We have previously covered the growing trend towards payroll outsourcing in Australia in order to achieve better pay compliance, utilisation of technology, risk management in addition to saving time and money.
If you have decided to follow the trend to an outsourced payroll solution or if you are in the midst of reassessing your current outsourced payroll vendor relationship – then the following can be used as a guide to help you make the best decision in choosing the right outsourced payroll partner.
There are several key indicators when assessing payroll service providers. Following is a brief discussion on each that can help in determining which particular vendor is most suitable for you.
Expertise comes first
The partner you choose for your business must be stable and knowledgeable across payroll and local laws impacting payroll. It also helps to have significant experience in the demographic that your business belongs to. For example, payroll solutions in the hospitality, retail and fast food industries require a greater emphasis on managing rostering, timesheet and pay conditions for a largely shift-based workforce – or in the case of the not-for-profit sector there needs to be deeper experience in dealing with salary packaging arrangements.
Your payroll service provider should be registered with the Tax Practitioners Board (TPB) as a BAS agent to be equipped to provide broader payroll services and deliver greater proactive advice to your business in the areas of PAYG taxation and payroll tax rules, superannuation and fringe benefits.
A proven track record
The credibility of a payroll vendor’s expertise and cultural alignment with its customers is supported by a proven track record of delivering value to other businesses over a sustained period of time, particularly those in your industry with similar needs and challenges. Be sure to seek out relevant references or case studies to validate your decision.
One of the more complex aspects of managing payroll is correctly applying pay conditions from relevant awards or enterprise agreements. If this is important to you and your business look for payroll providers who understand Australian workplace law and whose payroll software includes automated award interpretation technology. Such vendors also take their responsibility to accessorial liability very seriously – as they can also be implicated if their client’s payroll is non-compliant.
Technology and features
Take the time to evaluate the payroll software and features which underpin the outsourced payroll provider’s services – even if your interaction with it may only be minimal. Cloud-based payroll options make it easier for you to access payroll data at any time and advanced platforms will also offer employee self-service functionality and rostering, time and attendance engines. You also want to pay particular attention to the speed and agility in which the payroll software adapts to external changes (such as ATO rules in regards to superannuation and reporting). Most payroll systems are now fully single-touch payroll (STP) compliant – if your payroll vendor cannot guarantee this then you should look elsewhere.
When changing payroll systems – which is often the case when choosing to outsource your payroll for the first time – you want to be confident that the type of payroll reporting you rely on to monitor the business, report on legislated obligations and make key decisions will be available to you.
Implementation and change management
It is important to understand what will the next steps look like once you have selected your new payroll provider. A robust implementation strategy should include a dedicated point of contact for your business, a clear and concise implementation plan, steps to communicate changes to other key stakeholders (including employees and managers), training (where necessary), the management of payroll data and at least one end-to-end parallel pay run to minimise risk.
Some payroll providers will be able to ensure integration with other systems including accounting software (such as Xero, MYOB or Netsuite) for general ledger integration, time and attendance solutions (such as Deputy or EmpLive) to import timesheet data or HR software (such as Employment Hero) for two-way integration of employee data, leave requests and pay slips.
Other bundled services
The most suitable outsourced payroll service provider may also be able to tick more boxes for you across a range of other employment-related services including employment law, workplace advice and human resource management – at a fraction of the cost of engaging with different vendors.
Transparent pricing or hidden fees
Don’t get caught out by hidden costs. Many payroll services appear to be cost effective on face value but stack on a range of additional fees for regularly occurring payroll activities. These hidden costs can significantly increase the cost of your outsourced payroll solution and should be fully estimated before committing to any vendor. It is important to note that payroll frequency will impact pricing so be sure to ask for different pricing options for further consideration.
Questions to ask your potential payroll partner
- How accessible will your payroll partner be to you?
- What technology do they use?
- What additional support can we expect?
- Is the payroll system STP compliant?
- Can they offer any other complimentary services to you?
- What are the service level expectations?
- What can we expect to see in the implementation process?