Outsourcing payroll step by step

the outsourcing of payroll is a way of reducing the workload in Human Resources departments. It consists of contracting an external company, which will be in charge of managing all the processes related to the payroll of our employees.

Outsourcing your company’s payroll to an external provider has a series of benefits that can make us consider this option. With outsourcing we manage to reduce payroll costs, as it will not be necessary to have a specialised payroll person on staff. We also work with the peace of mind of knowing that the payment of our employees is in expert hands. This means knowing that we will always be up to date with current legislation and the protection of our staff’s personal data.

Having seen some of the advantages of outsourcing payroll, it’s time to take action. Hiring this service requires a series of steps that we are going to detail in this article. These steps will help us to choose the best option for our business, in addition to being able to visualise how the company is adapting to the new situation.

Analyse your company’s situation

The first thing to consider is how payroll is being done in your company. You need to know which departments do which tasks in relation to the payment of employees. The best way to do this is to make a list of tasks. In this list we have to write down who is in charge of which tasks and how much time they spend on them. In this way, we will be able to select the tasks to be outsourced.

Our recommendation is that you look to outsource the most time-consuming processes first. Eliminating this workload will free up a lot of time for our employees, who will be able to focus on their most important tasks. This move will increase employee satisfaction and reduce payroll costs at the same time.

To make the return on investment more visible, it is best to set goals. Setting short-, medium- and long-term goals will help you measure the benefits of outsourcing realistically. It is also important to periodically review these objectives, especially those set for the long term. Depending on the services contracted, the results will be different, so it is necessary to consider whether it is worth investing in contracting more services from our provider.

Choosing the right payroll provider

Once we know which tasks we want to outsource, it is time to analyse the market. There is a wide variety of outsourcing companies out there, but not all of them are going to be a good fit for your needs. If we are talking about a small company, it doesn’t make much sense to go to a provider that specialises in large companies.

Ideally, you should take your time with this process. It is always said that haste is a bad advisor. In such an important decision, it is best to weigh several options. Although the first option may seem appropriate, it is advisable not to stick with it. The more we analyse the options of back office companies with which to contract these services, the more likely it is that we will find a better option for our business.

To this end, we have a series of tips on the most important issues to take into account:

Constant updating and ability to adapt to changes.

Ability to produce reports to facilitate decision making.

Ability to adapt to our IT systems.

Agility in transmitting information, changes and data between companies.

This last point is perhaps the most important of all. Later on, we will talk about the importance of communication between our IT systems. Well, if it is necessary to pay attention that machines understand each other, it is much more important that people do. Smooth and constant communication with our payroll provider will make everyone’s work easier. Being able to discuss any unforeseen events, problems or payroll mismatches quickly and conveniently will make it easier for us to solve the problem. On the other hand, if communication is not fluid, that small problem can snowball into a major crisis for our business.

Integrating IT systems

Once the decision has been made as to who to contract these services with, we move on to the integration process. In this process we will work hand in hand with our new payroll provider to make our IT systems compatible.

This process may not seem very relevant, but we will gradually see the results of good communication between the two systems. You need to make sure that the way both companies work is coordinated. In this way, the flow of work and information will be more efficient, obtaining better results. It is essential that the data we send is compatible with the software used by the contracted company. This ensures that we will not have problems later on.

Reporting

The payroll provider must deliver a series of reports on a regular basis. In these reports we will be able to see data on the expenditure of the personnel in the company, the evolution of the payroll over time or the complements in which more money is invested. In this way, we will have real and detailed information about the company’s expenses, which will allow us to make quick decisions in case we need them.

It is advisable to compare these reports with the objectives set at the beginning of the process. Once we receive information on how the outsourcing is going, we will be able to compare it with our ideas. This can be the perfect moment to analyse how we are progressing, how close or far we are from achieving these goals, adjust long-term objectives and set new objectives for a longer term.

Calculating ROI

Finally, we will need to go back to the analysis we did at the beginning of the process. With this information in hand, we will need to calculate the return on investment (ROI). We can see how the payroll process was solved before, which tasks we have outsourced and how this outsourcing has impacted us.

We also recommend people-focused ROI. Although numbers are fundamental to the performance of our business, it is important to keep in mind that we are working with people. At this point, we will have to look at several factors in addition to money. It is also important, for example, to see how the time that our staff has gained for their tasks has been spent. It will be necessary to take into account whether the satisfaction of our employees has improved in relation to the payroll, whether they have had any problems with the supplier or which aspects they feel can be improved.

Once we have the ROI information, both monetary and personal, it is time to draw a conclusion about outsourcing. Here it will be time to answer a series of questions: Are we happy with the current situation? Do our employees think that we have improved or deteriorated in this respect? What can we improve to make payroll processing even more efficient? What objectives have we met? With these answers we will draw a conclusion, either positive or negative, about this outsourcing.

Outsource payroll easily with Vasalto

At Vasalto, we have been working in payroll outsourcing for more than 30 years. This means that we have extensive experience in the sector, in addition to a series of our own computer systems that allow us to manage more than 40,000 payrolls every month. In addition, we also have the best legal and accounting advice in order to offer our clients the best possible service.

At Vasalto, we believe that communication between people is fundamental. We make technology available to people, never the other way around. We work with technological automation solutions so that IT takes as much work off our hands as possible. This way, we have more time to dedicate to our customers.

If you are interested in finding out more about payroll outsourcing, at Vasalto we will be happy to help you. Contact us to get to know us and see how we can help your company.