Outsourcing Business Processes

By Leave a Comment

A necessary business evil or not?

The term outsourcing immediately conjures up a feeling of fear, creates a sense of foreboding and there tends to be a general misconception that it will lead to redundancies. Factor in a lack of awareness or understanding of the benefits that can actually be derived from outsouricng a particular business function or process of your organisation and you can understand why people pale in front of you when the “O” word is mentioned.

There are 12 good reasons why a company might like to consider outsourcing here!

So what is outsourcing?  

Outsourcing business processes is when you contract out a business function either a task, role or process to a third party over a substantial period of time.  The outsource provider ostensibly takes control of the function and becomes responsible for managing its effectiveness and ultimately its success.

Outsourcing has become synonymous with large enterprises who offshore manufacturing or call centre operations to remote providers based in China or India. (I am pretty sure we’ve all had some very interesting conversations at some point in either our working or personal lives.)

This is not a viable option for the SME or for organisations wanting to outsource maybe one or two business processes. An effective and cost saving option is to consider “nearshoring” the process by which a company outsources to a local service provider (when I say local I am referring to a UK based provider)

Outsourcing core business processes may save you money, note I suggest the word may. The success of the process and its overall effectiveness must be clearly defined and managed and there are some guidelines to consider here!

An outsourcing partner can give you flexibility and help you manage growth; ultimately it affords your business benefits by giving you access to outside expertise and technologies without you having to make massive investments in infrastructure change and maintenance. Overall, outsourcing can be scaled to suit the changing needs of your business.

Should I outsource?

The benefits of outsourcing can be great. Capital for start ups is limited and outsourcing some of your business processes can ensure you know exactly what your on-going monthly costs will be allowing you to allocate much needed funds to the development of the business. How…

  1. Will outsourcing allow my business to focus on its strengths?
  2. Will it improve efficiency of the business?
  3. Will your business gain a competitive advantage?
  4. Will it save me money?

Points to consider…

Think through what you need and how the company will benefit!

  • What process(es) are you thinking of outsourcing and why?
  • Weigh the costs of doing it in-house V outsourcing
  • Consider a consultant to help you set up a service provider
  • Consider what the on-going costs would be if you don’t outsource it
  • Are you prepared to invest in the time and management of the outsourcing relationship?
  • Do you have realistic expectations?
  • Are you outsourcing a key function which you really need to make your business successful and competitive?
  • Finally weigh up the risks of outsourcing V managing the process in-house!

Whatever your decision you choose outsourcing or keeping the process in-house; you will need to consider the cost implications and the longer term impact on your business.

One final thing.. to reap true, tangible cost savings the process must be carefully managed and monitored. In other words the relationship must be built on trust, knowledge, security and ultimately become a partnership! Much like a marriage!

Until next time.. How to find the right outsource partner and how to avoid the pitfalls of outsourcing!

 

Filed Under: Outsourcing, Print Management Tagged With: , , , , , , , ,

How RTI Will Impact your business in 2013! RTI – Are YOU Ready?

By 2 Comments

We’ve recently been discussing RTI with our Payroll Manager customers and what impact they believe it’s going ot have on their business.

Comments range from “really unsure how the HMRC are going to be ready to take in such a potential mass of data each month or week”; “what about data integrity?” to “We don’t know how its going to impact our business”; and what additional administrative tasks will be required?”

What is RTI?

Real Time Information is a new system that is being introduced by the HMRC to fundamentally improve the operation of PAYE (Pay as You Earn) Currently PAYE return process is a manual procedure that happens annually; it is prone to error and inaccuracies – employers only find out at year end if they have deducted the correct amount of tax during the year.

RTI will result in this information being collected regularly when employers submit their payroll submissions.

Why is it changing?

The current PAYE system has been in place since it was introduced in 1944 making it 68 years old; operating unchanged and is the method used by employers to pay income tax and national insurance contributions (NIC).

Employers deduct payments from employees’ pay each week or month and for a large part; the current system works for the majority of employers and employees.

However, it has become prone to error, fraud and inefficiencies making it difficult for the HMRC to identify errors and assist employers and employees’ to resolve problems in a timely manner.

The RTI system will require employers to send data about PAYE, NIC and student loans every time they pay their employees rather than with their end of year tax return.

Why introduce RTI?

Simple. RTI should enable HMRC to respond to errors, improve the accuracy of payroll and reduce the probability of fraud.

Benefits of RTI

The government wants transparency of financial status and RTI will consolidate and automate tax reconciliations for individuals. It should reduce administrative costs of PAYE by phasing out annual employer returns and removing the need to submit P45 or P46 forms.

RTI will prevent identity fraud, reduce errors and overpayments in the current benefits and tax credits system which will ensure that individuals are taxed correctly through PAYE.

payroll print out

Concerns of RTI!

Small businesses will struggle to implement real time reporting the Public Accounts Committee has warned the HMRC; who must or will have to find a way of supporting businesses that do not  have electronic payroll systems in place.

Approximately 94% of employees receive earnings electronically but small businesses without electronic payroll systems and self-employed don’t submit monthly data to HMRC. How the HMRC intends to manage these employees is yet to be worked out.

How will it affect you?

Instead of submitting information once a year at Payroll Year End, employers will submit information electronically to HMRC for PAYE, NIC and student loans every time employees are paid.

When will it come into effect?

RTI will be phased in from April 2013 and will be mandatory for all employees from October 2013.

The system is being piloted from April 2012 and the current timetable published by the HMRC is as follows:-

  1. March 2011 – technical specification to be issued
  2. Oct 2011 – test system available to solution providers
  3. April 2012 – pilot customers submitting RTI (complete by Oct 2012)
  4. April 2012 – Large employers (25o+) to start RTI
  5. April 2012 - Medium employers (50 to 249) to start RTI
  6. Aug 2013 – small employers (<49) to start RTI
  7. Oct 2013 – all employers submitting RTI

What do I need to do?

To get your software right you will need to ensure your payroll provider is compliant so you can submit additional RTI information required along with Bacs payments.

Small companies will have access to the HMRC’s basic PAYE tools which will work with RTI free of charge.

Ensure your data payroll is right ensuring that the payroll details for your employees are fully up to date and in the right format for RTI:-

Name must be your full name and official forename(s) surname; no initials and in the correct order. Date of birth must be given in the format “DD/MM/YY”. National Insurance Number (NINO) must be given as two letters, followed by six digits and end with a letter which will be either A,B,C or D.

With every business in the UK expected to commence migration to RTI between April 2012 and October 2013 it makes sense to prepare your business. Taking control and adopting RTI early will enable you to understand what the impact is likely to be on your business and its payroll practices, ensuring that you continue to pay your employees and HMRC on time.

What do you think of RTI? How do you think its going to affect you? Who will pay for RTI?

Is RTI the Government’s way of getting much needed revenue into the treasury quicker than the current PAYE?

Drop by and leave a comment in the comment box below; we love to hear your opinion!

If all this all sounds like too much hard work or worrisome then contact Digital Print Management for independent and impartial advice on how to outsource your payroll.

Follow us on twitter, like us on facebook and join us on linkedin by hitting the buttons to the right of this post!

 

 

 

 

Filed Under: Outsourcing, Payroll Processing Tagged With: , , ,

How To Manage The Process of Outsourcing Your Payroll?

By Leave a Comment

This article follows 10 Reasons to outsource your payroll

I’ve talked about the benefits that can be acheived by outsourcing payroll, invoice printing and processing here are a few reminders:-

  1. You know what your monthly fixed cost for the operation is
  2. Allows you to focus on the area of business you hope to succeed in
  3. Allow experts to manage the process
  4. Reduce the cost of internal errors
  5. Speed up the process
  6. Benefit from your providers’ technology without having to make the investment
  7. Flexibility you’re no longer reliant upon people to manage the process in-house
  8. Secure in the knowledge that any disaster that affects your organisation it’s still business as usual for your outsource provider

You’ve now taken the unprecedented decision to outsource your payroll function.

What happens next?

The next step is find a payroll provider that can faciltate your requirements?

Easy?

Not so, when you are unclear or uncertain as to what you are looking for and what you need to look out for!

Where do you start?

You only have to google payroll bureau and a whole host of names pop up from the small to the large service providers and that’s where it gets sticky because do you have the time to search, research, evaluate, tender, set up visits to establish creditability then make a decision. All told, the process might take you anything from 2-6 months and that is a conservative estimate.

Here are a few things to consider when outsourcing your payroll:-

 

  • Small (1-50), medium (50-150)or large (150+) employees on your payroll will help determine the type of bureau you select to work with.
  • Expertise – does the payroll provider have relevant industry expertise to manage your payroll efficiently?
  • Flexibility – can they offer solutions tailor made to fit with your requirements and not a box that comes pre-packed and one you need to fit in?
  • Technology – can they offer online pay slips; paper based slips or a combination of both? Can they manage multi-channel distribution?
  • Does their system offer the flexibility to integrate with yours?
  • What reporting functionality are you likely to get with each payroll run; ask for sample reports and payslips both on and offline so you get to see the quality of the output. If you have a need for both paper and online slips how are the paper slips being printed – pressure seal (without envelopes) or A4 folded and inserted into an envelope, look at the quality.
  • Find out if the cost of postage is included. There are a host of mailing discounts available via the Royal Mail and DSA (downstream access) which your payroll bureau should be able to offer.
  • One final thing – let your payroll team be instrumental in the project after all they will be the people managing some or all of the process going forward.

What type of payroll services will you need?

  • A fully managed payroll system
  • Bureau payroll
  • Hosted
  • BACS
  • Multi-national payroll
  • CIS

 How do you then manage the process?

Project management is paramount. Any business process that integrates with the payroll function needs to be considered such as HR and Finance. A pay calendar or schedule is imperative for the bureau to determine cut off times and when data will be made available to the bureau for processing, this must include BACS transmission dates, pay dates and the physical distribution of the pay slips. During the migration phase the payroll system will need to be tested to ensure data integrity, compliance and accuracy with the current system. This process is usually tested over a 2-3 month period where parallel runs will be done by the payroll bureau and measured for accuracy against the current system.

Feeling overwhelmed!

Digital Print Management can offer advice and consultation

We are independent of any manufacturer, I.T. solution provider and print supplier. As a solutions and print management specialist emphasis is understanding the customers requirements and not trying to sell them something which doesn’t cut the mustard in the long term.

Put simply we offer a free consultative, no obligation approach to helping customers who frankly are overwhelmed by the prospect of outsourcing their payroll; whether its the processing and printing or the complete function of a department.

We are here to help so please do call us or leave a message and one of our consultants will be in touch.

To keep up to date follow us on twitter or subscribe to our updates!

 

Filed Under: Outsourcing, Payroll Processing Tagged With: , , ,

10 Reasons to outsource your payroll?

By Leave a Comment

Outsourcing your payroll

There are a number of reasons why outsourcing your payroll can be a cost effective option for you.

Firstly, it affords the opportunity to drive down operational costs and remove inefficiences within the payroll department. A decision to outsource any business function is a result of various internal and organisational pressures such as the lack of skilled personnel suitable to handle the task and to keep control of costs.

In the current economic climate, Companies face increasing pressure to keep up to date with new technologies, legislation and organisational change; at the same time having to streamline some of their internal business functions and processes.

Why outsource payroll?

  • Cost – even before you consider outsourcing your payroll function you need to know what it is costing you to process in-house. How many hours are spent engaged in payroll activities? This must include the cost of labour, technology, office space, stationery, printing and postage. The more manual the process the more people that are required to maintain and administer the function.
  • Productivity – payroll management is a time consuming activity by outsourcing this function employees can focus on productive activities focussed on the business. The more you automate the process the less people involved in the pay roll cycle.
  • Accuracy – Payroll mistakes can result in angry and worried employees. A good payroll bureau is far less likely to make errors because it is their job to provide accurate payslips.
  • Reliable service – Outsourcing to a bureau won’t be impacted by staff illness and holidays therefore the output speed and quality will be constant. Neither will you have to spend time helping new employees learn your payroll system.
  • Speed – payroll bureau are designed to speed up the process of payroll printing and distribution as specialists they have technical resources enabling them to process payroll quickly and cope with on going changes within an organisation such as seasonal or temporary workers without having to upgrade systems.
  • Expertise – a payroll bureau will have the expertise to provide the services you need irrespective of industry sector.
  • Accountability – it becomes the payroll service providers responsibility to ensure your payslips are accurate, comply with HMRC and tax regulations and are distributed on time.
  • Technology – a payroll provider will keep up to date with new technologies and software ensuring that you don’t need to make additional investment in-house; as they invest so you benefit from increased efficiencies.
  • Flexibility – by being able to meet your needs overtime as requirements change and your business expands.
  • Security – working with a carefully selected payroll provider frees you from worry associated with possible abuse of the payroll function by employees and if it’s on time and accurate!

COMING NEXT:

How to manage the process of outsourcing your payroll function?

Subscribe to our updates by clicking here or on the orange button.

Follow us on twitter

 

Filed Under: Payroll Processing Tagged With: , , ,