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For most small companies, payroll runs are the definition of ‘a necessary evil.’ While the task is routine, it is one of the most high-pressure operations every business must perform. There are several reasons for this.
The work is always done under a time constraint. Payroll preparation can’t begin before the pay period closes, but must be completed in time for the checks to be cut or the ACH transfers initiated. And there is no give in that deadline. The results need to be flawless every time. Any slip-ups can irreparably damage employee morale or trigger legal fines.
To ensure appropriate attention is paid to the process, the team performing the work needs to focus on it 100%, to the exclusion of any other responsibilities they might have. Big companies can have dedicated teams whose sole job is doing the payroll and getting it right. Smaller companies can also have dedicated teams. They just have to secure those resources a little differently.
A small company’s can-do resourcefulness can be a liability in this case. The better solution may mean looking outside the organization at alternative models. And the results may free that company’s energies to do more strategic, revenue-focused work.
Understanding the Role of a Payroll Administrator
A few lucky small businesses have a dedicated payroll administrator. Usually, that responsibility falls on someone in HR or the accounting department. It’s a heavy load.
They have to ensure that all the data necessary for processing payroll has been collected or supplied and that it is accurate. Likewise, they need to confirm that all the payments go out accurately and on schedule.
A lot of skill and knowledge go into these duties. The payments generated by a payroll run are not just paychecks. There are multiple tax payments associated with each disbursement, including state and federal employer taxes (and even local ones in some jurisdictions), unemployment taxes, and withholdings for benefits.
To do all of this correctly, the administrator needs to stay current on labor laws and tax codes. All the resulting documentation needs to be complete, accurate, and properly filed. If there are any questions or disputes regarding the payments, including issues raised by employees, the administrator needs to know the systems and processes well enough to resolve them.
Payroll administration may also be responsible for providing regular reports to the company’s accounting team and executive management. This can extend the scope of their job from the hyper-tactical to the strategic level. It’s a tough position to fill, which is why many small businesses do without, and hamper their growth potential in the process.
The Hidden Time Drain of In-House Payroll Administration
As every business owner or payroll administrator knows, payroll involves a lot more than cutting checks. There are calculations based on time tracking, which can involve multiple shifts at differing rates. The same applies to calculations for taxes and benefits withholding.
Even if every employee is salaried, addressing their compensation disputes, which may involve a lot of research, can take time away from other, more valuable activities. If management or other concerned parties, like tax authorities, have issues with the payroll data, that often requires a painstaking manual effort to research and fulfill the request.
Payroll software can alleviate some of the challenges, but that means maintaining in-house software expertise. And, if the payroll software is a standalone program without features like integrated time tracking and automated tax data updates, the time savings will be relatively minimal. On the other hand, implementing a robust enterprise-class software package doesn’t make sense for every company.
Ultimately, it takes a certain number of manhours to get the payroll out on time with as few errors as possible.
Nearshoring Payroll Administration: A Strategic Solution
Fortunately, with the increased adoption of remote work solutions, small businesses can bring in the help and expertise they need from anywhere, either across the country or around the world. In fact, even many smaller companies outsource services to distant locations where the cost of doing business is considerably lower.
However, for a task as time-critical as payroll, staying closer to home is a safer bet. That’s where nearshoring comes in. Nearshoring leverages highly skilled and culturally attuned workers from relatively less expensive geographies – often in the same time zone – to perform administrative tasks for U.S. companies.
This arrangement can have some advantages over completely outsourcing the payroll function. The primary reason a company would prefer nearshoring is cost savings, which can be considerable. Also, depending on the nearshore resource, they can work as an extension of the client’s company, leverage the client’s in-house systems, and provide services custom-tailored to the client’s needs and work style.
Client companies still enjoy all the benefits of outsourcing payroll: utilizing experts to speed up the process, freeing in-house staff for strategic work, and retaining a remote resource instead of onsite personnel, for further cost savings.
Reclaim Your Time and Achieve Payroll Efficiency with a Nearshore Partner
From a financial and operational standpoint, the case for outsourcing payroll administration is pretty straightforward, and the numbers will speak for themselves. Taking that a step further, the same math applies whether the outsourced provider is a local company or offshore. Ultimately, the decision to outsource to a nearshore solutions provider is an emotional one.
Nearshoring has evolved as a way to make clients more comfortable with a foreign resource. It provides the cost-effectiveness that attracts companies to the solution while delivering the very real advantages of proximity to clients’ physical offices. Most importantly, it can deliver the time savings and increased efficiency lost to traditional in-house payroll processing operations.
Solvo is organized to achieve exactly this balance. As a major Business Process Outsourcing (BPO) provider, Solvo delivers expert nearshore payroll solutions, along with accounting solutions for businesses of all sizes. Solvo’s people work as an extension of each client’s own team to provide expert skills and bandwidth, seamlessly and cost-effectively.
Learn more about Solvo’s nearshore solutions for a host of business operations, including payroll administration. Contact Solvo to see how we can provide the skills you need, and to configure them into the best solution for your business, so you have more time to make your business grow.
