Calculating payroll costs is vital to understanding if and how outsourcing the function may benefit you. Typically managers and business owners underestimate the total cost of the payroll process. This is because the payroll function often touches more parts of an organisation than you might think at first glance.
For example, we need to measure the cost of the entire end to end function, from the time an employee turns up at work to the date of payslip delivery, and at the end of the financial year, their payment summary.
It goes without saying that any salary costs of payroll staff need to be included in the calculation, but often, particularly in a decentralised environment or when there are employees who are mobile, there are people who manage the paperwork before it gets to the payroll office. In small organisations when part of someone’s role is payroll, you need to estimate the percentage of time that that employee worked on payroll. It is important to remember the following, as they often take up more time than you might expect;
- Month End,
- Year End Reconciliation, and,
- Managing Employee Queries.
We’ve prepared this useful breakdown of common costs that all make up the true cost of your payroll function, but it is by no means exhaustive. Please see below;
If you would like more information on the Payroll HQ difference, please contact us here.