One of the cornerstone activities of every business is the timely and accurate payment of payroll and its related tax and regulatory filings. Whether you do this in-house or use an outside service, it is a good idea to periodically assess how it’s going and whether a change makes sense. Here are some thoughts.
Take a snapshot of the current situation
Assess how well your current pay cycle is working. Create a list of the pain points. Also determine the level of knowledge the current person(s) have in the process. Payroll can be complicated, especially when adding in all the required deductions and various tax and payment deadlines. Try to be as objective as possible in your review.
Determine the time required
Review how much time is spent in managing your payroll. Then convert it into cost. If you currently use an outside resource, you will already know the cost, but you should assess how much lead-time they require to get your payroll records and how much of a hassle their requirements are to your internal coordinator.
Integration assessment
Determine how important it is to have payroll integrated into your accounting and benefits system. This will make reconciliation easier and will aid in the tracking of other key employee benefits like retirement plans and tracking paid time off. And don’t forget the employee integration. Decide if you wish employees to self-monitor their pay with online access or if you wish to stay on top of the requests being asked for by employees.
Service is important
Most of the time, payroll runs like a clock, but when it doesn’t it can be a real pain with possible penalties to boot! So knowing how problems are solved, and having a responsive person to handle those problems is key. If commissions are forgotten, or you are going to be a bit late in submitting payroll for the period, you do not want to be waiting hours or days to get an answer.
Compliance. Compliance.
Assess the payroll provider’s understanding of taxes and other compliance measures. This is important, as not sending in withholdings timely can create real problems. If a large payroll service has a generic call center, the person on the line will not usually be able to knowingly answer your questions. Having a sound accounting understanding and how it works is key.
Review alternatives
Once you know your pain points and the cost of running your payroll, you are ready to assess potential alternatives. Create a matrix of measures before you discuss your payroll with alternative suppliers. Then stick to your matrix, and ensure you include a reputation review and transitional process timing in your assessment. It is often hard to get suppliers to provide costing in a comparable fashion with other suppliers, so stick to your guns.
Good luck, payroll is one of the top functions of every business and, ideally, one that works well. But that usually doesn’t happen by accident, it is because you are working with a trusted, well reviewed, competent provider.
