Knowing the true cost of payroll 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 time they are delivered their payslip, and at the end of the financial year, their payment summary.
Obviously any salary costs of payroll specific staff should 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 where someone has payroll as part of their role, you need to estimate the percentage of time spent working on payroll. Don’t forget reporting, month end, year end reconciliation and managing employee queries as these often take up more than you expect.
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. Take your time and really consider all the costs that go into every facet of payroll. It will really pay off in the long term to get an accurate figure you can rely on. You can download your copy here.
We hope you find this infographic useful as it helps you to calculate the cost of your own payroll function. It’s certainly a tried and tested method and an exercise which sometimes yields surprising results. A client recently did this exercise and was shocked to find the process was three times what they had expected. A large amount of that was due to the fact that each time there was an enquiry relating to payroll, they asked their lawyer!
If you would like more information on the Payroll HQ difference, please contact us.