Managing multiple payroll spreadsheets, tax compliance, and constantly changing regulations is no small task. It’s why 61% of companies choose to outsource some or all of their payroll processes.
Continue reading to understand how managed payroll works and whether it’s the right fit for your business.
What is managed payroll?
Managed payroll services let you hand over your payroll tasks to an expert third-party provider. After payroll integration, they can handle tasks like calculation, processing, deduction, and reporting.
How do managed payroll services work?
With in-house payroll, your HR or finance team typically manages the process. But with managed payroll, you outsource this responsibility to a dedicated provider. You’ll save your team time and effort so they can focus on higher-value tasks.
Outsourced payroll services vary depending on the provider. As a whole, here’s how it works:
Choose a payroll provider
You’ll start by picking a vendor that fits your needs best. Consider these factors:
- Company size: How many employees do you have?
- Employee type: Do you have hourly workers, salaried employees, or contractors?
- Industry needs: Are there specific payroll regulations for your industry?
- System compatibility: Do you have certain requirements or concerns regarding HR integration with existing systems?
- Scalability: Are you planning for growth?
Set up payroll integration with your provider
Now, it’s time for payroll integration. Your provider will likely offer a system that needs to be set up and synced with your internal systems.
Once set up, the provider manages payroll for you
The extent of the service depends on whether you choose fully managed or partially managed payroll services.
Full vs. partial payroll management
Full payroll management
Fully managed payroll means handing over the entire process to a third-party expert. They take care of everything, including payroll integration, processing, and tax compliance. About 1 in 8 companies worldwide outsource their entire payroll function.
Partial payroll management
Some providers only handle certain tasks, such as payroll processing, while you manage other parts in-house. Around 3 in 5 companies outsource some or all payroll tasks.
What does a managed payroll solution include?
Typical managed payroll services will cover:
Automated pay calculation
Wages, salaries, and deductions are calculated automatically after HR integration.
Paycheck distribution
Paychecks are issued for you via direct deposit, pay cards, or paper checks.
Tax and deduction management
Payroll taxes and contributions are automatically withheld and filed. Some providers also generate employee tax filings for you.
Payroll integration and reporting
Your provider will generate detailed reports for internal tracking and audits, handling all necessary payroll paperwork. You’ll have access to both real-time and historical payroll reports.
Automated compliance and support
Work with a reliable provider, and you’ll stay compliant with payroll laws and regulations. Your provider should also keep you updated on the latest payroll laws. In case of any issues, providers should offer support and disaster recovery.
Benefits of outsourced payroll services
Error reduction
Manual payroll tasks are prone to mistakes. In fact, 37% of payroll errors are caused by manual data entry. Automating payroll supports more accurate, consistent payments, reducing the likelihood of errors.
Time and cost savings
Managed payroll frees up your HR and finance teams from repetitive, mundane tasks like data entry and calculations. Your employees will be able to focus on higher-value tasks, improving efficiency, cutting down overhead costs, and relighting their spark.
Job satisfaction
A reliable payroll system means employees get paid on time, every time. Plus, your HR and finance teams will have fewer payroll-related tasks, reducing their stress and workload.
Easy to scale with you
As your company grows, managing payroll internally can become increasingly difficult. Managed payroll scales with you without hiring more staff or training someone new.
Stay compliant
Payroll laws are constantly changing across industries and regions. Outsourced payroll services help you keep track of regulations so you can stay compliant and avoid those costly fines.
Secure data
Payroll involves sensitive employee data. Managed payroll providers specialise in protecting that data, limiting access and reducing the risk of breaches.
Access to experts
Managed payroll services are run by experts, so you can trust your payroll is handled correctly every time.
Cons of outsourced payroll services
May feel like risk at first
Outsourcing payroll might feel like a big leap, especially when transferring sensitive data at first. Choosing a trustworthy provider with solid reviews is vital to minimise risk during HR integrations.
Less internal control
Prefer full control over payroll? Outsourcing might not be an ideal fit. You’ll be handing off this responsibility to an external team, which may not align with your company’s preferences.
You may need to monitor their performance
Tracking your service provider’s performance is essential, especially at first. Check for errors, monitor time saved, and assess the overall quality to ensure the investment is worth it. Providers like BrynQ offer dashboards with rapid, visualised HR and payroll data through graphs and charts.
Signs you should get managed payroll services
Your internal payroll team isn’t properly trained.
Payroll is complex. Doing it manually or without experts can lead to errors. If you don’t have a trained team, outsourcing is a smarter option.
You can’t afford to risk non-compliance.
Plan on paying large fines if you fail to comply with payroll laws. Studies show 53% of companies have been penalised for payroll non-compliance in the past five years alone. Outsourced payroll services help you cut down that risk.
You want to reduce staff costs
Managing payroll internally can be expensive. Outsourcing is often more cost-effective, especially if you have a large or growing business.
Your current payroll process is slow or outdated.
Is your payroll stuck in the past? 51% of small businesses still use spreadsheets for payroll, and 19% use entirely outdated manual processes. Outsourcing it to a data-driven, AI-powered provider can help modernise it.
You’re large organisation and/or operate in multiple countries
Have a large team? Operate across multiple countries? Managing payroll in-house will become more complex. A managed payroll provider simplifies these challenges for big and international businesses.
Start your payroll integration
Managing payroll doesn’t have to be complex. BrynQ helps streamline your process with seamless HR and payroll integration that reduces errors and improves your efficiency. With BrynQ, you get the accuracy and support you need to keep your payroll compliant and stress-free. All while ensuring data security.
Join over 10.000 users in simplifying their payroll with BrynQ. → Request a demo