Outsourcing Business Processes

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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 To Manage The Process of Outsourcing Your Payroll?

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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.

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

10 Reasons to outsource your payroll?

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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?

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Filed Under: Payroll Processing Tagged With: , , ,

Top Tips to Consider Before You Outsource!

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I have often been asked the following questions when it comes to outsourcing:

  • Should I outsource or should I keep it in-house?

  • Is there a process or a mechanism to help me determine how I go about this process?

  • When or at what point should I view outsourcing as an achievable and realistic option for my business?

For the purposes of this piece, I make reference to payroll and invoice processing; however, the principles can be attributed to almost any business function.

What is outsourcing?

Always a good place to start; and that is understanding what the process of outsourcing is.

Outsourcing is the contracting out of a specific task such as payroll, invoice processing, billing; credit management to a third party provider often implemented as a cost saving measure for tasks that a company requires but is now finding onerous and time consuming to manage in-house. Many small and large companies turn to outsourcing to cut costs and streamline their operations.

So what are the key points to bear in mind when you are considering the need to outsource some or all of a business process(s).

Key Points to Consider Before You Outsource?

  • Where are you in the outsourcing process? What does the outsourcing process conjure up in the minds of senior management? And what are the tangible benefits that can be derived from outsourcing?
  • What is your level of commitment to the process? i.e. Is it a fundamental part of your business plan to relinquish some if not all of a business function? How serious are you about outsourcing as a mechanism to streamline some of your business processes?
  • Have you decided how much time you are going to put aside to establish this as a project and move it forward?
  • Who or what person will “champion” the process and will take responsibility for steering the project to its conclusion? By this I mean having the authority to make the decision outright for your organisation to procure an outsource partner.
  • Have you determined what areas of the business might benefit from being removed to an external outsource partner?
  • What impact is the process (you are reviewing) currently having on your business? In other words is the business function now taking too much time away from your core business objective?
  • Is it costing or adding too much to your bottom line?
  • Is the process too manual intensive?  Is it not cost effective to make the investment to automate or mechanise the function in-house?
  • How many people are involved in the process? In other words has the function outgrown that of the organisation to a point whereby externalising this particular business process is a realistic alternative?
  • Are you able to quantify the time taken to get payroll/invoice processing complete and on time?
  • Can you quantify the cost of doing it in-house?
  • Is cost the main factor in considering outsourcing? What I mean is, are you basing your decision to outsource purely in terms of what it is costing you to do it in house? Are there other factors that might influence your desire to outsource?

Coming Next: The Benefits of Outsourcing for Your Business.

Do you have any questions you’d like us to answer? Any anecdotes or experiences you’ve had with outsourcing that you can share? If so, Please leave a comment as your passing through we’d love to hear from you and we will feature your question in one of our up and coming articles!

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Filed Under: Invoice Processing, Managing Print Costs, Payroll Processing, Print Management Tagged With: , , ,

Why You Should

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Automate your invoice and statement processing.

If you are still printing your invoices and statements in house then read on!

There are many companies still choosing to print these time critical documents in-house.

Why? Well, here are some well documented reasons…

Because its too expensive to outsource
Because we don’t want to give up control
I want our envelopes post marked with our address details
Because the Directors want only us to print our statements/invoices

If it’s taking you and your company too much time to process and generate your invoices and statements then you really should think about automating the processing by opting for a print services provider.

A Mailing service provider specialises in the process, printing and inserting of invoices and statements.

Let’s look at the above points in more detail:

In the good old days, I probably would have agreed with it being too expensive because outsourcing was only ever going to be cost effective for high volume generators of statements and invoices.

Today, technology has changed and improved to such a degree that any company generating a few hundred invoices will benefit from tangible cost savings in postage and processing especially when this is weighted against the costs of doing it in-house factor in over ordering of stationery, consumables, maintenance fees, inserting machines and employees who are involved in the process too.

Retaining control – The question that needs to be addressed is do you trust your billing software to output the correct data? Are you painstakingly checking certain customer invoices for errors or omissions prior to actually sending them out?

Even if you have specific customers that require you to check prior to sending; most, if not all mailing services will have a medium with which you can isolate those documents, view and approve prior to print or sending electronically.

Envelope details – this is given as most print companies will suggest that the outer envelopes will be pre-printed with a return address, company logo and postage indicia in the corporate colours.

Company Directors are insistent in keeping the process in house - Next time the accounts department process the monthly, weekly invoice or statement run ask the Directors to spend time in the department just to see what’s involved in the process, oh, by the way, present them with a time V cost analysis report that you’ve done in advance, costs both visible and invisible should be shown then see what response you get? I’d be very surprised if they didn’t exhale sharply and respond with “really it costs that much!”

What are the benefits of automating the process?

If your company regularly sends out invoices and statements in a paper format as well as providing electronic billing then you will benefit from having this process automated.

The outsourcing of invoice and statement printing is not as complicated as you think.

By understanding a company’s billing cycle, how the information (data) is extracted out of the accounts system and how to send the data; are taken care of by the mailing partner.

If managed correctly by the printing services company, the cost savings will be evident ; for example by speeding up the print times i.e reducing the time taken to despatch bills or statements; receipt of a datafile on day 1 can result in despatch the same day; which can have a dramatic impact on the DSO (days outstanding).

There is minimal time spent by the company once the data file has been emailed because the mail service provider does all the work.

Pre-sorting your bills and statements specifically for Royal Mail or DSA (downstream access) will offer huge savings on postage.

Outsourcing this non core business activity enables you to have the option of sending paper based items and an electronic version as well. The data file can be pre-sorted for bills and statements that are required to be printed and posted or to be electronically sent.

In effect, your only concern is ensuring the upload of the information file. This is the only part of the process that your business truly gets involved in.

The biggest advantage of outsource bill and statement printing is that your outsource provider does all the work associated with printing and prepping of your invoices and statements for mailing. You also have the flexibility to change the layout and format of your documents because most outsource printers can print in colour at the same time as printing the statement or invoice information therefore implementing a form change becomes effortless!

Most customers have come to expect paperless billing and it is cheaper than sending a paper version.

If customers want a paper based bill or statement then they have the facility to print it themselves for their records.

There is also a compelling argument to outsource the processing of your electronic bills and statements.

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Filed Under: Managing Print Costs Tagged With: , , , , ,