How to Design an Effective Payroll Outsourcing Model

Top business executives continue to seek ways by which their business can remain relevant in the industry while their operations become more fluid. One of the top secrets they utilize in making their business become more fluid is outsourcing especially their payroll process. When you want to outsource your payroll process, here’s a simple 6-step checklist for designing an effective payroll outsourcing model. Read on to find out more in detail.

Step 1: what exactly do you need from an outsourced payroll service?

Having defined what you need, you need to start putting them in the right order. A common technique is to identify the processes that you feel needs to be outsourced and the ones you feel can still be handled internally. However, it is also perfectly acceptable to outsource everything.

The processes you are going to outsource will influence the payroll service provider you are going to choose.  New evidence from the HACKET group suggests that employee data maintenance is the most outsourced payroll process. Others in order from the most to the least outsourced payroll process are payroll inquiries, gross to net, garnishment administration, pay statement distribution, garnishment payments, verification of employment, check printing, w-2/t-4 as well as tax and payment.

You can choose to also do likewise

Step 2: critically examine service providers

When you have chosen the payroll process or processes to be outsourced, the next step is to assess different service providers. It won’t be a bad idea to also keep in mind the future of your business.

Step 3: appraise the proposals put forward by service providers

Before you ask them for proposals, you must have had a discussion with at least ten of them and you must have narrowed them down to at least five. Then, you can request proposals from these five.

Step 4: see their product in action

You will need a visual and practical presentation of their product to choose your preferred payroll service provider. A side benefit of this is that you may have some suggestions on processes not identified by the provider but which they can offer for your company.

Step 5: choose your service provider

After listening and watching their presentation, you must be able to make a decision on who to hire.

Here are the top six questions you need to answer before you make your decision on who to hire;

  • What are their suggestions on changes in payroll function when your company grows bigger?
  • How did they assure me that their service is the best quality?
  • Were they honest about prices of their services?
  • Based on your selection criteria, was the outline of their proposal detailed enough?
  • Do they have an understanding of the current state of your payroll procedure?
  • Which of this service provider stands out both in everything?

Step 6: move your payroll to the outsourcing company

This is the last step involved in this process. It is important for you to stick to your plan because this step is the most demanding. A detailed plan of the transition should be supplied by the service provider.  Go over this plan very carefully, if you have any questions, don’t hesitate to ask.

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