The benefits to outsourcing payroll

Are you or your business considering outsourcing your payroll to a third party managed payroll provider? In this guide we will break down what payroll is, why you should outsource and the time, benefits and stress saved with doing so. At PayEscape we understand the pressure and the stress businesses face with paying their staff, taxes and pensions on time, read the full guide on outsourcing payroll below.

What is payroll?

Firstly, payroll is the essential function within a business responsible for managing employee compensation, including salaries, wages, bonuses, and deductions. It involves calculating employee earnings, withholding the appropriate taxes, and ensuring timely payment to employees. Payroll also encompasses compliance with legal regulations and reporting requirements related to employee compensation.

Why outsource payroll?

Outsourcing payroll is a strategic decision that many businesses make to streamline operations and enhance efficiency. As a UK leading payroll provider, we understand the complexities of payroll management. From processing payroll to handling tax obligations, we provide comprehensive solutions tailored to meet the unique needs of your business, you can book a free demo here and get started on third party payroll management.

What are the main benefits of outsourcing payroll?

If you are considering outsourcing payroll, then you may have a lot of queries or blockers around what you will gain from investing into this service. Below are the full benefits to outsourcing payroll, our CIPP payroll experts have covered the common concerns, and queries we get when onboarding new payroll clients, please see the main benefits of outsourcing below.

Time-saving

Time is money, and when your valued team members are spending hours processing payroll in-house, it’s costing your business money. When you outsource your payroll to a payroll service provider, everything from working out SSP to tax codes is taken care of, freeing up valuable time for business owners and HR professionals to focus on strategic initiatives and core business activities. Meaning your company saves time and money in the long run.

Cost-effective

In-house payroll management entails significant costs, including hiring and training staff, investing in payroll software, and staying updated on tax regulations. Outsourcing payroll to PayEscape allows businesses to reduce overhead costs associated with payroll processing and eliminate the need for expensive software upgrades and maintenance, which similar to the point above, also saves a lot of time.

Accuracy and compliance with HMRC

Payroll errors can result in costly fines and damage to employee morale. PayEscape ensures accurate payroll processing and compliance with tax laws and regulations, reducing the risk of costly mistakes and penalties.

As business owners are aware, there are a lot of HMRC rules and regulations to follow. There are also specific qualifying conditions that must be met, which gets further complicated when you consider areas such as zero hour contracts and hourly pay.

Failure to remain compliant can lead to a fine. If a late payment or first offense is resolved within 30 days, you may not be fined. However, fines for late submission of FPS documents start from £100 and can go up to £400.

Businesses that make mistakes for more than three months in a tax year will face a penalty for a further 5% of tax owed. These areas include:

  • Statutory Maternity Pay (SMP) and Statutory
  • Paternity Pay (SPP)
  • Statutory Sick Pay (SSP)
  • Share Schemes

Enhanced Security

HR and payroll is a goldmine full of highly sensitive information, so it’s important to ensure that data is protected. If you’re managing payroll in house, there’s increased risk of identity theft and other issues. However, when you outsource payroll to a reputable provider, they’ll store all information on highly secure cloud-based servers and have robust security processes in place. They will also keep record of every change and payment made, giving you a complete digital audit.

At PayEscape we employ advanced security measures to safeguard sensitive employee data and protect against any potential breaches or identity theft. Our secure systems and protocols are ISO 27001 certified and ensure that your payroll information remains confidential and protected at all times.

Access to Expertise

Outsourcing payroll means you have a team of payroll experts who are up to date and available on a three ring policy. At PayEscape, our team of CIPP payroll specialists possess extensive knowledge and expertise in payroll processing and tax compliance. By outsourcing payroll to PayEscape, businesses gain access to a dedicated team of professionals who can address complex payroll issues and provide personalised support and guidance. Get in touch with a member of our team today and book a free demo online.

Business Growth

As your business grows and evolves, so do your payroll needs. PayEscape offers scalable solutions that can adapt to your changing requirements, whether you’re adding new employees, expanding into new markets, or implementing changes to your payroll processes. When you outsource your payroll and/or HR software, time spent on administrative tasks is reduced significantly. Inconsistencies with timesheets, hours worked and pay is minimised, and all software is integrated, ensuring a seamless cycle of communication.

Reporting and tracking

Payroll reporting is a necessary component of the payroll process but is often manual. Automated reporting functionality within your payroll system allows you to view payroll in real-time, identify errors before payroll is processed, and prevents filing mistakes or miscalculations prior to paying employees. By receiving outsourced custom reports each month allows your team the opportunity to spot trends, identify improvements, and simplify year-end reporting.

Integration with other softwares

As technology evolves, companies end up working from several different types of software, which means processes and data can sometimes result in data getting siloed. Choosing a payroll management system that can directly integrate with your HR and time keeping software, means you can decrease manual data entry, ensuring data accuracy. Compliance risk is reduced drastically, with auditable reporting and real-time visibility. Request a demo today and find out how to revolutionise your HR, time and attendance and payroll processes.

How do i know if outsourcing payroll is right for my business?

Whether you’re a one man band or an enterprise company trying to decide if payroll is the right path for you. Outsourcing payroll is a strategic decision that depends on various factors, including the size and complexity of your business, your budget, and your long-term goals. Here are some common indicators that outsourcing payroll may be right for you:

You’re spending too much time on payroll

If you’ve noticed your finance and HR departments are spending several hours on payroll, and as a result they’re unable to do any other tasks or meet their targets, then it’s time to look at outsourcing to a managed payroll service. Think about it, when your employees are spending all of their time on administrative tasks that could be automated, they’re not able to focus on any other tasks or strategic jobs that can help drive business. As a result, business growth may take a hit. PayEscape’s managed payroll software frees up time and resources as it eliminates the need for manual tasks, multiple spreadsheets and the data management that comes with undertaking your payroll in-house. This means your team can focus on what they do best.

You keep making mistakes on payroll

From missing administration deadlines to using the wrong tax codes, and even underpaying or overpaying employees, payroll mistakes can be costly, stressful and impact team morale.

There have been instances where companies have submitted the wrong employee details and have been fined, and said employee has left as a result. Clerical errors and missed deadlines can also lead to penalties from HMRC. If you’ve noticed mistakes crop up time and time again, it might be worth looking at a managed payroll service that will eliminate these mistakes.

You’re struggling to remain compliant with HMRC

Even before coronavirus changed the workplace, remaining compliant with HMRC has been a real challenge for a lot of companies who manage payroll in house. With new regulations and changes to minimum wage, taxes, cost of living and employee contributions, staying up to date can be really overwhelming (and not to mention costly). If you fail to remain compliant, it can lead to a penalty. In most instances, late payments and first offenses are tolerated if they’re resolved within 30 days. However, late submission of FPS documents start from £100 (companies with 10 employees or less) and can go up to £400 for companies with over 250 employees.

Businesses that fail to comply for more than three months in the tax year are penalised and fined for a further 5% of the tax owed. If you think your business is at risk of being fined, or you’re struggling to remain compliant then it is definitely time to consider outsourcing to a managed payroll provider. PayEscape is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017. PayEscape offers so much more than just payroll software as it is managed by a team of CIPP qualified professionals who are all up to date with the latest regulations.

Your employee data isn’t secure

In order to pay your employees, you need to collect and store employee data in a safe, secure and GDPR compliant manner. It’s important to remember that data privacy for your employees is vital, and any violations or breaches can not only damage employee trust, but harm brand reputation or even lead to fines. Outsourcing your payroll to a tried and trusted provider is one of the easiest ways to ensure your employee data is secure, due to the technology and expertise of the team working with you. We regularly update our software to make sure it is safe, secure and compliant with industry regulations, we are also ISO27002 certified meaning your sensitive data is always secure.

Your business is growing

As your business expands, managing payroll becomes increasingly complex and time-consuming. More employees means more payslips, pension and tax management and keeping compliant can become a challenge. Outsourcing to PayEscape allows you to scale your payroll operations seamlessly and focus on driving growth and innovation.

Advice for getting started with successful outsourcing

If our outsourcing payroll guide hasn’t convinced you otherwise, below are five tips to help you get started on your payroll outsourcing journey.

Set realistic goals

The first step when planning to outsource is to decide what it is you want to achieve. Do you need to reduce costs or increase efficiency in a particular department, or free up time to focus on the core business? Setting expectations and goals can help you determine what parts of your business need the most attention.

Decide what function to outsource

Step two when planning for outsourcing is to choose which function to move out of house. What part of the business is suffering or not functioning to your standards? Do you have insufficient expertise in one area? Are you falling behind with compliance requirements or struggling to keep up with new changes? How do the costs incurred by your in-house team compare to outsourcing that particular function? Asking these key questions can quickly help you identify what area of your business to outsource.

Budgeting

Using a cost-benefit analysis to decide on a budget for your outsourcing project is a simple way to give yourself a very clear overview of what returns you can expect from an outsourcing project. When doing your analysis, consider; the cost savings related to outsourcing; the expertise of the service provider and the opportunity cost of the time saved by outsourcing.

Choosing a service provider

Selecting the right service provider can take time, but you need to ensure compliance and be confident you have chosen a vendor you can rely on for a quality service. Pay attention to testimonials from satisfied customers, and whether any clients are comparable to your business. Consider the service provider credentials; do they have a dedicated team for queries? Do they have certifications in their respective field? Do they follow all compliance and regulatory requirements as required by law? Make sure to check the fine print as well – if there are lengthy service contracts or complicated terms, be wary of signing. Assess the IT infrastructure and security compliance of potential vendors and whether they will be able to fulfill your requirements.

Getting started

Once you have decided it is time to begin outsourcing, there are a couple of things you can do in order to measure progress and monitor the quality of the service provided by your chosen service provider. Track your expenses and compare them against your budget; communicate openly with your provider and assess their processes; and ask your employees about their experiences with, and opinions on, the provider to provide ongoing feedback.

There are now outsourcing options for almost every conceivable business function. More and more SMEs can benefit from the added expertise and cost and time savings that outsourcing can bring.

Choose PayEscape for outsourcing your payroll


We hope this guide has expanded your knowledge on what payroll is and how outsourcing can benefit your business. If you would like to learn more on outsourcing payroll and how PayEscape can help please get in touch on 028 2764 1060 or book a free demo online.

Leave a Reply