Why Most of the Australian Businesses Are Outsourcing Their Payroll

Through the years, payroll outsourcing has grown in both its scope and influence. Many businesses in Australia, which shunned it decades ago, have embraced the idea now, due to its convenience and the advantages it gives to the general operations of the business.

The 5 main drivers of payroll outsourcing in Australia

Outside of the above,  there are 5 main drivers of payroll outsourcing Perth that are contributing to the growing trend in outsourcing the payroll function in Australia

• Pay compliance

Australia has a complex myriad of laws governing employment at both a State & Territory and federal level that cover minimum pay rates, minimum terms and conditions, leave entitlements, public holidays, termination of employment, workers compensation, privacy, superannuation, and taxation (including fringe benefits), jury duty and record keeping – and the payroll function plays a key role in keeping up-to-date with changes in the law and in ensuring ongoing compliance in all these areas.
 

• Better utilisation of technology

As a business, you may find it easy enough to obtain the latest payroll and HR software, but find it challenging to ensure it is integrated properly to reduce administration, automated to ensure compliance with pay conditions and ATO rules, and optimised for full utilisation of their extensive product features.

Cloud-based systems have made the cost of maintaining in-house systems much less, however, businesses are often finding themselves subscribed to a number of different solutions for accounting, rostering, HR and payroll – or perhaps only using the basic payroll features within their existing accounting suite and therefore not gaining any additional value from product features that exist today in leading payroll and HR software systems.

• Risk Management

In addition to managing compliance, other risks that need to be managed relate to security, fraud, and key person loss.

Payroll fraud costs businesses a lot of money and can arise in a number of different creative ways such as ghosting, inflating time or rates, and redirecting funds. It can commonly occur where there has been a lack of controls in place, such as having more than one person involved in payroll processing and auditing. Small businesses typically do not have the resources for both controls.

• Save Time

Sensitive processes such as payroll management are procedures that add significant weight to a single person or team of people that already have their hands full. Again, this makes the addition of a company that specialises in payroll management services that much more logical. When you outsource payroll, it frees up your time to focus on the other responsibilities that come with running a business.

• Save money

In addition to the costs associated with maintaining in-house payroll software, you also have the cost of financing in-house payroll resources (salaries and on-costs), ongoing training, administrative overheads, and recruitment costs.

The latest payroll benchmarking report discovered that it costs the average business with under 200 employees $36.30 per payslip* to manage payroll in-house. For example, a business with 100 employees paying fortnightly, the average cost of an in-house payroll function is $94,380 per annum.