When looking for an accounting firm to outsource payroll, organizations usually seek an all-in-one accounting provider who could take care of all aspects related to payroll. However taking care of additional services that are not core to accounting or need a lot of management without getting additional monetary benefits, becomes a challenge for the accounting firm.
Here’s How Payroll Outsourcing Can Help Build a More Profitable Accounting Practice:
Payroll Administration – A burden for accounting firms with no profit
Accounting firms face several challenges while processing their clients’ payroll; as listed here:
- Time consuming tasks that do not add much value to the accounting practice.
- Essential for retaining clients, but clients are hesitant to pay extra for it.
- Information provided by clients isn’t always accurate, complete or timely hence involves a lot of back-n-forth.
Clients hiring third-party accountants don’t simply demand the calculation and processing of employee payroll, they also expect the accounting firm to process and submit employee taxes; file government forms and reports; manage employees’ pension, insurance and health contributions; notify government officials when new employees join and existing employees exit the company and maintain compliance with all the relevant payroll mandates and regulations.
For accounting firms, this is not only time-consuming but also requires considerable investment of manpower and capital. Offering payroll services can help accounting firms create a stronger revenue stream by effectively marketing their professional services, but currently, most providers are either not charging anything or are undercharging their clients for payroll services.
Outsourcing the payroll services, in such circumstances, is the smart way out, as it helps accounting firms estimate the costs incurred and accordingly charge their clients, which, in turn, contributes towards a thriving accounting practice.
Why Outsourcing Payroll as an Accounting Firm is a Smart Decision
For accounting firms that process volumes of payroll data on a regular basis, the following challenges can be addressed with the help of payroll outsourcing.
Preventing payroll errors
Blunders while processing employee payroll can lead to unforeseen and unwanted costs, and there is always a possibility of errors with manual data entry. However, for clients, these errors are not simple mistakes, they cost money as well as business. Large or recurring errors can also lead to payroll audits. Moreover, if these errors directly impact the employees working at the clients’ organisation, it can lead to upset employees and severe mistrust. This will certainly strain the relationship you’ve worked so hard to build with your client. Additionally, your client will have to face disgruntled employees and even have to pay penalties.
Saving precious time
Payroll, as an accounting function, demands a lot of time along with careful attention to fine details. Even with assistance from automation, employee numbers and figures still have to be manually entered into the accounting system, which involves the consumption of countless man hours for entering large volumes of information and cross-checking the entered data for typos and errors. This takes away precious time that could have been spent on your core accounting services. Outsourcing payroll services will help you save time so that your accounting practice can focus more on what matters, build new revenue streams and serve more clients.
Complying with statutory changes
The UK legislative structure is complex and mandates companies to ensure payroll compliance with several jurisdictions. Moreover, protocols and legislative regulations keep changing from time to time, and outsourcing payroll to specialist providers will help keep your clients’ business compliant, irrespective of the changing regulatory landscape. Tax changes, employee records, National Minimum Wage (NMW) compliance, employee contributions and more can be managed accurately and resourcefully by payroll experts, freeing you and your clients from the liability of non-compliance.
Reducing operating costs
Payroll is a completely separate and specialised HR function that requires time and trained experts, both of which are expensive. Outsourcing payroll to a proficient service provider will free your accounting practice from operating overheads, and the service provider’s trained staff will be liable to handle your clients’ payroll formalities and requirements on your behalf.
Maintaining data safety and security
Processing employee payroll is a complex task that involves a certain level of risk, and your clients’ data is at stake. Despite having trusted employees, risks such as identity thefts, records tampering and embezzlement make it extremely crucial to maintain the safety and security of clients’ sensitive payroll data. This challenge can be addressed by outsourcing the payroll services to a well-established, experienced provider who can ensure the safety of your clients’ payroll information. In the absence of outsourcing, you will have to maintain backup and multiple servers for securing your clients’ payroll data, but outsourcing will free you from this burden as well.
Leveraging the latest up-to-date technologies
Technology is transforming all business functions, and accounting is not immune to the trend. Specialised payroll providers employ the latest software and invest in state-of-the-art accounting technologies to streamline and automate payroll services, which leads to more accurate payroll processing. You can offer the latest up-to-date technologies to your clients by hiring systematic outsourced payroll services from a trusted provider. Using outsourced services will also free you from the investment required for deploying the latest accounting software and technologies.
Leveraging the expertise of qualified professionals
Outsourcing payroll services to specialised providers offers the opportunity to leverage the expertise and knowledge of skilled and qualified professionals. These professionals are experts in their field and provide on-time quality services, which will help keep your clients happy. In the absence of outsourcing, you will have to spend money to hire these experts, which will increase your business overheads
Avoiding reconciliation challenge
In the overall payroll process, bank reconciliations are considered the most tedious task, as they involve substantial efforts to keep track of every payment going through the bank while issuing pay cheques. You can easily avoid bank reconciliation-related challenges by delegating your clients’ payroll to specialised service providers who have ample expertise and proficiency in reconciling bank statements.
Payroll outsourcing can be used as a potential opportunity to strengthen your relationship with clients.
An efficient payroll provider will offer peace of mind to your clients and help you develop a thriving accounting practice with payroll as a vital service. However, do not simply introduce the payroll provider to your client and leave the picture; this will undermine the value you’ve offered to your client. Instead act as the mediator between your client and the third-party provider, so that you can provide quality services at a reasonable price while simultaneously maintaining profits. Integrating payroll services into your accounting practice will offer complete accounting solutions to your clients under the same roof, which will help attract more customers, increase the value and will help build a more profitable accounting practice.