The business case for payroll outsourcing

PayRoller Co-Founder and Strategic Director Vicki Gris and Marcelo Concha – Co-Founder and CEO of Reo Group discuss how to determine if outsourcing the payroll function is right for your business.

Business leaders must wear more and more hats today –you need to be a leader, a lawyer/industrial relations specialist, an accountant, a HR manager, a contracts expert, a marketing and digital media guru, a salesperson extraordinaire, a risk and compliance connoisseur, an IT and data security expert, and a psychological safety and wellness champion, to name a few.

It is no wonder that business leaders and owners new and old, find themselves looking at what they can outsource to make their lives easier and to free them up to focus on what really matters.

The payroll function ticks all the boxes. It is a complex, resource-heavy cost centre for a recruitment business. It requires fit for purpose systems, stringent processes, and experienced resources.

The compliance and risk burdens are overwhelming. Keeping up with changing legislation and requirements (per State and Territory) is daunting and expensive.

The consequences of getting it wrong are severe and potentially fatal to a business.

Outsourcing this function seems like a no-brainer to the converted, however, this task should not be taken lightly.

Provider due diligence is critical given the payroll compliance heavy space. Furthermore, providers should be viewed as business partners, rather than a commodity given that they are responsible for engaging, managing, and paying the workers that you have worked hard to source for your valued clients.

Putting this specialised function in inexperienced hands will not achieve your goals of; minimised risk, simplification/process efficiency, cost-effectiveness, improved service quality, and contractor experience or allow you time to focus on your core business.

How do you know if outsourcing the payroll function is right for your business? How do you pick the right partner?

Let’s ask someone who has been through the decision process and has come out the other side smiling – Marcelo Concha – Co-founder and CEO Reo Group.

Vicki: Reo Group went from an in-house payroll function to an outsourced function partnering with PayRoller almost 2 years ago, can you tell us what your key drivers and considerations were?

Marcelo: There were many factors in considering moving our in-house payroll function to an outsourced model. Top of the list was cost, which I needed to balance with risk. While the initial cost comparison would be different depending on how many contractors we have, knowing our tipping point was important to understand when the numbers made sense. This also included knowing the cost of risk associated with getting something wrong, which could lead to costly fixes or legal costs.

The strong Government push to keep employers accountable has meant that even honest mistakes are being dealt with harshly and is a constant challenge to get right.

The other main factor was finding a service provider that saw themselves as a business partner to our business. Disruption to payroll is never a good thing so we wanted to find a partner that was in it for the long haul. This meant knowing that their approach to our business needed to be on point which would be evident in what questions they asked to know and understand not only our needs but also our business.

Vicki: How did you go about formulating the business case and taking the key stakeholders on the journey?

Marcelo: The business case involved showing our stakeholders our current state that would require continually adding more resources, time, energy, and effort as we grew our contractor book. This would be a distraction away from our key focus in the business, which would also slow down our growth efforts and prolong our timeline for hitting key milestones.

Vicki: Fast forward 2 years, what key benefits have you derived from outsourcing to experts? And what key learning can you share?

Marcelo: The major benefit in all of this is knowing that we are 100% compliant in all areas of our payroll function. This is not an easy exercise when you consider the legislative minefield that exists currently with each State and Territory having different rules that we need to play by.

The other main benefit that we did not foresee to the same extent is how free we have been to focus on other parts of the business. As we have grown, the payroll function has been ready and capable, growing with us and supporting the greater business to achieve.

The key learning for me has been that having payroll professionals manage the function in the business has allowed us to play to our strengths while giving us a level of comfort and support that ultimately allows us to provide our clients and candidates an improved, professional service that scales with our business.

Vicki: Like consumers of staffing services, payroll outsourcing clients can be spoilt for choice, what advice can you give others for selecting the right partner for this critical business function?

Marcelo: When considering outsourcing payroll, make sure your service provider can deliver what they claim. Words are great but attitude and action is everything.

My experience with PayRoller is not measured when everything is going right, but more so when a challenge is presented. I have found that the team at PayRoller step up to the challenge and approach the situation as a business owner would proactively working on getting the right outcome with minimal to no impact on our clients and candidates.

This characteristic is key for effective partnering in such a vital area as payroll. Asking them for examples of how they have dealt with issues or challenges that their clients have faced is key in understanding the attitude and action that turns up under stressful situations.