Outsourced Payroll Services
5 min read

5 signs you’ve outgrown payroll outsourcing

Sabrina Castiglione
January 17, 2023

We’re speaking with companies every day who are realising their payroll outsourcing has transformed from a cuddly bunny into an unmanageable monster. But just like asking ‘when do grains of sand become a heap?’ identifying the exact point that change happens is hard; it’s gradual, getting a little more painful month after month (with slightly sharper claws and longer teeth).

So how do you spot the signs that it’s time to reassess your relationship with payroll?

We’ve collated the top 5 signs that you’ve outgrown payroll outsourcing.

1) You’re project-managing your payroll process

Do you have a payroll calendar? A ticketing system? Plan cut off days, data collections and approvals months in advance? Then we hate to break it to you, but your payroll has become a project.

As companies evolve, you end up with multiple people from different teams involved in data collation, checking, and manipulation, not to mention analysis and making payments. This is because your payroll process has become complex and the number of changes and data points are daunting.

Your project management of payroll has evolved to work around the constraints of your outsourcer - especially to take back confidence and control after bad experiences with errors and delays, and to loop in all the people who need to be involved.

2) You have an FP&A function

If you have a Financial Planning & Analysis person or team, you'll have reached a maturity in your level of budgeting and data analysis, and this means you need timely, good, well-structured, granular data in easy to access formats (never pdfs!)

You need more than just to know how total payroll has changed, you need to see which parts of payroll have changed, and why. Was that increase because of more sales and higher commissions, or because you’re doubling down on your R&D function? Is your G&A spend growing too quickly or too slow? Do pay trends reflect the strategic balance of investments? Without good quality data and automated journals, pulling out these insights is like pulling teeth.

Particularly when you’re outsourcing, there’s a gap as your team **has the context and data to split employee payroll data, but your outsourcer just has a person’s payroll ID. And because getting this data fast matters, chances are you resort to doing it yourselves, taking up time doing reconciliations and calculations.

If you’ve got to the point that you’ve made an investment in FP&A, you probably need more from your data than outsourcers are able to provide for you.

3) You’ve got better-than-statutory benefits

If you offer better-than-statutory benefits, this is a sign that you're a more complex and mature organisation, but it also means that a lot more data inputs are needed to run payroll - and that data almost certainly lives in lots of different places.

Because your outsourcer doesn’t have access to those sources of truth, you have to go the extra mile to collate all that information, and tell them exactly how to apply your enhanced sick pay rules to your employees, or how much bonus someone is entitled to and when.

When you reach this point, the balance has shifted with your outsourcer and you’ve crossed a line where now you’re the one doing most of the legwork on payroll – and they’re taking days to duplicate your changes into software and run a tax calculation. By this point, you’re probably not getting as much value from outsourcing as you used to.

4) You’ve bought best in class tools in Finance & HR

If you've outgrown your first HRIS (or HR spreadsheet), migrated to a better accounting software, or bought specialised tools for expenses, benchmarking, recruiting, or time tracking, you’ve matured enough to need something more than what a generic outsourcing process for payroll can offer.

And if you have those tools, and they are your sources of truth, you need something that can integrate deeply with them. But if your payroll provider can't integrate with these tools, you're not getting the full value from your investments, especially if you’re stuck in the duplication cycle of spreadsheet downloads, uploads, and emails. Who has the time for that?

5) You’re dreading the next pay-run

Exhausted just thinking about the next payroll run?

If you find the pay-run one of the most unenjoyable parts of the month, this is a sign that your payroll process is becoming a burden. You're likely spending too much time and energy on payroll tasks, rather than on other important aspects of your business.

Let’s face it - payroll is something that has to be done, but that shouldn’t be the star of the show. When your payroll process is hogging the limelight, you need a new approach to cut out superfluous steps, and to save time and effort.

Uncanny, right? If it feels like we’ve just reached into the darkest payroll recesses of your memories, it’s because we’ve been there too - and it’s why we’ve built Pento.

If you and your team are beginning to notice the signs that your outsourced payroll process is holding you back, get in touch with us to learn more about why hundreds of growing UK businesses are using Pento, and how we aim to be the last payroll solution you need to invest in.

Our platform is designed to handle the complexities of your payroll, with seamless integration with your critical systems, data updated in real-time, and payroll expertise just a button-click away when you need it.

Our dream is that payroll shouldn’t take you more than 5 minutes. If your current payroll process is your nightmare, get in touch to see how Pento can save you effort, and put you back in control of your time.

In our next piece, we’ll delve deeper into The Best Way to run payroll, efficiently and with confidence - every time.

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