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Setting up Payroll Outsourcing

There are many reasons we've already covered considering reasons for payroll outsourcing mostly revolving around savings in valuable resources, time and money. One thing we've not yet covered is how best to find the best payroll services and streamlining the flow between your business and the payroll business you've chosen.

1. Understand Your Current Payroll Process

It is crucial you first have an understanding of your existing payroll process, including the hours spent by employees, kinds of reports, management processes and any errors that occur. 

2. Define Your Expectations and Requirements From Payroll Outsourcing

Completing step one will help give you clarity on whether you need a full payroll service or simply the basic payroll calculations. Scope out your requirements and what you expect to from whichever service you require.

3. Explore HR Payroll Outsourcing Companies in the Market

Now that you have assessed your existing payroll process and have defined your expectations from the payroll service provider, it is easy to explore and analyze which service provider will be the best to meet your outsourcing needs.  

4. Request a Proposal From Shortlisted Payroll Outsourcing Companies

Share your expectations and clearly defined payroll management requirements and request a proposal from the shortlisted companies. Your well documented payroll outsourcing scope will enable the service providers to respond promptly with a solution you can then make a decision on.

5. Study and Evaluate the Proposals

Here's what you should expect from a payroll outsourcing proposal:

  • Details of your current payroll process and its limitations
  • Detailed recommendations based on your requirements
  • A roadmap to the solution recommended by the payroll outsourcing company
  • A step by step implementation plan with clearly defined role of team members (in-house as well as outsourcing team)
  • Transparent pricing for implementation, maintenance, training etc.
  • Service guarantees – delivery timeframe and milestone achieved with each, system up-gradation in accordance with future business needs, etc.
  • Support guarantees – technical support, staff training, etc.

6. Select the HR and Payroll Outsourcing Company

This is one of the most crucial steps while setting up payroll outsourcing for your small business. Keep the following factors in mind while selecting the service provider:

  • Track record – are there some happy customers?
  • Quality of the team – knowledge and expertise in the field
  • Financial stability
  • Readiness to respond and help
  • Competitive pricing

7. Implementation of the Payroll System and Transition

Here's possibly the most step to ensure you get the most bang for your buck:

  • Communicate to your employees regarding the processes that are being outsourced and the ones that will remain in-house, so that there is no ambiguity regarding changes in their job role, if any.
  • Clearly define and communicate the responsibilities to be shared by your in-house payroll team members and your payroll outsourcing company. This will minimize the chances of accountability conflict in case of errors in payroll processing.
  • Encourage your in-house team members to collaborate with your payroll service provider who can act an expert guide on account of their knowledge and expertise in the field.
  • Payroll outsourcing is a partnership between your organization and your service provider which can be successful and cost-effective if you follow the above steps for setting it up.

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