3 COMMON PAYROLL OUTSOURCING ISSUES AND HOW TO AVOID THEM
To start with, making a payroll is well known to be a cumbersome process. It takes a lot of time and mental energy to compile a sensible payroll. This explains the fact that most companies eventually engage a third party to make their payrolls. Engaging a third party or outsourcing payrolls as it is commonly referred to, comes with a lot of advantages, but has its own downsides too. Here are three (3) of the issues associated with outsourcing payrolls:
Inadequate payroll processing
If the company to which the payroll is outsourced do not have an adequate information about the workforce and their various cadres within your organization, there could be a mix up in the payroll issued. That is, some of the employees would be under-paid while some would be over-paid. This would lead to gross unhappiness in your work force, which might be very dangerous to your business’ growth.
However, this can be avoided by providing the company handling the payroll adequate information about your workers and the various positions and contributions they make in the day- to-day running of your organization.
In payroll processing, making deductions is considered the most complex part of the process, as this aspect of payroll processing is governed by central and state laws. Such deductions include: Professional tax (PT), Labour Welfare Fund (LWF) and Employee’s Provident Fund (EPF) among others. However, excess deductions could lead to meagre take home salaries for employees, which is not desirable.
Therefore, to combat this, before outsourcing your payroll to any company, ensure that the company you eventually outsource your payroll to is updated with all the laws regarding deductions. Check here.
In some cases, engaging an outsourced payroll system can disrupt smooth running of a business. This occurs mostly, in the absence of a change management plan, where the individuals saddled with the responsibility of preparing the payroll within your organization are not duly informed about the new development or are not enlightened on the advantages of outsourcing the payroll. Therefore, conflict could arise within the organization, as the individuals formerly saddled with the responsibility of preparing the payroll feel their job being threatened.
To avoid this, the payroll management crew in your organization must be duly educated on the need and advantages of outsourcing your payroll. It should also be made clear that their job is not being threatened, but made more efficient. You could also, allocate a devoted team to your payroll system migration, to ensure a smooth transition from the payroll system of your company to that of the company it is outsourced to.
It is also advised that you engage a company that owns or developed the payroll software it uses. This is to ensure that any changes within the contract can be made without any hassle, thereby, preventing any disruption to your business. Also, engaging a company that owns the payroll software would be cost-effective for your business, because, your payroll service provider would not have to enter into a third party contract to licence the software it uses. http://payrollserviceaustralia.com.au/payrolloutsourcing/