Payroll Services

Payroll services are becoming more popular by the day.

A survey conducted in 2017 by PeopleStreme suggests that more than 70% of organisations use payroll software in some shape or form for their payroll functions.

That being said, having the right software is critical. Many companies offer payroll and other HR solutions. It is always advisable to work with one company for all your HR business functions for easier consolidation.

How Has Payroll Processing Evolved over the Years?

One of the earliest recorded time-card machines was invented in the late 19th Century by William Le Grand Bundy.

After this, clerks began to write ledgers by hand. This was in the early twentieth century. As technology grew, so did payroll processing. The invention of calculators later on prompted many companies to migrate to mechanical and electronic calculators for their payroll and accounting.

The first computer to ever handle payroll and other business functions was the Lyons Electronics Office. This was soon replaced by IBM in the 1980s and Microsoft Excel in the 1990s.

It wasn’t until 2016 that the automated payroll revolution really took off. Payroll became digitized to reduce the administrative difficulties associated with it.

Today, payroll as a function is much more efficient than ever before, but it’s still not at its best. Modern technology like artificial intelligence (AI) and GPS tracking offer a wealth of potential for human resource professionals.

With this major shift in technology and even greater promise for the future, companies are faced with an important question, “To outsource or not to outsource?”

Payroll Outsourcing: Should you do it?

Choosing whether to manage payroll in-house or to outsource is a major decision in every company’s life, and careful consideration must be made before arriving at a decision.

One of the most important things to consider when making this decision is technology. Outsourcing payroll will improve the productivity of your HR team and give them time to focus on other more important tasks. It will also result in significant cost savings to your company.

Processing payroll in-house occurs when companies choose to manage their own payroll functions without involving payroll outsourcing companies.

Companies that choose to process their payroll in-house do the following:

  • Host and maintain their payroll system of choice on company servers.
  • Ensure the information on their payroll system is secure and data is backed up.

Some payroll companies offer to update the software and back up the information at an additional cost.

Any company looking to keep the payroll function within the company should know that there are significant costs involved in purchasing payroll software and training the employees to use it if the system is relatively new. Additionally, any changes to the software and requirements by the government should be facilitated by the team responsible for payroll.

The benefit of maintaining payroll in-house is that the company has full control of the entire pay process. One of the main disadvantages is the time it takes for a HR employee to perform the repetitive tasks involved in this process.

Outsourcing payroll involves outsourcing companies taking control of various processes, such as data security and pay-slip production.

Many companies are anxious about outsourcing because they associate it with relinquishing their power. This is far from the truth. Outsourcing companies work under the direction of the company that employs them to undertake the payroll function.

Even so, it is important to consider your company size and needs before making the final decision on whether to outsource or manage payroll within your company.

Outsourcing: How Much Can You Save on Payroll Services Fees?

In a 2017 survey, Ernest and Young found that 65% of a company’s HR functions can be automated, and this includes payroll functions.

One of the main things that should motivate you to automate your HR functions is the guarantee of cost savings. Repetitive tasks are the culprit in this case, as these can waste up to 93% of your HR team’s time. Getting payroll companies to supply and manage software that deals with these repetitive tasks means more time is spent on the important stuff. This will ultimately save you money – up to 65% to be exact.

Another benefit is the consolidation of all employee information on a human resource information system (HRIS) based in the cloud, from remuneration to on-boarding and performance management. Payroll service providers such as Affinity give key stakeholders within the company the ability to generate reports on these and more as needed.

But what is the exact cost of payroll, you ask?

This cost depends on a number of factors, but in general, companies with more than 200 employees usually spend an average of $16.38 per pay-slip. The higher the number of employees a company has, the higher the cost to the company.

This figure is derived from a study conducted by the Australian Payroll Association in 2016. The study also revealed that companies that improved their processes, payroll team and technology could reduce the amount mentioned above by 42%.

Another major benefit of payroll outsourcing is reduced cost as a result of managing a mainframe system. Such changes should, however, be made based on a number of factors, such as the size of a company and the number of organisational processes being outsourced.

Affinity assists in cost reduction for companies through daily reporting of actual labour costs. This way, companies can tell how their actual labour costs compare with their budgeted labour costs, and this in turn helps when making the necessary adjustments.

Affinity offers customizable payroll services for a variety of companies, regardless of size.