What does a best practice payroll processing service look like?

By November 10, 2016

With a myriad of payroll companies offering different payroll services, it can be difficult to understand what a full service model looks like. Here’s what makes a payroll processing service outstanding.

When you are seeking out a payroll outsourcing provider, each vendor you interview most likely will have a different service model on offer.

Knowing what differentiates one offer from another, and what will work best for your organisation can be difficult.

We outline the industry gold standards you should be looking for to ensure best practice payroll processing for your company:

An Account Management Team

Different vendors will operate to a unique account structure.

Many payroll service operators offer a single dedicated payroll person who will have sole responsibility of your account.

While you may be assigned a highly skilled account manager, the issues arising from this service model is, of course, the reliance on the continued availability, accuracy and knowledge of that single individual.

If the account manager doesn’t have an in-depth knowledge of specific payroll function, is ill or leaves – your business will be impacted while the service provider hands over the reins of your account to another.

Alternatively, high quality vendors will offer a team of specialist professionals to manage different aspects of your payroll rather than a single person performing ‘end to end’ payroll processing management.

This will ensure that the knowledge of your account and a consistency of service will be retained regardless of staff absences or departures.

A True ‘End to End’ Service

Many payroll service providers claim to offer a full outsourced payroll model but few actually do.

One of the critical elements missed is employee payroll query management, which is often relegated to the responsibility of your in-house HR/finance team.

When an employee has a complex payroll query, they generally approach their line managers who in turn refer to the HR/Finance team to research the problem.

The time taken to resolve problems can often take days and can require a level of internal payroll knowledge (knowledge that you dispensed of when you outsourced your payroll service) to solve employee queries

Multiply this by numerous employee/manager queries and it soon erodes the very reasons for outsourcing payroll to begin with. Often this results in a need  to reemploy staff with the necessary payroll expertise to support employees.

So if you are looking to eliminate the need to employ payroll staff, seek out a vendor that will directly manage all staff payroll enquiries without any in-house intervention.

The Integration of Automation

When seeking out an outsourced provider you should look for a payroll company that delivers a streamlined industry best process your company cannot deliver.

For example it is completely ineffective to move from an in-house manual payroll process – where all staff are required to manually create timesheets – to an outsourced services that replicates your manual offering.

This will lead to little impact on efficiency gains or the elimination of error, circumventing a sufficient return on investment.

Instead seek out a payroll service model that offers industry best practices including the automation of all existing payroll transactions such as timesheets, leave requests and any other paper based approvals.

A payroll software solution should offer self-service capabilities and automated functionality such as electronic and user configurable forms within a single source system.

Real Time and Accurate Reporting

Once again – the reporting capabilities of a vendor should outweigh the reporting capabilities you could create in-house.

If your potential payroll partners cannot provide standard period end reports across all the employee data or provide you with access to timely information in suitable formats without the need for in-house intervention or manipulation – find one that can.

Look for a system that can store all employee information required,  automate the delivery of reports, and offers a variety of accessible reporting tools such as manager dashboards to enable all your people to access and run reports appropriate to their role.

Service Level Agreements

You cannot manage what you can’t measure.

High quality payroll companies will operate under a Service Level Agreement (SLA) that removes any ‘grey’ areas as to who is responsible for each aspect of the payroll operation.

Service level agreements detail the complete services provided, the time and format in which they are to be provided, along with the responsibilities of each party to perform.

A good payroll company should have a SLA that includes a schedule of services and assigns tasks to specific personnel to ensure accountability for all aspects of the services agreed upon.

If there is a requirement that does not form part of the service then the SLA should include the costs for performing the task. The SLA should include escalation paths and how often both party convenes to review detailed key performance indicators.