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The Ultimate Guide to Outsourcing Payroll

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Few decisions at work can have as profound an impact as the choice to outsource payroll. Whether you’re a small business owner looking to streamline processes or a growing enterprise seeking to reduce administrative burdens, understanding the ins and outs of outsourcing payroll is crucial.

In this comprehensive guide, we’ll break down the concept of outsourcing payroll into digestible bits, providing you with the knowledge and insights you need to make informed decisions. From the basics to the finer details, we’ll explore the “whats,” “whys,” and “hows” of outsourcing payroll, ensuring you’re well-prepared to navigate this important aspect of your business. So, let’s dive into the world of outsourcing payroll!

What is payroll outsourcing?

Outsourcing payroll is the practice of handing over the responsibility of manage your payroll and related tasks to an external service provider. Instead of handling all payroll functions in-house—like calculations and deductions, payroll processing, employee payments, real-time information reporting—a specialist service provider will handle those tasks on your behalf. 

 But they can’t manage the process from beginning to end without your input. You and your team are still responsible for providing the outsourced payroll provider with all of the relevant information they need to run your payroll in a timely and accurate manner.  

And they’ll likely provide you with an online payroll portal to do this. In that portal, you’ll need to enter data such as new starters and leavers, salary data, working hours, pension schemes, and so on. Once they’ve got all the correct information to process your payroll, they’ll take the reins and do all of the complicated work around calculations, deductions, compliance, and reporting. 

It means you’ll have payroll experts at your fingertips, and you don’t need to worry about keeping the knowledge and expertise in house—which can be a challenge! 

Retaining control when outsourcing payroll

Let’s face it, whether you’re a payroll or HR professional, you don’t want to lose control completely. Think of outsourcing as your perfect payroll partner. You manage the data on the system, then your dedicated payroll team steps in to manage all the calculations, deductions and fiddly backstage processes to give you the accurate, smooth payroll process of your dreams. Think: 

  • Keeping your payroll processes compliant 
  • Processing your payroll form start to finish—that includes payments of wages and salary via BACs  
  • Creating and sharing all kinds of employee paperwork like payslips, P45s and P11Ds 
  • Making sure you produce all the reports required by HMRC as well as your Year End processing including employee P60s 

 

The final stage in the process that needs your input is the sign off before the pay run takes place. But your payroll partner is there to provide as much support as you need. 

The best outsourced payroll providers will work in a way that suits your organisation and processes, not the other way around. 

How do online payroll portals work when outsourcing payroll?

Your outsourced payroll provider should set you up with a cloud-based portal that sits alongside the work of the payroll service and provides you with everything you need for data-entry and upkeep, keeping things secure and compliant. Let’s take a look at just some of the things that portal can do for you: 

1. Cloud-based data entry

This just means that you will enter the data for your organisation into a system that you can access directly through your browser. Think of it as online payroll. It’s just a piece of software that holds all your data securely, giving you access where and when you need it. You work on the move, so your payroll will too. 

2. Real-time calculations

When outsourcing payroll with a simple-to-use online portal you’ll see real-time, automated calculations when entering your data into the system. It’s pretty intuitive and means you can compare calculations against budgets and ditch that calculator.

3. Secure document sharing

Everything is shared with your outsourced payroll provider via this platform, including any sensitive documents. That means everything’s in one place and fully secure. For reassurance that your sensitive data is being handled correctly, keep an eye out for Accreditations such as ISO9001, ISO27001 and PAS Proven Expertise. No more worrying about bits of paper flying about and whether everything is safe and protected. 

4. Full data visibility

We’re used to having everything at the touch of a button now. The beauty of the cloud is that you can keep an eye on things anytime, anywhere. Cloud-based solutions provide a real-time window into your entire payroll cycle and give you full visibility for all your payroll data, in one platform. They should also update in real-time when you’re entering data, allowing you to see exactly where your payroll is at, instantly. 

5. Automated payslips and payroll documents

What is the one thing we all need more of, but money can’t buy? We all know the real answer to that question is time. And that’s the beauty of outsourcing payroll. Not only will it free up time when you hand over the calculating, the deducting, the reporting, and the worrying, but you can also hand over the payslip system. Payslips, P45s, P11Ds and more will be handled for you and be delivered to your employees.  

6. Employee self-service 

Outsourcing payroll also comes with employee self-service features, allowing you to save even more time on admin. In these platforms, people can edit and update their personal information, access payroll documents, and request holidays and manage their absences.  

7. Bespoke reports

Great outsourced payroll services will come with a standard library of reports allowing you incredible analytics. And for anything that isn’t part of the standard suite? Just ask your outsourced payroll provider to help. 

Additional services

We’ve covered the basics of outsourcing payroll. And depending on your needs, there’s likely a few other areas you’ll need some support as well. The combination of cutting-edge tech and a dedicated team of experts can pretty much cover everything. Here’s a quick list of a few more things you wouldn’t have to worry about again, because a good payroll partner will be able to lend a helping hand: 

  • Payment of liabilities 
  • Pension provider payments 
  • Pension reporting 
  • Paying employees via BACS 
  • P11D preparation and submission 

How does the pay run work?

You’re still very much a part of this team. Without you, it wouldn’t work. Once you’ve entered all the data, you hit the ‘submit’ button—meaning you’re submitting everything to your outsourced payroll provider. They then lock it in while all the checks, calculations, and deductions happen. You’ll get the right reports to reassure you that everything is happening as it should.  

You’re a partner through the whole process. Payroll needs a team to make it happen! 

How do you know if outsourcing payroll is right for you?

We know how hard it can be to secure the right expertise in-house. And that leaves you in a difficult position. Not only do you find yourself overstretched, overworked and overwrought three weeks of the month, but everything’s amplified in around the pay run.  

And that’s when risks double up. If you’re working hard to tick the basic boxes, the errors of non-compliance can creep in. You have a responsibility to make sure everything is 100% compliant or things will become yet more complicated for you. 

And let’s face it, you come to work to make a difference. To do more than just chase your tail each month. So, outsourcing payroll allows you to share some of that load and turn your attention to your priorities.  

With a team of incredible payroll experts behind you, you’re not alone anymore—and your time can be spent making real change where it matters most. 

The benefits of outsourcing payroll

  • No need to hire new talent for your payroll team—saving you time and money.  
  • Powerful data-management tools supporting all your processes—including single-entry for your data, reducing errors in input. 
  • No more worries about compliance—it’s all taken care of. 
  • A team of payroll experts there to answer any sticky questions, and to make sure you’re up to date on legislation changes. 
  • Your payroll will be managed so you will have bags of extra time. 

How much does outsourcing payroll cost?

There’s no definitive number when it comes to payroll outsourcing costs. Typically, providers charge on a per-payslip basis, and economies of scale kick in the more employees you have. For example: 

Alongside a minimum charge, an organisation with 1-25 employees might pay £6 per payslip, whilst an organisation with 501-1000 might pay £4.25, and an organisation with 1001+ might pay £3. 

The more frequent your pay runs occur, the more you’ll pay for outsourcing payroll, because you’re scaling up your payroll needs—from one pay run per month to four or five. 

There are also additional services with costs to consider… you can be billed for aspects like self-service options, implementation, and integration with other software systems. At Cintra we love to talk all things payroll so we’re happy to discuss your options with you.  

Payroll Outsourcing Buyers Guide
BUYERS GUIDE

Payroll Outsourcing Buyers Guide

Download everything you need to know in your payroll outsourcing buyers journey—covering services and solutions in depth.

Looking for an outsourced payroll provider?

We’re proud of the innovative solutions we offer our clients. Cintra have been delivering payroll services to organisations of all shapes and sizes for over 40 years and with the backing of PSSG we’ve been able to invest over 3 million into our solutions over the past two years alone.  

Powered by our team of CIPP qualified payroll professionals, we want to create the best solution for our outsourced payroll clients. That might include anything from our menu: 

  • Cintra Groups: a powerful addition to Cintra Cloud that lets you delegate payroll admin to your managers. 
  • Employee Hub: where you can let your employees keep their personal information up to date and make holiday requests. 
  • CintraHR: we’re yet to mention that you can integrate with our HR management software. It’s no secret – we’re happy to chat about it.  

So don’t just take our word for it. Book a demo and see Cintra Cloud in action.  

Danielle Nicholson
Danielle Nicholson
Danielle is our Communications and Content Manager, leading the content strategy for Cintra. Outside of her passion for all things copywriting, she loves being on the water in a kayak or taking long walks with her Golden Retriever!