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4 Strategies to improve efficiency for your outsourced payroll services firm

5 min read
A team having a meeting in a coffee ship

It is no secret that payroll is a complex and time-consuming process.

From changing legislation and repetitive manual tasks, to the back and forth on employee hours, expenses and leave management, there is a lot to manage for just a single pay schedule.

And if done incorrectly, the consequences can be disastrous for clients.

So how can you ensure that your outsourced payroll service is efficient and valuable for clients without compromising on compliance?

Below are our top tips for improving the efficiency of your payroll firm.

Why is it important to create efficient payroll processes?

Without the tools and expertise in place, managing payroll can be more than just time consuming, it can also be a risk to your and your clients’ reputation.

Automating manual processes, leveraging technology, and implementing an employee self-service portal that streamlines communication, doesn’t change the fact that payroll legislation is complex. Whilst you might be supporting businesses with their payroll needs, you may come across large scale implementations for clients with unique payroll scenarios.

Overall, increasing payroll efficiency allows you to focus on more strategic and value-added activities, such as analysing payroll data, improving processes, and providing better support to clients. It enhances the overall effectiveness of the payroll function within your firm and contributes to its success.

What are some common challenges faced by outsourced payroll service firms?

1.Keeping up to date with compliance

With multiple laws and rules, changing requirements and important payroll dates; time associated with running payroll is down to ensuring clients are adhering to compliance requirements. The smallest mistakes can lead to serious mistakes, putting your firm or your clients at risk for a fine or legal battle.

Using payroll software that helps with compliance by promptly applying updates according to local payroll legislation, will reduce the significant amount of time spent double and triple checking the pay run!

A payroll software should complement the existing technologies within your business and help you meet record keeping requirements set by your clients local tax and payments authority.

2. Keeping organised and tracking important tasks

Organisation is crucial to increasing payroll productivity. When managing payroll for multiple clients, you might have a number of tasks happening at once and prioritising them might get difficult. You might miss an important note and have to spend time going back over details to fix errors or maybe new employees haven’t been captured in the latest pay run.

Some payroll software will include dashboard notifications and alerts to make tracking and managing deadlines easier in one place. Creating a payroll calendar with important dates and reminders for your team and clients will also improve payroll efficiency – you’ll find a lot more time in your day by ticking things off once ahead of time, and not having to come back in a panic.

3. Moving away from manual tasks

One of the biggest challenges is to cut-down time spent on payroll processing. One way of doing this is to automate as many manual processes and repetitive tasks as possible.

You may already have legacy processes that made do, but it shouldn’t be a reason to fear change or switching tools or processes. By automating tasks like manual data entry, calculating employee hours, checking leave requests and distributing pay slips, you can save hours, if not days, from the payroll process.

The easiest way to start automating payroll is to use a payroll management system that offers automation features like integrated timesheets, tax and leave calculations, and customisable notifications. A good payroll provider will help equip your staff to get onboarded smoothly and have a robust and sophisticated system that can automate many of the tasks involved in payroll to not only save time, but reduce the chances of errors being made.

A payroll system that is cloud based is also key to maximising efficiencies so that you can securely access data 24/7 without being restricted to your desk. For a deeper look at what tasks could be automated with payroll software, take a look here.

Beyond payroll software, automating manual tasks like email management, appointment scheduling, client invoicing and customer relationship management will also help to ensure your processes are streamlined so that you can avoid payroll errors and delays when it comes to payday.

5 Ways to improve efficiency and output of your payroll process

1. Streamline your payroll processes

To improve efficiency, evaluate and simplify your payroll processes by eliminating redundant steps, automating manual tasks, and standardising workflows. Implement a payroll software system that integrates with other systems to streamline data entry and calculations, reducing errors and saving time. Maintain a centralised database for employee information, payroll records, and relevant documents. This improves data accessibility, reduces duplication, and facilitates accurate and timely reporting.

2. Set clear goals and priorities

Establish clear goals and priorities for your payroll team. Clearly communicate expectations, deadlines, and performance metrics. This helps employees understand their roles and responsibilities, enabling them to prioritise tasks effectively and focus on critical activities.

3. Continuous training and professional development for staff

Provide ongoing training to payroll staff to enhance their knowledge and skills and align them with standardised procedures and templates for payroll tasks. This keeps them updated on industry trends, regulations, and new software features or capabilities, enabling them to work more efficiently.

4. Utilise data-driven decision making

Leverage payroll data to make informed decisions. Analyse trends, identify areas for improvement, and measure performance against established metrics. Use data analytics tools to gain insights into cost-saving opportunities, compliance risks, and process efficiencies, enabling data-driven decision-making. This will also help you to measure the efficiency of your payroll processes.

5. Adapt to client-specific requirements

Start automating pay calculations if you’re managing complex payroll scenarios. Our customisable pay conditions engine empowers your teams to eliminate human error in manual calculations, manage pay rate increases in bulk and keep track of those important dates such as public/bank holidays or work anniversaries so you’ll never miss one again.

How do you measure payroll efficiency?

Measuring payroll efficiency is essential to evaluate the effectiveness and productivity of the payroll processes within an organisation.

Here are some examples of how you can measure it:

Time-to-process: Measure the time taken to complete payroll processing from start to finish. This includes data entry, calculations, validation, and payment disbursement. Comparing this metric over time can reveal improvements or bottlenecks in efficiency.

Error rate: Track the frequency of payroll errors, such as incorrect calculations, missed payments, or tax filing mistakes. An increasing error rate indicates the need for process improvements or additional training to enhance accuracy and efficiency.

Compliance metrics: Assess compliance with legal and regulatory requirements. Monitor the accuracy and timeliness of tax filings, reporting obligations, and adherence to labor laws. Non-compliance issues can indicate inefficiencies in the payroll process.

Employee satisfaction: Conduct surveys or feedback mechanisms to gauge employee satisfaction with the payroll process. Feedback regarding timeliness, accuracy, and transparency can provide insights into areas for improvement.

Cost per payroll: Calculate the cost incurred to process payroll, including software licenses, employee hours, and other related expenses. Analysing the cost per payroll cycle can help identify cost-saving opportunities and evaluate the efficiency of resource utilisation.

Process automation: Measure the extent of automation within the payroll process. Assess the percentage of tasks that are automated versus manual. A higher level of automation indicates improved efficiency and reduced manual effort.

Key Performance Indicators (KPIs): Establish KPIs tailored to your organisation’s payroll objectives. Examples include on-time payment delivery, payroll accuracy rate, or employee self-service utilisation. Regularly monitor these KPIs to track performance and identify areas for improvement.

Start creating an efficient payroll process

Employment Hero is a comprehensive payroll and HR platform that can help create an efficient payroll process.

By leveraging Employment Hero, organisations can create an efficient payroll process by automating data capture, integrating time and attendance tracking, ensuring compliance, simplifying payroll processing, providing employee self-service functionality, offering reporting and analytics capabilities, and enabling seamless integration.

Justine Lou
People Specialist - Employment Hero
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