Payroll is among the top five business processes which are entirely outsourced by British companies. In fact, nearly half (48%) of UK businesses admit that they don’t have a dedicated accountant on board. However, while outsourcing certainly relieves the team from in-house salary and tax deductions, many companies become fully dependent on these partnerships.
This brings a question to mind – how effective is payroll outsourcing in the UK today? With the rise of cloud-based software solutions, is it still the best way to handle payroll?
In this article, we explore the role of payroll outsourcing services, the pros and cons of outsourcing, and how software can help businesses overcome the inherent shortfalls of modern payroll outsourcing in the UK.
Outsourcing payroll in the UK follows a pretty standard formula that meets the accountability requirements and operational needs of public institutions and private employees alike.
While the payroll outsourcing procedure may appear straightforward to most, many variables can compromise the process at any point. Human error and time pressures are common factors that can lead to incorrect tax contributions, delays, and growth constraints. When faced with these challenges, companies can search for alternative options.
The decision to outsource payroll depends on the needs of the business. While some UK businesses are capable of taking care of their own payroll, limited experience and outdated systems can make things difficult.
Conversely, other companies who may wish to outsource their payroll needs may lack the means to do so. As such, it is critical to consider the pros and the cons of outsourcing payroll when choosing a payroll administration method.
Outsourcing payroll services takes the weight of time-consuming payroll tasks off of human resources, and improves efficiency and compliance. But human error is still a big factor. Choosing the right payroll outsourcing service in the UK can be challenging, not to mention additional fees and complex processes canceling out any initial cost-savings.
Payroll software automates the process, eliminating many of the problems caused by people. This allows companies to outsource their payroll tasks while keeping the activities in-house and thus, costs, manageable.
Systems such as Pento's cloud-based payroll software have assisted hundreds ofUK businesses to save time. In one case, our client saved 80% on the time previously spent on their overall payroll activities, which contributed to a stunning 50% cost saving in their payroll administration expenses.
Automation means fewer mistakes, too. By eliminating many tricky manual calculations, payroll software ensures that common errors are avoided and payslips correctly generated and issued. Payroll software in the UK is designed to integrate with gov.uk systems like HMRC and NEST. Meanwhile, full ownership of the software eliminates costly delays caused by the convoluted communications channels required by outsourcing.
Payroll software is also built to be scalable and to grow with your business. In the event that a company outpaces the capacity of their payroll outsourcing service, a scalable payroll software solution takes the need to renegotiate, or face an ugly divorce out of the equation.
While some UK organisations do possess the resources to manually administer their payroll in-house, many others lack the experience and capacity required to do so. And while some companies may be willing to choose to outsource their payroll needs, others simply cannot risk it.
This leaves many businesses stuck between outsourcing their payroll and taking care of it in-house. When faced with this puzzle, automated cloud-based software solutions like Pento’s can go a long way in answering many of the questions posed by both outsourcing and keeping payroll in-house.
Retaining the ability to correct payslip and tax errors quickly and efficiently without being overwhelmed or blocked by partner issues is critical in maintaining an effective payroll system.
Pento allows HR to add or edit employee profiles in a few clicks. It also integrates with HR tools, including BambooHR and Hibob which enables automatic data synchronization.
Time is precious, and hours wasted on correcting avoidable in-house errors can cost a company dearly.
Pento’s real-time payroll calculations and instant information availability mean that tasks that used to take hours are handled in minutes instead.
If you’re planning to hire new people and grow your teams, you’ll need to ensure that your payroll outsourcing service is capable of growing with you.
Pento’s software options are entirely scalable and not limited to outdated legacy system constraints that cap the number of employees they can handle.
Keeping employee data and payroll information is crucial in a cyber-threatened world. Changing policies and regulations can also mean that keeping up with tax requirements is becoming more of a challenge.
Pento takes care of security risks by initiating the payroll process, protecting cloud data, and ensuring that all HMRC and pension contributions are executed correctly.
Picking the payroll system that fits your business isn't easy. The key variables that govern your payroll needs are constantly changing and shifting, trying to keep up with your business's evolving requirements.
Companies looking to hand off the payroll burden while meeting their tax requirements should lean towards outsourcing the job to UK payroll outsourcing services. This approach, however, carries the risk of overcomplicating an already complex process, slowing turnarounds and giving up full control over payroll processes.
Payroll software solutions like Pento’s end-to-end cloud-based systems are quickly gaining ground over payroll outsourcing in the UK and outdated in-house legacy tools. Technology meets in-house convenience and saves time with an infrastructure that keeps things simple, compliant, accessible, and – most importantly – accurate.
So, are you ready to transform your payroll, save time, money, and stress, without overburdening your finance team or putting your trust in an outsourcing service that is also prone to error? Take a look at Pento – we may just have the perfect solution for you.
As they say: “If you want something done right, let the software do it for you”.