Two common payroll outsourcing issues – and how to avoid them

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There are many good reasons to outsource your payroll. A robust, global solution can help companies simplify the process of managing their payroll in multiple locations. Instead of having to source and manage various service providers in each location, your HR and procurement team only needs to manage one contract. This reduces the administrative burden considerably.

Outsourced payroll can also help your business maintain legislative compliance at all times. It’s all too easy for companies, especially those operating in unfamiliar territories, to misinterpret a crucial regulatory clause or fail to keep up with legal changes. Your payroll provider will manage all the legislative requirements and ensure that your systems are in line with the local laws of all the countries in which you operate.

The case for outsourcing your payroll is strong: it can lower your business costs, keep your operations compliant and improve efficiencies. However, the process is not always smooth sailing. There are two very common outsourcing issues that can trip a company up unexpectedly. Let’s take a closer look at what they are – and how you can avoid them.

  1. Unhappy payroll team

Most people don’t like change. They prefer the familiar – even if it’s not working very well. With that in mind, it’s very likely that some of your existing Payroll & HR team members will feel reluctant about transitioning to a new payroll system.

While advanced features like ‘mobility’ and ‘automation’ are crucial components of any modern payroll platform, they may worry your staff. Typical concerns include job loss, lack of training or simply not having control over the business’ data anymore.

A change management process is crucial to avoid any staff anxiety. You need to make sure that all staff know what benefits the new system will bring – and understand how it works. A well-planned change management process that includes regular training and a phased communications plan will help ensure that every team member is on board with the new system. 

It’s also important to stress that outsourcing the payroll does not result in a loss of control over the company’s intellectual property. The IP remains yours. If you’re using a cloud-native payroll outsourcing provider you’ll also retain full visibility into the entire process – your team can pull you can pull any information they need at any time.

It is important to note, however, that this won’t be the case if your supplier uses legacy software. Payroll suppliers using legacy software will only be able to send you reports, as opposed to you having full access to your information at any time.

  1. Business disruptions

There are instances when moving to an outsourced payroll system can disrupt business operations. These often occur when there is no comprehensive change management plan in place. Or, when you have to adapt some of your existing processes to fit in with the new system.

To avoid any costly downtime or operational interruptions, choose a payroll service provider that adapts to your way of working. Another good tip is to allocate a dedicated team to your payroll system migration. Providing the necessary resources will help ensure everything goes smoothly.

To further ensure a smooth outsourced payroll process, use a company that developed or owns the software it uses. If your outsourcing provider owns its software any changes (like legislative updates) can be made seamlessly, avoiding any disruption to your business. As an added benefit, using owned software will also be more cost-effective for your business, as your payroll provider won’t have to enter into a third-party contract to license the software.

To avoid any outsourcing issues, make sure you incorporate modern technology and services into your payroll processes now. Contact us today for more information.

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