Think you know payroll outsourcing? Busting 8 common myths!

If payroll had a motto, it’d be: no feedback is good feedback.

Employees simply want to be paid accurately and on time.

However, achieving this requires extensive specialist knowledge of payroll processes, data security, legislation and compliance. 

This is why many businesses turn to payroll outsourcing suppliers.

However, while outsourcing can offer a convenient solution, we’ve noticed large numbers of businesses remain wary of the offering.  

Do you have concerns? If so, read on!

We worked with Ian Davidson from our IRIS Payroll Services offering to debunk common myths surrounding outsourced payroll.

Myth 1: “We’ll lose control of our payroll”

Understandably, many fear that outsourcing their payroll will result in a lack of control.

However, the reality is quite the opposite.

With a good payroll outsourcing provider, you retain full control over approvals and changes.

Davidson explains: “Payroll data is submitted to us, then calculated and sent back to the client for approval.

“The payroll is never processed without a client’s final approval, and any changes are applied exactly as requested.”

Ultimately, with payroll outsourcing, the customer retains full control of their payroll, but it’s simply managed elsewhere.

Myth 2: “The service will be unreliable”

You can’t afford to get payroll wrong, so reliability is a must.

With a reputable outsourcing provider, you’ll be in good hands!  

Many providers handle thousands of payslips every month with exceptional accuracy and consistency.

Davidson said: “Processing 552,000 payslips a month for more than 5,500  companies means reliability is a key focus for our service.”

At IRIS Payroll Services, we prioritise confidentiality, strict deadlines and follow rigorous quality control checks to ensure error-free processes.

To achieve this high level of quality, all our outsourcing staff undergo:

• Extensive internal training 
• Enrolment in our Payroll Academy 
• Accreditation from the Chartered Institute of Payroll Professionals (CIPP) 

Myth 3: “Our data won’t be secure”

Many businesses worry that their payroll data stored outside the organisation will be vulnerable to loss if systems break down.

However, outsourcing providers typically have more advanced security measures than most in-house teams.

“The majority of smaller businesses will have little or no back-up or disaster recovery if their payroll system breaks down,” comments Davidson.

At IRIS Payroll Services, we use our award-winning cloud payroll software, ensuring watertight processes and data transfer, as well as encrypting all data for further protection.

For added peace of mind, we also hold the following security certifications:

• BACS accredited   
• ISO 9001 
• ISO 27001 
• ISO2 7701 
• ISO 14001 
• ISO 22301 
• HMRC Approved Payroll Software  
• Cyber Essentials 
• Anti-Money Laundering Compliance 

Myth 4: “Outsourcing costs more”

At first glance, keeping payroll in-house might seem cheaper, but this often ignores hidden costs.

Davidson explains: “Actually, it’s more cost-effective to outsource payroll, in most cases.

“A lot of people don’t realise the true cost of running their payroll as they tend to look only at the salary costs of the people running the payroll.”

Beyond the salaries of payroll staff, there are expenses like training, software updates, IT support and covering gaps due to absences or departures.

With payroll outsourcing, your only responsibility for the payroll operations should be to nominate a payroll contact who acts as the point of communication between you and your provider.

It’s also worth noting that in small businesses, one person may have sole responsibility for processing the payroll, which can prove a major challenge at times of holiday or sickness – we call this a single point of failure.

If your payroll manager suddenly goes off sick for an extended period of time, what will your business do?

Myth 5: “Outsourcing won’t be as flexible”

“Many businesses assume that if they need to make a one-off payment to a member of staff, it’s easier to do this in-house, but this isn’t generally the case,” says Davidson.

He adds: “In fact, a flexible outsourcing provider can still get things done last-minute, if there is an emergency.”

Leading payroll providers are equipped to manage all situations efficiently.

IRIS Payroll Services, for example, assigns each customer a dedicated contact who gets to know your business needs and can support with adjustments or alterations.

Myth 6: “We’ll lose access to valuable insights”

A clear view of payroll data is a necessity for businesses.

Some fear that with outsourcing, they’ll lose sight of their data and be unable to run reports and extract insights.

However, modern payroll providers use online, cloud-based systems that provide customers access to on-demand reports and data.

Davidson explains: “All of our clients have instant access to their own data at any time because of the software we use, so they can run reports whenever they want via a web-based tool which can be made available to authorised personnel within the organisation.”

Simply put, outsourcing the payroll does not mean losing access to your payroll data.

Myth 7: “Outsourcing is too impersonal”

Some fear that outsourcing will result in an impersonal, one-size-fits-all service.

Yes, there are suppliers where the payroll is processed by someone different each month.

But not every supplier is the same, and you can find a personalised supplier, like IRIS Payroll Services.

We operate by a simple philosophy: keep it personal.

Davidson says: “Each of our clients has a named contact with their email who will handle their monthly payroll for them and will be there to handle any queries.

“They are part of a small team, all of whom will have a knowledge of the client’s payroll to ensure that there is adequate knowledge and cover in the event of sickness and holiday.”

Note that we don’t just claim to provide good service — we back it up with customer satisfaction data. 

Our commitment to excellent customer service is demonstrated through our customer sentiment (CSAT) score, where our team have received an overall score of 80% (with CSAT, a good score is considered anything between 70-85%).  

Also, our Net promoter score (NPS) for all our managed services is 46 (NPS is run on a scale of -100 to 100, anda good score is anything above 0). 

Our service has also been certified as a Great Place to Work, further cementing the brilliant environment we are looking to cultivate.  

Myth 8: “Switching to outsourcing is too much hassle”

Transitioning may seem daunting, but a good supplier will make it as seamless and stress-free as possible.

Davidson explains: “We have invested significantly in the implementation process.

“It’s critical that we fully understand how a client’s payroll operates, so we spend time to ensure that we get the information required to effectively set up the payroll.

“We publish an implementation timetable which clearly outlines who is responsible for each element and by which date.

“We work closely with the client at every stage to make the process as easy as possible.

“Our implementation consultants are responsible for making it all happen.

“For example, if a new client is due to go live in July, we will conduct a full parallel run in June with the same data they are running in-house to make sure both are the same.

“Our implementation process is very thorough.”

Myths busted!

For those considering payroll outsourcing, hopefully the above has cleared up some common misconceptions.

Payroll outsourcing offers businesses a fantastic opportunity to streamline their operations, enhance accuracy, protect sensitive data and reduce costs.

So, if you’ve been holding off because of these misconceptions, it might be time to take another look!

To learn more about our award-winning payroll outsourcing service, IRIS Payroll Services, click here and to request a quote, click here.