements in payroll software have improved the ability for small businesses to process payroll themselves, and today, more and more businesses are opting to bring their payroll in-house. Opting for the right payroll software can mirror many of the benefits of outsourcing. 

Cost when processing payroll in-house vs. outsourcing

Take, for example, cost-savings. Outsourced payroll services are typically priced on a monthly basis, with pricing based on the number of staff that you employ and the frequency with which you pay your staff. With a workforce of ten people or less, you can expect to pay around £4 to £6 per employee for a monthly payroll, but that figure may increase as you take into consideration a setup fee, complex payroll needs, last minute adjustments, automatic enrolment, access to reports, an integrated HR system and much more. When you outsource your payroll, the cost of the software, time etc. will need to be recuperated somewhere by the accountant.

On the contrary, employers who decide to handle their payroll in-house have the upfront cost of the payroll software. Some payroll service providers also argue that there is the additional cost of training employees, or maybe you might need to hire a new staff member with payroll experience to manage the payroll. But what if there are minimal training costs? What if there is no hidden software costs for additional functionality and support? 

With BrightPay, there is a simple pricing structure where all licences include full functionality. There is no additional charges for auto enrolment, CIS, expenses and benefits etc. Best of all, you don’t need to be a payroll expert to use BrightPay. The software is easy-to-use, even for someone with little to no payroll experience. Should you need assistance, we’re here to help with free phone and email support.

Workload when processing payroll in-house vs. outsourcing

One of the key benefits of outsourcing your payroll is the time saving advantages. However, the reality is that you may still be doing some of the work yourself when you outsource your payroll. The employer or HR Manager will still need to give the information to the payroll bureau, be it on a spreadsheet or through an online portal. Changes to employees hours and payments need to be monitored in-house, regardless of who actually processes the payroll.

If a new employee is hired, the employer or HR manager will still need to collect all of the new starter’s information. The amount of effort required by the new employee and the HR staff is the same if the payroll is processed within the company or with a third-party provider. 

Compliance when processing payroll in-house vs. outsourcing

Another benefit of outsourcing your payroll duties is peace of mind knowing that your employees are paid correctly and that you are fully compliant. However, although the employer is placing the responsibility onto the payroll service provider, the onus is still on the employer if the third party fails to pay taxes on time and accurately. In contrast, when processing payroll in-house, you can use intuitive payroll software with complete transparency to easily monitor the payroll information to avoid any costly mistakes.

BrightPay monitors everything in the background with on-screen alerts to help you along the way. For example, you will see an alert if an employee needs to be enrolled into a pension scheme or if an employee’s wage falls below the National Minimum Wage. BrightPay also includes mid-year updates in line with the latest payroll laws and regulations, keeping you compliant. 

Data security when processing payroll in-house vs. outsourcing

Employers must take every step to ensure employee data is kept safe and secure at all times. One of the biggest concerns for small businesses regarding payroll is data security. Every company’s nightmare when it comes to outsourcing payroll is a data breach and identity theft. You’re also depending on a third party to protect your sensitive employee data. Many companies choose to keep payroll in-house as they have added assurance that they can implement stringent data protection methods.

By processing payroll in-house, you are increasing your control over employee data and the payroll process itself protecting private information such as salary details. 

BrightPay payroll software can also be password protected, so you don’t need to worry about employees accessing sensitive information on other employees. 

Control & flexibility when processing payroll in-house vs. outsourcing

One of the major concerns of companies who outsource their payroll is the loss of control. Simple tasks such as accessing a payroll report is not instant, which can be difficult for a business to get information they might need at a moment's notice. When processing payroll in-house, you have instant access to your data. If you have a question about the payroll, you can quickly and easily find answers to your questions, instead of going through the third party provider.

Mistakes can also take extra time to correct when the payroll is outsourced. Basic changes such as adding overtime, adjusting shifts or making last minute changes to the payroll not only take longer to implement, but the provider may also charge an additional fee for making the change. When payroll is processed in-house, you have the flexibility to correct the issue immediately, instead of waiting for a third party to resolve the issue. 

One of the main aims of BrightPay is to be a flexible payroll platform – suitable for any employer. It’s easy to make corrections to the payroll and there is an intuitive report builder, where you can build and design your own custom payroll reports. This allows you to analyse every aspect of your payroll, and thus, make more effective business decisions.

Other HR functions when processing payroll in-house vs. outsourcing

If you process the payroll in-house, some payroll systems come with additional HR features built-in. An employee self-service portal makes payroll and HR processes much more efficient by delegating various tasks to the employee. Give your employees remote access to personal data, holiday entitlements, payslips and P60s. 

Process payroll in-house or outsource - which should you choose?

Although there are many benefits to outsourcing your payroll, you can get the best of both scenarios when you choose the right payroll software. With BrightPay, you have the cost savings, data security and compliance, without compromising your workload, control and flexibility. You also have the added benefit of an additional suite of HR features including an employee self-service app, leave management tool and HR document hub. 

Book a demo today to see how seamless and efficient the payroll process can be with BrightPay. 

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