Managing payroll is often seen as one of the more tedious and time-consuming tasks in running a business. It’s not just about ensuring employees are paid on time – it’s also about compliance with tax laws, regulatory requirements and handling the complexities of benefits administration. And let’s face it, payroll mistakes can be costly, leading to fines and penalties, and even putting employee trust at risk if payments are delayed or incorrect.

According to Ian McAlister, General Manager at CRS Technologies, payroll management can consume a significant portion of a company’s resources.

“Processing payroll involves more than just issuing payments. Companies need to track overtime, bonuses and deductions for taxes, medical aid, retirement funds and other contributions. Even after payments are made, payroll administrators often spend hours fielding queries from employees, resolving discrepancies and ensuring every calculation is accurate.

“For a small business with 40 to 50 employees, payroll professionals might spend as much as 20% of their time processing payroll. For larger companies with upwards of 200 employees, it becomes a full-time job for one or even more individuals. Add in the time required for correcting errors, staying updated with tax and compliance changes, and administering benefits, and you could have a whole team just managing payroll.”

So, the real question for business owners is whether this is the best use of internal resources.

“Wouldn’t it make more sense to focus on growing the business and improving products or services? McAlister asks. “If the answer is yes, payroll outsourcing might be the solution that allows businesses to redirect time and resources to more strategic activities that contribute directly to the company’s growth, such as product development, customer service or marketing.”

Enhancing efficiency

Despite living in an era where technology touches nearly every aspect of business, many companies fail to stay current with the latest payroll tech solutions. This can be due to cost constraints, lack of expertise or a focus on other priorities.

“A payroll provider addresses this gap by offering access to cutting-edge payroll software, streamlining processes and reducing manual intervention,” says McAlister.

Additionally, the software incorporates robust security measures to protect the sensitive employee information contained in payroll data, while ensuring compliance with relevant data protection laws like POPIA and GDPR.

“This is especially critical in an age where data breaches can have devastating financial and reputational impacts.”

Outsourcing also ensures compliance with ever-evolving tax and labour regulations, which is particularly critical for businesses operating in multiple regions, he adds. “Payroll providers stay up to date with local tax laws, meaning they can help businesses avoid costly fines that stem from non-compliance.”

Time savings that translate to growth

While there’s a cost to outsourced payroll solutions, it’s usually far outweighed by the savings achieved from avoiding penalties and errors and through improved productivity, McAlister points out. “Additionally, payroll service providers offer scalable solutions that evolve with the business, meaning the service can be adjusted as the company grows.”

And if you think that external payroll services are only for small businesses, think again. According to McAlister, companies of all sizes – from those with a single employee to enterprises with a global presence – can benefit from the streamlined processes, reduced administrative burden and enhanced accuracy and compliance that a payroll provider brings to the table.

“Ultimately, choosing to outsource payroll depends on what works best for your business. By outsourcing, companies not only save time and money but also gain access to the technology and expertise that ensures compliance and security.

“By partnering with a payroll provider that understands your unique business needs, companies can not only save time and money but also gain peace of mind, shifting focus from administrative tasks to strategic growth.”