Payroll is an essential part of every company’s operations and a foundational part of employee engagement. If you have a well-oiled payroll process, your staff will love you—but if you run payroll inconsistently, you risk major upset.
Since payroll processing is an admin-heavy task, it’s understandable that some business owners believe it’s easier to use outsourced payroll. However, bringing this process back in-house can give you greater control.
What a company ultimately chooses depends on a number of factors. We’re here to make the decision between in-house and outsourced payroll a little easier, by breaking down the benefits of both.
What is in-house payroll?
In-house payroll is when a company has a team or individual in their organisation who is in charge of running payroll.
What are the benefits of having in-house payroll?
Bringing payroll in-house can be transformational for your business, but it has to suit your set-up and preferences. Here are just a handful of scenarios where in-house payroll could be the right choice for you.
You’d like to have greater control over the payroll process
Do you need to change a payroll rule? Do you need to enter a new employee into the system? Are permissions of pay reporting changing hands? When you’re outsourcing payroll, these changes could take some time to take effect. You’re waiting on someone external to complete what might be urgent changes.
With in-house payroll, you can make instant changes to your processes and start actioning them right away. It takes the middleman out of managing your payroll.
You’re interested in utilising technology
These days technology can do a lot of things, and one of them is supporting payroll. Payroll software is a great way to minimise the time your in-house team spends on payroll. It can also provide greater clarity on the trickier parts of payroll, and automate a number of processes, including statutory contributions.
If you’re thinking about bringing payroll in-house but are concerned about the time-cost, introducing payroll software can be a great way to provide extra support.
You’d like to instantly and confidentially access important data
When you’re outsourcing to a payroll provider, important employee data is being passed on to an external company to manage. While they might have great security and processes, there’s nothing like having peace of mind in knowing that your data is securely held in-house and easily accessible to those with the correct permissions.
Sometimes urgent reporting is required, or an employee needs to access their details quickly. When the data sits directly within your company, it can save so much time and stress for your administrative and payroll team.
You want to connect timesheets and rostering
By using technology like payroll software, you can easily connect timesheets and rostering directly to payroll services. With everything living on the same platform, approved timesheets automatically feed through to payroll. Rostering is also a breeze, with templates, dynamic rostering and budgeting tools.
Integrating these critical HR processes is another way you gain more control over your business operations. With software solutions that speak to each other, you can easily manage your employees’ time and payment from one single source of truth.
Employees want control over their own information
While we’re on the topic of human error… Most administrative staff will know the pains that can be caused by one small data entry mistake. Something as small as typing an illegible number incorrectly into a system can cause hours of headaches to fix down the track.
When you use an in-house system like Employment Hero Payroll, employees can enter their own payroll details into the self-service platform. They can easily view and manage their personal details, making updates as their life circumstances change.
You’d like to control reporting
Is your company growing and evolving? Maybe you’re looking to do a detailed audit of your finances and need specific information to do so?
Controlling your own payroll reports can give you back the flexibility to do things your way. You can pull reports instantly, easily sourcing any information you need.
What are outsourced payroll services?
Outsourced payroll services are when you hand payroll management over to an expert. While they’re not a part of the business, they can take over all the manual tasks that take up critical time.
What are the benefits of outsourcing payroll?
If you suspect that the time you’re dedicating to running your payroll in-house is affecting your bottom line, or you’re struggling to keep up with the constantly changing regulations, it might be time to outsource. We’ve outlined some common scenarios where outsourced payroll would suit you better than in-house payroll management.
The team are spending too much time on payroll tasks
Ask yourself how much time you’re spending on payroll and tax calculations, keeping on top of payroll compliance, cross-checking details and training new employees to use your tools. Then there’s time spent updating HR information in the system, including new hires, leave requests and more.
Are you managing these processes manually or on spreadsheets? You’re probably frustrated by the inefficiency. If your business is growing, your in-house payroll processes will start taking up more and more valuable time. Outsourcing payroll can cut down wasted processing time by taking it out of the business’ hands entirely.
You’re finding that payroll costs are too high
Running payroll in-house means you’re footing the bill for resources such as:
- Employing someone to process payroll
- Ongoing training for payroll staff
- Payroll software
- Time and attendance software, if it’s not included in the payroll system
- Professional membership to a payroll organisation that provides assistance
That’s not all – as payroll legislative requirements change, you might find yourself saddled with impromptu costs from keeping up to date with these changes. You might need to attend training courses, allocate additional time or resources to conduct payroll calculation audits, engage a third party to review your payroll software, or consult a legal firm for advice on compliance.
All of this adds up into a hefty sum. If you’re in the midst of growing your business and being mindful of cost per head, an outsourced payroll model could be the right move (and might not be as expensive as you think).
Some outsourced payroll providers roll everything you need into an all-inclusive package – this can be a cost-efficient solution, and lets you manage your organisation’s payroll operations budget a little better when you don’t have to account for all the inevitable ad hoc costs.
Incorrectly paying people can come with hefty fines and you don’t want to find yourself in this position. That’s why outsourced payroll can be a huge lifesaver.
You’d like more focus time to run and grow your business
If you think about it, you already outsource a bunch of critical functions – your internet, your accounting software and maybe your inventory management. It’s pretty standard for small and medium businesses to hand these vital tasks over to the experts, so you can get on with what you’re supposed to do.
If you’re spending time training new staff, chasing timesheets and running reports, you’re not focused on revenue-generating activities, such as increasing sales or strategising your business plan. And all the other people who were helping to manage payroll? They’ll also get time back to focus on their own areas.
You’re struggling to keep up with compliance
Compliance. Every business owner’s favourite word. Have you looked at each detail in your workplace agreements? Are you on top of the latest legislation? There are leave entitlements and tax obligations to consider.
If all this incites fear, you’re not alone. If you make a mistake, there are often significant penalties, and as a business owner, it will be your legal and financial responsibility. Outsourcing payroll means that you can be sure that an expert is taking the lead, leaving you less liable to such possibilities.
You aren’t sure whether your data is secure enough
Do you know if your payroll data is prone to hacking? It’s not just banks that are at risk anymore. Your payroll system has sensitive identity information that cybercrime would just love to get their hands on. And it’s not just external threats. Your data can be at risk from internal staff too if the system isn’t adequately protected.
A good outsourced payroll provider will have secure payroll systems and processes to keep your data safe and give you one less thing to worry about. If you’re considering outsourcing payroll, check that their systems are:
- Hosted on secure servers
- Password protected
- Able to encrypt your data
- Hosted in the cloud for secure access
- Backed up with redundancy in place
You need more ongoing support
Processing payroll in-house often involves one individual or a small team handling your payroll process – if the people responsible for payroll are involved in other areas of the business, they might only have a short amount of time allocated to ensuring payroll is processed in line with the correct requirements.
Meanwhile, if there are any absences, that may result in delays to the payroll process, or your existing staff needs to make time to train someone else to run payroll while they’re away, taking them away from their regular day to day tasks.
Outsourcing your payroll also means that you have a dedicated and experienced team that manages the payroll for your organisation. Not only do you no longer have to worry about training, time and resource allocation, you can also rest easy knowing that your pay run will always be taken care of as they rest in capable and knowledgeable hands.
What to consider when choosing between in-house and outsourced payroll?
Both in-house and outsourced payroll have their pros and cons—to determine which one suits you really depends on your business’ goals and objectives as well as your payroll needs. Here are some questions you should consider before deciding on a solution:
- Is your company presently experiencing growth, or will it in the future?
- How much are you currently spending on payroll?
- How much time is your team spending on payroll tasks? Is it taking time away from other company activities?
- What kind of HR and payroll functions apply to your business?
- What controls are in place for payroll compliance?
- Do you need more support in your payroll processes?
- Would outsourcing payroll be beneficial?
- What level of control would you like to have over your payroll processes and reporting?
- What is the ideal time frame for accessing data related to payroll at your company? Is it urgent or can it wait?
- Do your employees want control over their own information?
- What kind of integrations do you need?
- Are you comfortable applying tech solutions to your payroll processes?
- Do you have any concerns about data security?
- Are you looking for a payroll system or provider that can scale with your organisation as it grows?
- What level of customer support or assistance do you expect from your payroll system or provider?
If you’re planning on outsourcing your payroll, pick a provider that is familiar with the complexities of Singaporean legislation and business practices. You’ll also want a provider that has a proven track record so you know for sure whether they can meet your needs.
The wrap-up
Whether you outsource payroll or bring it in-house, the choice depends on your business and capabilities – whichever you choose to go with, we’ve got you covered.
Get your pay runs and more sorted without any stress or struggle with our next-gen all-in-one HR and payroll software, or leave it in the capable hands of our outsourced payroll services team.
To find out more about how we can best support your payroll function, book a demo with one of our business specialists today.
