Payroll Services
Published November 02nd, 2016 by

Features of Payroll Outsource Solutions That Can Cater to SMBs

Features of Payroll Outsource Solutions That Can Cater to SMBs

Why Outsource?

In not having a big capital and other resources to start with enables small businesses to turn to outsourcing some of their non-core aspects. The decision is more on opting to rely on expert management. But when it comes to cost, some small business owners are a bit hesitant about it. But through due diligence and careful weighing of the pros and cons, small business owners will always find strong reasons to continue with outsourcing in terms of benefits, and even cost savings.

According to the outsourcing statistics consolidated by Credit Monkey, 87 percent of the outsourcing decisions by the IT and business sectors are typically cost-related.

Here are some tips to consider before outsourcing activities or tasks involved in your business:

  1. Understand your unique competencies and know how to leverage it by outsourcing

Outsourcing is not for everybody, but for some businesses, it can be a life-changing decision. Know your business’ core competencies and evaluate if outsourcing will be the better choice to make it more efficient. For example, companies that have multiple branches or offices across different states can benefit from having a separate entity to centralize documentation, tax submission, and other compliance and paper-based processing tasks. By having an external group of staff to manage and consolidate everything, the business can be assured that everything is well coordinated and documents and compliance matters are submitted on-time.

  1. Set up clear objectives, goals, and expectations for outsourcing

Do you need to outsource because you want to improve the quality of the output of the specific department concerned? Did you realize you can have significant cost savings out of it? Will it make  your existing system more efficient after outsourcing? Defining the areas of improvement, and setting clear objectives on how to achieve it using outsourcing, will help align your business to the right provider and outsourcing agreement.

Before getting into an outsourcing partnership, it helps that you come up with a set of performance metrics for your desired outcomes at certain periods in a timeline. Collaborate with your provider on making it attainable and realistic. Set limits for tolerance with undesired performance level. Partnerships will most likely to work out if there have defined expectations up front, you supervise (but not micromanage), and give a reasonable time frame before expecting a result. This ensures that the partnership is set on clear ground with mutually beneficial working relationship geared for long-term.

  1. Seek a partner, not just an outsourcing vendor

Delegating an important of your business to another requires you to be more discriminating with your options. First and foremost, it should be built on complete trust and credibility. Secondly, it should fulfill your objectives and achieve your goals; or else, the purpose is defeated. Consider a long term partnership that will help your business as it strategizes its subsequent steps towards growth. It would be more beneficial in the long run if you seek a partner that can demonstrate commitment to you all throughout.

A potential partner is somebody who is human to know how to align with your business goals associated with the outsourced task. His company must understand your business, and it helps that it has the experience in handling similar situations within the same industry. If the outsourcing agreement includes legal implications, heavy documentation, regulatory compliance and financial technicalities, look for a partner that has expert knowledge and works with an established system to handle and process everything with accuracy and efficiency. This more crucial outsourcing purpose would need you to be more critical with your options, especially that you will delegate something that will have an impact on your business.

Give plenty of time to evaluate your options. The market is robust with choices, and it is best to wade and deep dive into the sea to find a gem. Make an exhaustive research about each of their competencies, strengths, expertise and capabilities. Learn more about their extended services which may benefit you too in the near future. Seek for references from colleagues and ask about their own experiences dealing with them.

It is also important to find a partner that can identify and fit in with your company’s values and principles. This will add an emphatic touch to your partnership, which will make it a good candidate for long term relationship. Also, put an emphasis on its customer service. It is good to experience a personalized and responsive customer service, which can also be relied on anytime you need support. Do take note, also, if its customer service representatives have the substantial knowledge in dealing with all of your concerns and questions, whether technical or not.

Make sure that your partner will send a representative to work in your office. He or she will serve as your point person, which you can give instructions on how to properly communicate matters and issues you want to convey to your third party partner. It is best that this person is given some power and capability to make decisions on your partner’s behalf, so as to make sure that your operations and its integration with their system is seamlessly on-track.

  1. Maintain control and ownership of your company’s data

The technical aspect of outsourcing is very crucial, especially when it involves access to critical data like codes and financial accounts. Make sure that you don’t compromise its security, and you set boundaries on the access that your third party service provider will have over your data. Include a clear exit agreement and define which ones can be delegated back to you like documentation, information rights, audit reports or tools. Create an SLA (service-level agreement) which will contain the performance metrics you mutually agreed upon beforehand, and your corresponding evaluation about the service rendered to your company.

  1. Guarantee the level of security that your outsourcing service provider is using

Be mindful and firm about your expectations on how they should secure your business and customer’s data. Your partner must minimize your risk of deploying top-of-its-line security measures to protect your interests and give you confidence that your data maintains its privacy and confidentiality. Stipulate all responsibilities and consequences when a breach happens in a contract, and mutually agree and sign up front. Make sure that your partner’s company has the necessary compliance certificates and guarantees, and has the capacity to protect and maintain the integrity of your data.

Small businesses have to deal with limited resources most of the time. Knowing that there is a strong support system out there, which includes outsourcing companies, gives them the peace of mind that there will be no hindrance for their growth. One of the challenges that small businesses encounter when it comes to task execution is payroll processing.

Challenges in Small Business Payroll Processing

Payroll and employee management are critical aspects of the business, because it involves efficient time tracking, tax compliance, labor laws and other documentation-heavy requirements that are tedious and time-consuming to do. Without the knowledge and understanding on how to execute the right process, and a system to facilitate the smooth processing of paperwork, will make your payroll system prone to errors. Consequently, it may subject your business to legal disputes, fines and charges.

Another thing that small businesses consider is their growth. Of course, it is included in either of their short or long term goals, but it is a must, not to let anything hinder the opportunities for it to come at any time. The systems and tools they use must also scale with the business, to provide a long term support which is at the same time, cost efficient to implement. Increase in staff has been always part of the growth, and a strong payroll system must support this without any glitch or compromise.

As technology advances, small company owners now have more options to support their growing businesses. Knowing how payroll services work, a business can choose between using a payroll processing software to implement in-house, or outsource instead, for expert management. Either way, your business can take advantage of technology by opening all possibilities and opportunities for your unhindered growth.

Payroll Outsourcing Features for Small Businesses

In a global payroll survey conducted by Ernst & Young in 2013, it turns out that only 12 percent of the global participants do fully outsource their payroll management. Twenty-eight percent have it done in-house, and 60 percent is utilizing hybrid (partly outsourced, partly in-house) service model. The low percentage turnout may reflect many things, which can be lack of confidence, and lack of general need for some. However, the benefits of outsourcing is still best explored, to know if it will be more efficient to deploy than your other options.

Outsourcing your payroll management and processing is a critical stage of your business to take, because you basically delegate one key aspect that will have an impact, depending on how you set up your goals and expectations, as well as the performance of your chosen partner. It is crucial to evaluate a payroll service for small business and see if it will fit in your business needs, goals and budget based on the following criteria:

  1. Cost savings

Will it be more cost efficient to outsource than to capitalize on getting an in-house payroll specialist and staff, training them, provide tools like a software and supplies and sustain a department with a space in your office?

  1. Time savings

Will it be more efficient to have a third party service provider to process accurately the payroll and payroll-related documents like tax compliance, time tracking software data, accounting and HR integration, and address all employee concerns than having them in-house?

  1. Staff volume

Are you deploying a significant number of staff remotely and in different states? Does your staff needs considering their volume and complexity of requirements unbearable for your in-house payroll management team to process efficiently and on-time?

  1. Scalability

Can your payroll processing company scale its system to accommodate your growing or leaving employees without sacrificing the smooth and continuous flow of its processes? Does it offer extended services to provide better support for your payroll management, such as HR management, time tracking and attendance software and accounting system integration?

  1. Accessibility and communication

Can your payroll agency provide a stable and continuous communication between you and them while the system is running? Does its customer service always accessible and ready to address all your concerns, technical or not? Does it offer personalized and warm service all the time?

  1. Data security

Are you comfortable in giving out access to sensitive information and data of your business to a third party service provider? Can you give your full trust and confidence on your outsourcing agreement and make it beneficial mutually for both parties?

Before making a decision on why use payroll services, it pays to do due diligence in weighing the pros and cons of your options. Always bear in mind to think of the best interests of your business and your employees for the long term. Make it a partnership instead of a short term service agreement.

Learn how the best payroll processing companies deal with their real clients. Look up on for reviews of payroll processing companies to help you evaluate your options and find the right partner for your small business.

Our rankings are completely independent, transparent, and community driven; they are based on user reviews and client sentiment. These payroll services companies had to earn their way up and didn't just pay their way up.

View Rankings of Best Payroll Services Companies