Paymaster Magazine

In-House Or Outsourced Payroll? How to choose

Deciding whether to process payroll in-house or outsource to a payroll provider is a big decision. The choice can cost tens of thousands of Rands. With such a big decision, there are a lot of questions you need to ask yourself before finalizing your choice. To help you with the decision-making process, this article will guide you in how to addressing the top questions you should ask yourself before choosing whether to go with in-house payroll or outsourced payroll.

How much Control do you want over the Pay Process?

If you’re looking for control over the aspects of your payroll such as its timing, and the flexibility to make changes more easily, then in-house payroll may be your best option. With in-house payroll, you have greater control over each aspect of the pay process, giving you the most flexibility. It can also be much cheaper and easier to make updates, changes, and adjustments when they are needed. If you have collective bargaining agreements or other rules that change frequently, in-house payroll may be preferable.

On the other hand, by outsourcing payroll, you give up some control over the payroll process but you no longer have to worry about doing the payroll process. Some of the steps, like gathering time and absence information, would likely need performing. And you will still need to double check information before you send it off, and checks after processing, as last minute changes or adjustments may be harder to do with outsourced payroll.

How frequently do your Employees get paid? Do different Groups of Employees get paid at different Intervals?

Paying people at different intervals such as bi-weekly, weekly and monthly, means frequently sending batches of pay to a third-party for processing. If you have multiple groups of employees who need to be paid at different intervals, it can be easier to use an in-house payroll solution instead. If you have only one pay cycle to administer, then outsourcing becomes less complex.

How often do you have to give out Last Minute Pay Cheque Changes? Process off-cycle Payments?

Maintaining payroll in-house gives you the ability to quickly process a last minute paycheque or, make an off cycle-payment. When outsourcing payroll, last minute pay may not be processed in time or it may cost you more to be expedited.

Additionally, with outsourced payroll you usually pay-per-employee payment so each additional off-cycle or last minute payment may cost you more. With an in-house payroll solution, you usually pay a license fee based on the number of employees every year. This means you can process as many additional last minute and off-cycle payments without paying more or running the risk of being unable to deliver them on time.

How Complicated is your Payroll?payroll cons=fused

How many…

  • Benefit and deductions
  • Time codes
  • Earning codes
  • Allowances

Does your company have?

 

 

If your organization has complicated payroll, processing data before creating payments is your largest and most complicated step in the payroll process. For many companies, they must do all the gross earnings or the gross to net calculations themselves, before submitting final payment amounts to their payroll service bureau. If you are in this situation of processing most of the data yourself before handing it over to a third party, an in-house payroll system could save you money without increasing workload much beyond what you have now.

Software solutions like Paymaster, provide the payroll assistance your business needs. Contact a consultant and find the right solution for your business.

adapted from an article by:

Louise Coatta
LOKI Systems

Adrian Baillie-Stewart

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