Pros and Cons of Managed Payroll Services
Pros and Cons of Managed Payroll Services
What are Managed Payroll Services?
Managed payroll services is when a company utilizes an alternative workforce to handle the vast majority of its payroll responsibilities. Managed Payroll Services, also known as Payroll Administration, is a proven service to reduce workload and give you back much-needed hours in the day. It is typically used by organizations that don’t have the time, resources, or expertise in-house to run their payroll operations. Many businesses find it easiest and cost-effective to bring in specialists in the area who are experts in the field to provide oversight.
Managed payroll services are often confused with payroll services. The main difference is that managed payroll services deploy people to take the burden off a company’s shoulders in overseeing that the entire payroll process is timely, efficient, and accurate. The average third party payroll service doesn’t offer your company a second set of eyes to manage your payroll team or supervise salary and wage budgeting.
The administrative management of payroll ensures that you avoid the time-consuming and costly consequences of any payroll issues. A Payroll Administrator can elevate your payroll process with payroll vendor communication, reviews of quarterly tax reports, and creating payroll SOPs. When bringing in any third-party payroll administrator, there are always pros and cons of managed payroll services.
Pros of Managed Payroll Services
1.) Save Time
Hiring a third-party company to manage and implement payroll administration can help your in-house employees allocate time toward other revenue-generating tasks. Payroll often serves as a distraction for most individuals at a company. Allowing an alternative payroll workforce to handle and oversee these services will enable employees to concentrate on their core business functions.
2.) Reduce Costs
Hiring a company specializing in payroll administration is typically more cost-effective than maintaining in-house services. For example, payroll errors cost companies significant amounts of money, but when you bring in third-party experts to manage this, there will be fewer errors, costing the company less money.
3.) Experts in The Field
When you bring in a company specializing in managed payroll services, you entrust a crucial aspect of your business to providers with the necessary expertise in this field. Payroll Administration can enhance the accuracy and efficiency of completing essential tasks for your company. In addition, these services are provided by the best in their area who have access to software and tools that a company may not have.
Cons of Managed Payroll Services
1.) Reduced Supervision
Hiring a managed payroll service means your company relies on an external entity to oversee a critical aspect of your business. A significant concern to note is that your company is still responsible for any mistakes in the payroll services despite a third party being involved.
2.) Security Concerns
Companies deal with sensitive information. Allowing third-party access and partial control over this information can be risky if you are not dealing with a reputable and reliable managed payroll provider. Data security is always a concern whether involving a third-party service or not, but expanding a company to external sources increases the risk of a data breach.
