How Do You Outsource A Payroll?

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Outsourcing a payroll is a decision that can benefit a business in all sorts of ways. It can improve processes and free up employees to do other work. It can reduce the time needed for keeping on top of payroll legislation. It delivers a compliant, error-free payroll. But once a company has decided it’s the right thing to do – where do they go from there? What should you do next if you’ve decided you want to outsource your payroll?

Define your payroll needs

Start off by spending time defining your needs so you have an informed view on the kind of payroll solution that will be best suited to your company.

Careful analysis and good planning and preparation are important at this stage. Put the time into making sure you have as clear a view as possible about what payroll activities will need to be transferred. That will help you with the initial process of identifying the right payroll provider.

Are there plans for business growth at any point? If so, make sure you factor that into your planning as well.

Of course, all this will be something you review and develop as things progress anyway – but time spent up front will be really helpful for shaping your decisions about selecting your provider.

This step will also assist with identifying which kind of outsourcing model is right for your company; you might consider moving to a fully managed payroll or perhaps a payroll bureau will be more appropriate (you’ll find an explanation of how the two differ in this article on our website).

Finding the right payroll provider

The work you’ve done up until this point should help you narrow down the search for the right provider. Look for a well-established company with a reputation for reliability. What kind of software will be used?

Can it be adapted to deal with all the nuances of your payroll process? Is the provider set up to deal with HMRC on your behalf? Do they have the appropriate quality accreditations to give you the reassurance that they’ve the essential processes and procedures in place?

Take a look at this article if you’d like some more thoughts on what to look for in a payroll provider.

How hard is it to transfer a payroll to an outsourced payroll provider?

Once you’ve made your decision about the provider, it’s time to begin the transition. So what should you expect?

One of the big questions is often around how difficult it will be to transfer the payroll over to a payroll provider. Will it require a lot of extra work? The thought of handing over that much sensitive and complex data can understandably feel really daunting.

The first thing we should say, however, is don’t panic about how much there is to do. No two payrolls are identical; some are highly complex but others can be transferred across relatively simply.

And yes, there could be a lot of data to transfer and of course, given the nature of the data, it’s a big responsibility for everyone involved. We’re not going to pretend it’s always a quick and easy job; it will require internal resources to be dedicated to ensuring a successful transition.

But remember that any good payroll provider will have managed this process numerous times. They will know exactly how to work with you and guide you through everything that needs to be done as efficiently as possible. It’s likely a dedicated project manager will be assigned to you.

They’ll work with you to get an in-depth understanding of your company and current payroll processes, and guide you on all the information needed and how it will be transferred.

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Together you’ll agree what the key milestones and timescales for the transfer will be, along with a reporting schedule to keep communications as open and effective as possible. You’ll both agree who’ll be responsible for what; as well as ensuring a smooth transition, you’ll need to keep paying people in the meantime! It also presents an opportunity to consider whether any aspects of payroll can be streamlined to improve its efficiency even more.

Once everything is up and running, it will be rigorously tested, tested once more then tested again (and a few more times if needed)! With larger, more complex payrolls it might be necessary to carry out parallel pay runs before going live. While this means it will take longer to fully hand everything over to the payroll provider, it’s an important step for ensuring the payroll is running in exactly the way it needs to be.

Are you considering outsourcing your payroll?

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If so, why not contact us for more information about our services? With over 20 years’ experience in managing payrolls for companies of between 100 and 15000 employees, you’ll have the reassurance of knowing you’re in safe hands with our CIPP-accredited team. Corporate Payroll Solutions is also ISO 9001:2015 certified, a member of BASDA, a BACS approved bureau and fully GDPR compliant.