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HCMWorks Insights

5 Benefits of Managed Payroll Services

Posted by HCM Works on 24 Sep 2015

Companies are trying to get lean and mean by streamlining their business functions. The question that business owners often face is whether to keep performing tasks in-house or to outsource the functions that do not generate revenue or add value to core business activities. Though HR functions like payroll were typically handled in-house in the past, a greater need for efficiencies has had many companies seeing the benefits of outsourcing payroll to a managed services provider.

Here are five benefits you’ll reap by using managed payroll services.

1. Keep Control

Many business owners fear outsourcing as it implies a loss of control; however, with managed payroll services, you still get to stay in control as the engagement is defined in detail in the contract with the third party. With managed payroll services, you can pick and choose exactly which functions you want to hand over, and which ones you want to keep performing in-house, if any. It’s not an all-or-nothing strategy. Rather, it’s flexible and scalable to partner with a managed services provider. You can detail exactly what you want the third party to perform and you can ensure that it gets done, without having the time consuming task of doing it yourself.

2. Compliance Risk Management

Payroll and tax regulations can be nuanced and complex. With the right partner, you can gain access to expertise in legislation, government regulations, privacy, and security in order to mitigate risks. This is especially valuable if you own a small business and have limited payroll expertise in-house. Your partner will provide services in an efficient, secure, accurate, and confidential manner, so you can ensure compliance with regulations and make sure that your data is secure from the risk of payroll theft and fraud.

3. Enhanced Accuracy

When it comes to payroll, you need to get the numbers right or you’ll get into trouble with the IRS and let down your employees. However, with varying tax rates, a multitude of different time sheets and pay scales, different benefits and coverage offered as well as voluntary withholdings, it can be tricky to get it right. When you invest in managed payroll services, you get guaranteed accuracy, so you can ensure that your workers get paid correctly and promptly, every time. You won’t lose your employees’ trust from forgetting their overtime pay or getting their hours wrong, and you won’t get audited by the government when the numbers are always accurate.

4. Control Costs

Just like every other business owner in the United States, you’re likely trying to control costs in any way you can in order to boost your profits. Managed payroll services provide you with the flexibility you need to turn your fixed overhead costs into a variable cost structure. This is especially important during an economic downturn: as your business shrinks or grows, so do your service costs.

You won’t have to continue paying a hefty salary and benefits to a payroll clerk if the workload doesn’t warrant the fixed cost. Additionally, you won’t have to pay for payroll software fees, equipment, training, or office supplies to create, process, sign, and print the checks, either. You’ll also have access to IT support, best-in-class hosting infrastructure, and software that you couldn’t afford otherwise.

5. Save Time

When your HR department isn’t spending so much valuable time on maintaining payroll systems, your business can save time that can be spent on more important activities. Instead of spending hours on manual data entry, researching legislature, and double checking numbers, your HR professionals can focus time and resources on strategy and other critical activities that increase efficiency and productivity and optimize your workforce in order to better meet your customers’ needs and reach your business goals at the lowest cost possible.

Payroll processing needs to be strategically managed to ensure successful business operations. However, it isn’t a core function, and as such, using managed payroll services can be highly beneficial.

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Tags: Workforce Management

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