What’s the difference between a payroll bureau and a fully outsourced payroll provider? [updated]
Payroll is an important part of any business, after all, if you don’t pay your employees they won’t come to work. It used to be the case that many companies would keep their payroll in-house, however, it has now become common that payroll is outsourced instead. That said, many businesses simply don’t know which is the right solution.
What is Payroll Bureau?
A payroll bureau is partly in-house and partly outsourced. Rather than having the entire process run in-house, you control part of it and outsource the remainder. This means that you employ the staff, you set the hours that they work and you oversee the processes.
This means that you have control over the process, whilst some elements are handled by your provider, such as printing payslips or processing expenses.
Some outsourced providers have started referring to themselves as payroll bureaus – in some cases they offer both aspects of the payroll service, others offer a full service package that closely resembles outsourced payroll. If you are choosing between a payroll bureau and outsourcing, it is important to review exactly what a supplier is offering before making a decision.
What is Outsourced Payroll?
Outsourced payroll involves engaging a payroll service provider to manage your entire payroll service. Sometimes it is called fully managed payroll or full service payroll.
The supplier handles your entire payroll process from beginning to end. This is particularly helpful for businesses without an internal finance, HR or financial admin teams available, or when those teams are needed to focus on business critical activities.
Outsourced providers are experts in all aspects of payroll, including current and future regulations, keeping everything running even when the entire industry changes, for example when RTI (real time information) regulations and pensions auto-enrolment came in. This helps businesses that aren’t able to keep up to date on the minute details of payroll regulations.
Cintra Payroll is an outsourced payroll provider based in London. We are on hand to provide a comprehensive, professional and accurate payroll service for your company.
Benefits of Payroll Bureaus
If keeping control is important to your business, payroll bureaus allow you to pick and choose which functions to retain in house and which to pass over. This flexibility enables you to hand over tasks that you don’t have the in-house skills for, or those that consume the most time and effort, for example.
By choosing to hand over such tasks, you save either time or cost. You might choose to refocus your in-house staff on alternative tasks due to freeing up their time, or you might find you don’t need a full-time team anymore.
As with outsourced payroll services, a bureau solution also provides you with access to expertise in legislation, regulations, and compliance.
Benefits of Outsourced Payroll
- Focus on your core business
- Save money and increase efficiency
- Access expertise and technology
- Reduce risk
- Ensure business continuity
- Prevent fraud
There are a number of benefits of outsourcing the whole payroll process. One of the biggest is that it saves you money as a company. Whilst you will have to pay the outsourced company for the service, it can be much cheaper than employing and training payroll staff – even if you have a bureau service provider. You will likely find that the entire process is faster and more efficient, too.
Not only this, but it can free up your resources and time too, allowing you to put effort into other parts of your business. You can also benefit from the expertise of a company that understands payroll. They will have knowledge in avoiding pitfalls and will use the latest techniques and software. The chances of mistakes are minimised by using a fully outsourced payroll service.
Downsides of Payroll Bureaus
As you maintain a level of work in-house, you will need to pay for staff to work within the department on any tasks that are not handled by the payroll bureau – the cost implications of this include salary, National Insurance, holiday and sick pay, benefits, and so on.
These staff members will be required to undertake activities such as data collation, calculating overtime, administering pensions for your staff, and others, depending on what elements of the role you handed over. This means, that if someone in the team is out of the business due to sickness, then the entire process may grind to a halt, even though some elements are handled outside of your team.
You will still need the relevant technology and software required for all the areas of payroll you retain in-house, and will continue to be responsible for the uptime, backups, and security of these systems.
Whilst a fully-outsourced payroll service reduces the risk of mistakes to almost nothing, a payroll bureau service cannot be as robust, because some tasks are out of their control. When you retain some areas of your payroll service, you do also retain a level of risk. Should a mistake occur, you might not have the systems and processes to prevent or catch them in time. You don’t get as risk-free a service as you would with full outsourcing.
Downsides of Outsourced Payroll
One of the areas businesses worry about when outsourcing payroll services is the reliability of the provider. Choosing a reputable supplier is vital – spend time talking to the provider and asking as many questions as you need to feel comfortable. Bring up any unique requirements your business has at the beginning of the discussions, so that there are no surprises later that might affect the service. Find out if they have any kind of service level agreement or guarantee.
The other area you should discuss is confidentiality and data security. Look for certifications and accreditations that confirm whether the provider is legitimate. For example, Cintra Payroll are BACS Approved, which verifies our standards in physical security, computer operations, and more.
Choosing between Payroll Bureaus and Outsourcing your Payroll
Outsourcing part of all of your payroll can be a significant decision for businesses, however the benefits can be highly significant.
You should look carefully at your current processes, procedures, costs, and needs before making a change. If costs are a consideration, outsourced payroll is likely to be the most effective option for you.
If you are concerned about legislative changes, especially if you employ staff on variable or minimum wages, an outsourced service will provide peace of mind in keeping you fully compliant with all relevant regulations.
If you want to reduce your risk levels to the lowest possible levels, having an outsourced provider is the better option. If, however, you want to maintain more control over your payroll, a bureau would likely be a more comfortable option for you.
Ultimately, there is no single answer that is true for every business. The best path is to speak with a number of providers to see which offer a service that works for your needs.
If you would like to talk to us, we would love to offer our expertise and advice. Get in touch by calling 0845 873 5619 or by our contact form.