Payroll is a critical part of HR management and is a time-consuming activity that needs to be performed every month. But, if you can outsource it to a trusted partner, you can save a lot of time and labor for your HR team.
The HR managers are forever shrouded with the pressures of managing compliances and following the regulations when handling payrolls. Payroll outsourcing to a third-party vendor can reduce many risks and bring the benefits like:
Enhanced Productivity
As mentioned earlier, managing payroll in-house requires extra staffing, lots of resources, and attention to detail, leading to lost productivity.
Accurate payroll management involves a vast amount of data processing, requiring HR professionals to spend considerable time on these tasks every month. The time spent on payroll management takes them away from the core tasks of hiring and onboarding.
Payroll outsourcing allows HR teams to focus on business expansion and growth.
Reduced Costs
For every business, the time spent by their employees on any task has a monetary value linked to business revenue generation. The more employees focus on revenue generation tasks, the more profit they will generate for their organization.
Payroll processing involves several tasks like calculating employee hours, leaves, deductions, paid time off, generating reports, preparing tax filings, printing and distributing paychecks. None of these activities are related to revenue generation.
The activities of payroll management are related to business operation. It means businesses managing payroll in-house have to bear high costs due to HR employees spending most of their time on these tasks. The overall value of in-house payroll management is vast.
When you outsource payroll to 3rd party service providers, your HR team can focus on revenue generation activities. The fee paid to the payroll service provider is less than the total salary your organization pays to HR personnel overlooking payroll management. Your HR department can use this money to automate the systems or hire better employees.
Meeting Compliances
Organizations are required to prepare and maintain payroll records as a part of compliance requirements. Small businesses often struggle to maintain compliance with government regulations, as there are several complex rules related to overtime payment, PF percentages, and various taxes. It can be a daunting task for HR teams to process each employee’s salaries and reimbursements every month.
If your HR managers commit any mistakes, they snowball into audit irregularities and fail to comply with rules and regulations specified by the governing authority. Non-compliance and audit irregularities translate into hefty fines and penalties every business would strive to avoid.
Payroll outsourcing to third-party vendors gives you freedom from most worries. The payroll service provider has a dedicated team processing different aspects of payroll. They have updated knowledge about industry compliance about wages and other monetary benefits provided to employees. When you hire, you can expect they will manage payroll accurately every month and take care of your business’s compliance, relieving your HR team of this tedious job.
Lesser Worries about Data Security
Companies managing payroll in-house are required to build an IT infrastructure for efficient payroll management. The company needs to invest in servers, networks, payroll processing software to manage payroll tasks. When you manage payroll in-house, there is always an inherent risk of data mishandling, identity theft, and corruption of data that can negatively affect your HR system.
Every business is required to store employee and financial data securely as a part of record keeping. If the server is hacked and data is destroyed, the company may have difficulty meeting the compliance requirements. Data recovery may also become an added responsibility for the overloaded HR teams.
When you outsource payroll to a responsible service provider, you can be assured about financial data security and accessibility whenever you demand it. The payroll service provider employs advanced data security methods to protect client data.
To sum up, these are some of the benefits your HR team can enjoy if you consider outsourcing payroll management.
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