Payroll Outsourcing- What Does It Mean, How Does It Work, and Is It Worth It?

Payroll season is one of the most challenging and tiresome phases of an accountant’s life. Changing legislations, furlough calculations, and the latest CJRS computations make payroll endlessly complicated and time intensive. Many accountants and accountancy practices opt for payroll outsourcing to deal with these difficulties.

Payroll outsourcing has been a rapidly rising trend over the past few years. In 2021, QXAS surveyed sixteen accountancy practices in the UK to understand the changing trends in payroll outsourcing and firms’ preparedness for it.

Payroll outsourcing is thus a trend to look out for in the next three years. However, many small and medium-sized practices are still oblivious to the concept of outsourcing payroll to make it a profitable service.

In this blog, we will explore payroll outsourcing services in detail and examine whether they are worth the hype.

Payroll Outsourcing Services – What Are They?

The payroll season is often a heavily busy season for accountants. With payroll legislation undergoing a massive change post the global coronavirus pandemic, the process has become more complicated and resource intensive than ever. Several practices, therefore, outsource payroll services for accountants to rid their internal staff of the additional workload during the peak payroll season.

In the simplest of words, payroll outsourcing refers to transferring your payroll needs into the hands of third-party payroll experts who can handle them efficiently. Outsourcing helps induce productivity into processes, free up a firm’s internal resources for more prominent tasks, and thus build capacity.

Accounting firms can outsource the entire payroll process to an outsourcing provider or only delegate the complex compliance part of it. Leading payroll outsourcing firms specialise in customised staffing solutions and provide practices with the best talent in the industry to handle and execute their needs competently.

How Does Payroll Outsourcing Work?

There is a systematic process to outsource payroll services for accountants. To begin with, accountants must internally assess their firm’s capabilities and evaluate the need and scope for outsourcing. Does your entire payroll process need outsourcing or just a part of it? Are the post-pandemic changes making payroll increasingly tedious for your team? Are you looking to attract new clients or build capacity for your firm?

Once you have figured out the answers to the above questions, you will know your exact outsourcing requirements. This is when you must start looking for an outsourcing provider.

The search for the right payroll outsourcing partner may not be easy. Start basic – look into your inbox or speak to your colleagues and peers for references. Research the top outsourcing providers on the internet, speak to their representatives, and mutually compare their strengths and limitations to ascertain the right provider for your firm.

Once you have finalised an outsourcing provider and decided on a suitable engagement model, the outsourcing firm shares profiles of their best-suited offshore payroll experts. Accountants can interview each candidate and choose the right fit for their firm.

The last step in the process is to onboard the offshore payroll experts to your team. Top payroll outsourcing companies provide complete onboarding support to client firms. You can interact and communicate with your offshore team directly and regularly monitor the progress of tasks. The outsourcing firm also makes up for the unavailability or absence of resources with backup candidates.

Outsourcing is thus an effective solution for small and medium-sized accountancy practices to save their team’s time, invest in more critical services, and build capacity for their firm.

Payroll Outsourcing Services – Are They Worth It?

Payroll services for accountants have long been viewed as an efficient way to reduce operational costs. However, there is more to payroll outsourcing than simply cost savings. It can help you secure new clients and add a new service to your portfolio. It also helps create capacity for your firm, increase scalability, and make your payroll service profitable.

According to QXAS’s Payroll Outsourcing Trends 2021 survey, 93% of the accountants surveyed agreed that outsourcing helped them and their in-house team members to save time during the workweek. The same study also revealed that 81% of payroll outsourcers saw a spike between 5% to 40% in their profit margins.

Let’s look at the most prominent benefits of payroll outsourcing services for accounting firms.

Strategic Benefits

Payroll outsourcing helps accountants free up their internal resources and focus on value-based services such as advisory and legal. It also creates capacity for internal teams to upskill themselves and add new clients to the firm.

Cost Savings

Outsourcing has traditionally been known as one of the most effective ways of cutting unnecessary costs. The growing talent woes in the accounting world have skyrocketed the salaries of accountants and payroll experts in the UK. With the coronavirus pandemic putting additional pressure on practices to reduce prices, payroll outsourcing is the only practical solution for accountants.

Outsourcing firms providing payroll services for small businesses hire offshore professionals and train them on global payroll legislation. Offshoring offers a massive cost benefit to accounting firms in the UK. Moreover, practices can also reduce overhead expenses such as employee benefits, leave and special allowance, and office infrastructure, thus facilitating huge cost savings.

Technology

Another significant advantage of payroll outsourcing is its technological aspect.

Technology is the future of payroll. While several compliance tasks related to payroll have already been automated using the latest software, the job is yet to see numerous technical innovations in the years to come.

Outsourcing payroll opens the doors of technology for accountancy practices. It enables accountants to integrate the latest technology into their processes in collaboration with their offshore team. Top outsourcing firms providing payroll services to accountants train their professionals on the latest software to help minimise the scope of human error and thus bring efficiency into the process.

Summing Up

The global coronavirus pandemic had a massive impact on payroll and its regulations, making the task more difficult than ever. In such a scenario, it is challenging for accountancy practices to deal with the rising payroll pressure, maintain costs, and earn profits simultaneously.

Payroll outsourcing is a surefire way for accountants and accountancy practices to increase their firm’s capacity to scale amidst the rising competition.

Payroll Outsourcing with QXAS

QXAS is a leading payroll outsourcing provider in the UK with over 12+ years of experience helping accountants resolve their staffing and scalability challenges. To learn more about our services, log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK (qxaccounting.com).