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Payroll outsourcing - a case for

Dealers are being encouraged to consider outsourcing their payroll function as a means of cut costs.


It is being put forward as a means to improve efficiency and relinquish the burden of managing overtime payments, bonuses and commissions, shift patterns, tax calculations, NI contributions as well as the car benefit-in-kind implications.

Dave Cooper, managing director of outsourcing company ESOS, said: “Many managers appreciate the hidden costs of payroll, but very few know what to do about it.

“Processing payroll in-house can be both error prone and time consuming, often involving the input of a number of people. In less favourable economic conditions such cost and time savings can grow in significance.”

Most customers, he said, opt for a traditional ‘bureau approach’ where data is sent to the provider, who in turn process the payroll for customer sign-off; with reports delivered electronically via a secure portal.

Others opt for a fully managed service where the provider is the customer’s payroll department and handles every aspect of the entire process.

With the advancements in technology and the internet, many providers have begun to offer online processing of payroll.

Major improvements in web-based technology mean that data can be easily collected from multiple sites in a fraction of the time needed for more traditional methods such as the post or fax.

Web-based self-service modules allow managers and employees to update employee records from any web-enabled device from anywhere with complete security.

Even better, complete HR solutions make it possible for overtime hours and absence information to be directly fed into the payroll system.

This lack of human intervention reduces the likelihood of errors and reduces time spent on keying from old-fashioned time cards.

Likewise the outsourcing of your payroll requirements to a service provider better equipped to deal with frequent staff and legislative changes provides comfort from a compliance viewpoint as well as reducing the need to regularly maintain and upgrade your payroll software.

“Outsourcing the payroll means that senior management teams can expand or reduce the size of the workforce as needed and the overhead of processing the payroll can increase and decrease with it,” said Cooper.

“There are some minimum charges, but no longer is it necessary to continue to pay a full time payroll operative to do less than a full-time job.

"Budgeting for payroll is also easier than many expect because providers usually charge a set amount per payslip, allowing employers to calculate exactly what outsourcing their payroll will cost.”

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