Outsourcing payroll services and choosing the right provider is a big decision, no-one wants to take on extra costs in 2024 but often the time saved, speed of service and avoided fines can make all the difference. 

So, how do you find a good payroll provider when there is so much choice? And what are the pros and cons of outsourcing payroll? 

We’ve outlined some pros and cons below along with an 11-point checklist for choosing the right provider. 

Outsourcing payroll services – the right time to change provider 

Early in the year is the best time to choose a payroll provider, April is the time when many legislative changes come into place so getting a smooth payroll sorted is ideal to avoid any messy change-overs in the Spring. 

It also means you reap the benefits for as long as possible during the year. 

However, the best time to start reviewing your payroll system is always sooner rather than later, even if that decision is to keep payroll in-house. 

Pros and cons of outsourcing your payroll 

Pros of outsourcing payroll 

• Experience of difference scenarios – Although some payroll skills are trainable, outsourced payroll providers are exposed to more scenarios and problems quicker, by working with varied businesses in terms of size and sector, and build a varied experience faster. 
• In-house costs – Particularly important for start-ups, choosing to hire someone in-house may be more expensive than outsourcing payroll. Also, as costs bite employees in small businesses are taking on multiple roles. This means payroll may become a secondary function and mistakes may be made. Payroll mistakes costs UK businesses £150,000 a year! 
• Resource Output – If you employ someone solely for payroll, particularly in a small company, they will be very busy some weeks but may have a lot of downtime in-between, this leads to cost inefficiency.  
• Accountability – Having a good external payroll partner means they will prompt and remind you to sort things in a timely manner to avoid fines and keep staff happy, whilst taking on most of your payroll admin.  
• Your time as an asset – How much is your time worth? Do you want to spend lots of time sorting payroll? Put a value on your time when considering the costs of outsourcing vs doing all that admin yourself or in-house. 
• The rise of the salary sacrifice – A salary sacrifice is defined as “An agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.” Whilst there are pros and cons to this arrangement, the cost-of-living crisis has drawn more attention to this option. However salary sacrifice can add complexity to the admin side of payroll on top of all the other priorities associated with the payroll function. This adds an extra burden to an in-house payroll system. 

Switching Payroll Provider doesn’t need to be touch…

Explore our Payroll Switch Guarantee

Cons of outsourcing payroll 

• Sole resource – Having someone in-house means they will be solely focused on your company rather than needing to split their time. 
• Company understanding – Employing someone in-house means they will understand your company on a deeper level and will be part of the company culture which helps build relationships. Of course, external supplier relationships can still be exceptional and can prove very valuable. 
• All hands on deck – If there is a payroll emergency your in-house payroll can look at it immediately. Of course your in-house payroll will need to take holidays so this may not always be possible. Equally if a payroll scenario comes up that they don’t have experience in they may still need external support. 

11 step checklist for outsourcing payroll services – To Get the Best Provider

Before your company makes a final decision to outsource its payroll function, there are 11 very important things to consider regarding your intended payroll delivery partner.

New Payroll Legislation Updates

Can they adapt with accuracy? 

New payroll legislation is being introduced all the time. Can the payroll provider promise to keep track of all legislative changes and adapt their processes accordingly? Can they then deliver a high-quality service without making errors? Explore upcoming payroll legislation.

Auto-enrolment Pensions Handled

Can they deal with all the complex features?

You need to verify that your intended payroll provider can correctly deal with new joiners and opt-outs, as well as with staff wishing to contribute more than the minimum.  

There are also certain requirements for writing to staff within specified timescales to give them information about the pension scheme. Explore more about auto-enrolment

Gender pay gap Reports Completed

Will they be able to complete these effectively?

Since 2017, 8,000 companies with 250 or more employees need to publish, on their website, details of the difference in average salary between their male and female employees.  

If you will be required to adopt gender pay gap reporting, and you plan to outsource your payroll function, then it is likely you will look to your payroll provider to prepare these reports on your behalf.

Payroll Case Studies

Can they provide testimonials from satisfied clients?

You should check to see if the chosen provider can furnish you with a series of testimonials from client companies who have been satisfied with their services in the past. 

Explore our payroll case studies here

Great Customer Service

Will their customer service be of the highest quality and friendly?

You need to ask your intended provider whether they can respond promptly to any queries raised and how they will communicate (phone, email etc). 

 Ideally the provider would provide you with access to a dedicated account manager or other personal contact, rather than making you call a general helpdesk for assistance.  

The provider should also ideally be able to answer queries outside normal business hours. 

Watch out for: 

• Does the provider offer good customer service and deal with you in a friendly and approachable way?  
• Do they answer the phone promptly and answer email and social media queries quickly? Are they available to answer queries throughout normal business hours, and preferably at other times as well?  

• Does the provider offer you a dedicated personal contact, rather than making you go through a call centre?

Highly Experienced in Outsourcing Payroll Services

Do they have extensive experience of providing payroll services?

Check their track record, how long have they been providing quality payroll services? Ask about the size of businesses they have worked with, are they familiar with working with similar company structures to yours? 

Ask about their sector experience, they may also offer other services too so it’s worth seeing if you can tap into their expertise there. 

Explore UK Payroll Services we can help with at Talk Staff

Handles Common Payroll Problems (and Complex Ones too!)

Can they handle all the issues that might affect the company’s payroll?

You need to ask the prospective outsourcing payroll services provider if they could handle: 

•  Overtime payments 
• Bonuses 
•  Commission payments 
• Redundancy payoffs 
• Maternity/paternity pay 
• Child support payments 
• Auto-enrolment pension contributions 
• Payments to other employee benefit schemes  
• Other business expenses.  

A payroll run is about much more than ensuring employees receive the correct basic salary.

Adaptable to your Expanding Business Needs

Can they adapt if the company expands?

Suppose that you took on a large number of staff in a short space of time – would the payroll provider be able to adapt quickly to the increased workload? 

If you are expanding your team quickly you may also want to look at services such as organisational development to ensure you don’t end up losing trust or demotivating your team through constant change.

Sturdy Payroll System

Do they have rigorous IT security arrangements?

Levels of cyber-crime are increasing rapidly. Hence, payroll providers need to take steps to ensure that their computer systems are secure, especially as they will be entrusted with the personal details of people who work for you.  

Ask your payroll provider if they have firewalls, anti-virus software, password protection and encryption to protect their computer systems, and should enquire as to whether they train their staff on IT security matters.

Clear Payroll Quote and Pricing

Is their charging structure transparent?

Is the payroll provider transparent as to how much you will need to pay?  

Make sure you ask and check through their fees before committing to a contract. 

As with most things in life, when selecting a payroll provider you get what you pay for. It is therefore necessary to pay a certain amount in order to receive a quality service in return. But nevertheless, a good payroll provider’s charges will be affordable to a regular small business, and their charging structure will be transparent 

Overcharged or undercharged? 

Most payroll outsourced service providers will charge similar rates so it’s not usually a distinguishing point. However, you should get a feel for the market rate by getting quotes or researching payroll pricing. This is so you don’t: 

• Get overcharged – With the cost-of-living businesses have enough challenges than paying more than they need to. However, do factor in the time and costs saved by being compliant and reducing admin.  
• Being undercharged – The phrase ‘you get what you pay for’ tends to be true, a cheap payroll service may cut corners that could lead to costly fines or angry employees 
• Hidden charges – Make sure you read the T&Cs to check if there are pay as you go elements in the contract and whether that’s right for you. 

You may get a better deal by tying in for a reasonable period of time. 

Efficient UK Payroll Services

Can they deliver everything in a timely manner? 

Can the provider complete the task of administering the company’s payroll quickly and efficiently?  

Is their payroll outsourced services tailored to your company’s individual payroll needs?  

If you need it, can the payroll outsourced services provider cope with the need to deal with overtime payments, bonuses, commission payments, redundancy, maternity/paternity pay, child support payments, auto-enrolment pension contributions, payments to other employee benefit schemes and other business expenses?  

If you are expanding and taking on more staff, can the provider cope with the increased workload? 

Get a payroll quote

Outsourcing Payroll Services – What Matters to You

There may be elements to a provider that matter to you specifically, for example do you want a local provider or are you happy with someone halfway around the world? 

The answer may vary for you, use the checklist above to make a Wishlist specific to you and then speak with potential suppliers about any concerns you may have. 

They may also have hidden benefits you haven’t considered. 

A few of the Talk Staff team with the finalist certificate for Commitment to People Development, Nottingham Business Awards.

Payroll outsourced services from Talk Staff

We’re able to offer employee payments through a Faster Payments based service at Talk Staff. It’s an innovative way to get a quick and efficient payroll moving. This method saves time and resources especially on weekly pay runs.  

We can also help with HMRC, attachment of earnings and staff wages. 

If you want to explore your options then get in touch. 

We offer both outsourced and fully managed payroll services.  

Outsourced payroll is great if you want to split the workload.  

But if you’re still dreaming of payroll being entirely off your plate then a fully managed payroll service might be right for you.  

We’ll use your HR system and speak to your employees directly & interpret the data for you.  

Offering full compliance and submitting via secure link with HMRC & Pension providers with full reporting on completion. 

With our payroll services getting 100% 5-star reviews on Trustpilot and 15+ year experience in the payroll…what are you waiting for?  

Give us a call to chat about payroll today at 01773 828 326 or [email protected]. 

Speak to Our Friendly Team