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Choosing a Payroll Outsource Provider

Choosing a Payroll Outsource Provider

A payroll’s basic services include calculating gross pay and tax obligations for each employee, providing management reports and pay-slips on a weekly, fortnightly, four-weekly and/or monthly basis. For larger companies with more complex processing needs, payroll is often integrated with HR software systems that track employee HR-related information in addition to regular payroll data.

Boyle Practical Project Management (BPPM) specialises in payroll processing and reporting, As an outsource payroll provider BPPM has experienced many changes within the payroll processing field since 2012. The complexities of payroll processing in Ireland have reached new heights in the past two years with the introduction of Payroll Modernisation in 2019 and fueled with the introduction of the Temporary Wage Subsidies in early 2020 due to the Covid-19 pandemic. These conditions lead to 1,600 companies having to undergo detailed revenue compliance reviews in 2020 due to irregularities in their use of the TWSS scheme since the start of the pandemic. The prospect of further change during 2021 has lead to an increased demand for outsourced payroll services. To get a quote send details to BPPM payroll address of the number of employees in your company and the frequency of payment e.g. Weekly, Fortnightly or Monthly.

Payroll Outsourcing

Payroll outsourcing is the use of a service provider to handle the administration of paying employees. The payroll elements normally outsourced include:

1. Processing time and attendance data on a weekly, fortnightly, or monthly payroll.

2. Making employee statutory deductions for PAYE, PRSI, USC and other deductions.

3. Issuing pay-slips to employees.

4. Delivering Customised
Management and Statutory Reports.

Payroll can be a headache and for many businesses, payroll outsourced services offer an alternative to in-house processing. Many companies initially process payroll themselves because:

•they start small

•they consider in-house processing to be more cost-effective

•they want to maintain control over sensitive payroll data

Small companies with salaried staff on standard hours with minimal changes to payroll data and straightforward needs may be better off processing in-house.

When to Outsource Payroll

While the majority of large businesses process payroll internally, this may not always be the most cost-effective. Payroll administration requires the operation of payroll processes and a payroll system accounting program. Businesses need to keep up to date on changes in personnel, time and attendance deadlines, and regulatory requirements.  Running an in-house payroll can be a challenge for an expanding business with payroll staff turnover. Payroll can be very cumbersome without stable HR and payroll professionals. The question of when and if to outsource payroll depends on several factors, such as number and type of employees and whether a company has complexity regarding payroll changes with each pay period.

Using a payroll service generally makes sense if your company has employees working varying amounts of hours each week or has significant turnover. In such cases a payroll service can be a time-saving and cost-effective alternative to internal processing. In more recent times external factors such as PAYE Modernisation, Pandemic Wage Subsidies (such as the TWSS and EWSS) and Brexit have had a significant influence on companies' decisions to outsource to a payroll provider.

Outsource Payroll Services Required

Be sure the services offered meet your list of needs, but don't be fooled into buying more than you need just so the payroll service can make some extra money. The table below of pay and deduction elements may be of assistance in identifying the must haves and the nice to haves in the future. The best and most expensive payroll providers offer a wide range of payroll features including:

•Pay direct to employee bank account.

•Employee self-service to check pay details.

•Mobile applications

•Reporting and analytics

Outsourced Pay Requirements

1.Provides an unlimited number of earnings codes.

2.Pays various earnings types after an employee is terminated on system.

3.Provides automatic gross up calculation for earnings.

4.Allocates earnings by different organisational levels.

5.Calculates and initiates off-cycle payments.

6.Tracks YTD hours worked for unlimited number of years in detail history.

7.Handles employees with multiple rates of pay.

8.Calculates various shift premiums.


9.Overtime calculations include: Single Time, Time and a Quarter, Time and a Half, Double Time, Triple Time.

10.Aaccumulates hours and earnings by: Pay Period, Month-to-date & Year-to-date.

Outsources Pay Deductions Requirements

1.Provides an unlimited number of deduction codes.

2.
Sends court order and/or other payroll deduction information for separate processing.

3.
Allows prioritising of deductions.

4.
Supports reducing balance and start and stop dates for deductions.

5.
Tracks YTD amounts, by deduction type, for unlimited number of years in history.

6.Aaccumulates deductions by: Pay Period, Month-to-date & Year-to-date.

Benefits of Outsourcing Payroll

When chosen correctly, outsourcing can provide increased efficiency and reduced costs by avoiding the need to use in-house resources to comply with complex payroll requirements. The disruption caused by changes in payroll personnel, statutory changes and the need for updates, upgrades, contingency and disaster recovery planning is avoided. Adjusting to new legislation and working out new requirements takes time and adds to the workload of an in-house your payroll team. Outsourcing to a payroll provider keeps your in-house resources free to focus on what they do best.

Disadvantages of Outsourcing Payroll

Disadvantages include losing control of employee data, system customisation and the ability for timely ad-hoc reporting. 

Criteria for Choosing a Payroll Service Provider

Choosing the best payroll service for your needs can be a headache as the list of payroll outsourcing providers offering similar packages is long.  Comparing payroll providers, allow you as a business owner to benefit from outsourcing payroll while avoiding the pitfalls. Getting referrals from trusted sources and from other similar businesses in your area is a good place to start your search. This guide will help narrow down the potential providers.

Outsourced Payroll Costs

As with any business service, price is the main consideration.  If a company is not transparent about their pricing, then you may be better bypassing them. Knowing exactly what you will pay is not asking a lot. Many factors affect payroll costs (number of employees, reporting, pay frequency, etc.).  While there is always a need to speak with a representative for an accurate quote, providers that do not offer even a ballpark price without first learning about your company’s detailed situation may be hiding fees. If there's insistence that you are required to take additional services bundled with payroll then it is time to look elsewhere. Determine what rates are charged for running payroll per employee, and whether there is different pricing for higher volume.

A basic outsource service normally costs between €16K and €20K for companies with up to 100 employees at 2019 prices. The amount of the base fee depends on the pay period frequencies. Fees can differ dramatically across services, so it is important to check them out before signing up for a service. Look for a price quote that includes fees for all of the services you require. Get a quote for this year and next year. Pricing for services is generally negotiable, so only pay for features you are using and agree a rate for future add-on features.

    Are there additional charges for changing employee payroll data and setting up charges?

    Will the annual fees change or increase after one year?

    What is the process for paying taxes and payroll tax administration?

    What is the cost for your service for one year, including year-end processes?

    How long are these rates in effect? What rate increase should I expect after that?

    What is the process for overpayments?

    What will it cost for Re-Runs?

User-Friendly Payroll Technology

In addition to being easy to use, payroll software and information should be accessible anywhere with an internet connection and on any device with the appropriate secure login details. Make sure it's a user-friendly interface that the web platforms enable your employees to access their information quickly and efficiently if you have that facility. With almost all the payroll processing companies, you have to do the data entry work yourself and the payroll company takes care of all of the back-end operations. As such, one thing to be on the lookout for is a system that offers an easy, intuitive, data-entry system. If the system is difficult to use, it will take longer for you to do your payroll.

Outsource Payroll Customer Service

Payroll is complex and you will have need of help. Having the option for a single point of contact is important, as is availability for after-hours support. You need to make sure or verify that the company offers all the services you need upfront and determine how responsive it is. Calling the customer service department to see who you get on the other line is a good test. Be sure to speak with your service contact to ensure you are satisfied. As a client you require a payroll service giving a high level of customer service and regular communication. Look over a copy of one of the company's reports to see if they are easy to understand. The following is a list of questions you should use as a basic checklist for those interviews:

    What are the hours and means of customer service availability?
    Will you be assigned a dedicated resource or be directed to someone new?
    Is there an additional cost for EMEA payrolls in multiple countries?
    How often will I hear from you?
    Can they integrate with your accounting software?

Payroll Compliance Expertise

Choose an established provider with a proven history of helping clients comply with current regulations and keep their systems up to date with the latest statutory deductions. GDPR is the latest data management legislation that affects any business that gathers stores or uses information relating to EU citizens. If a company deals with EU citizens either as employees or customers, then it needs to adhere to the new regulations. Ask how do they secure confidential employee and payroll data?

Payroll Business Continuity

Look for a stable provider that has been in business for a few years. Check that they are financially sound and that they have a reasonable number of clients. Be sure to speak with your service contact to ensure you are satisfied. As a client you require a payroll service giving a high level of customer service and regular communication. Check that the company is bonded to ensure your company will not suffer from any potential financial mishandling and request references from current clients regarding levels of customer service. Natural disasters and extreme weather conditions can impact on providers’ ability to stay open. Ask about their business continuity contingency and disaster recovery plans to ensure your employees will be paid.

Familiarity with Your Industry

Certain industries have unique payroll requirements. Ensure that prospective providers are familiar with items that are specific or unusual to your payroll and to make sure they can handle the different kinds of employees you have in your industry.

Payroll Provider Scalability

Payroll needs change over time. Choose a company that can support your business as it grows or otherwise, with integrated services like time and attendance tracking, recruitment, and benefits administration. Beware of the larger services that may try to bundle your payroll package with additional capabilities that you might not need immediately, like human resources services, that would drive up your monthly costs. To avoid getting unwanted functions, list the services you expect your company will use over the course of a year. Ask yourself questions like how much you plan on growing, how many full-time, part-time and contract employees you will have on your payroll throughout the year, and if wage raises or bonuses are due. Decide whether you will need a company that can handle different country taxes and human resources functionality in addition to payroll if you require these in the future.

Data Required to Outsource Payroll

Every company is required to provide Masterfile data with employee names, addresses, bank account details, basic pay, pay deductions etc. The critical area in outsourcing is to become familiar with and experienced in using the processes required of you for initiating the payroll process. Parallel running of your old payroll systems with the outsourced company while cumbersome is vital to make sure the numbers match up.


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