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Top 5 Benefits of Payroll Outsourcing

With a growing trend towards businesses outsourcing non-core functions of their operations, it comes as no surprise that payroll outsourcing to software and service providers is becoming more popular. In fact, the 2019 Payroll Benchmarking Report by the Australian Payroll Association found that over 32% of their respondents outsourced payroll which was an increase from 24% in 2018.

With many businesses large and small considering a managed payroll solution, what benefits can be gained from outsourcing payroll and why should a business go through the effort of reviewing payroll software and service providers?

payroll outsourcing

Here we present 5 key business benefits to payroll outsourcing focused on achieving the goals of:

  • Saving time to put back into your business operations;

  • Realising the cost benefits of engaging a payroll services company;

  • Having the confidence of compliant payroll;

  • Leveraging technology providing operational advantages beyond payroll;

  • Ensuring business continuity and lowering risk.

Putting time back into your business operations

Performing payroll in-house is an administrative task that scales as your business grows and is not a business function that is directly tied to any profit centre. Processing payroll, ensuring compliance against Modern Awards, Timesheets and Pay Conditions along with handling employee queries and preparing reports are all functions of payroll that take time away from other business operations.

By outsourcing your payroll you not only free up administrative time for your staff but gain the additional benefit of having payroll services experts efficiently handling employee queries ensuring your staff are focused on business operations and not payroll.

Realising the cost benefits of engaging a payroll services company

Processing payroll in-house has a direct business cost attributed to the financing of a payroll team for payroll processing, maintaining payroll software and managing employee queries and pay conditions which can, in most cases, be greatly reduced by outsourcing to a payroll service provider.

Typically measured in a ‘per payslip’ cost, this can be simply calculated by adding up how many headcount hours are dedicated to payroll activities (processing payslips, maintaining software, managing queries), multiplying that by the salary cost and dividing by the number of payslips processed in any period.

The latest payroll benchmarking report 2019 (Australian Payroll Association) discovered that a business with between 50-199 staff as an average cost per payslip of $69.57 when processed internally. For a business with 100 employees, paying monthly, this would equate to a direct annual business cost of $83,484. Employment Innovation’s outsourced payroll solution, for example, would cost $1,900 per month or $22,800 per year representing a saving of 73%.

Payroll compliance for your business

Business operating in Australia navigate a complex legislative environment with staying Fair Work compliant a major focus area for all companies that employ staff. With the Fair Work Ombudsman now targeting directors, HR professionals and payroll officers making them potentially liable to prosecution in the event of any contraventions of the Fair Work Act, the payroll function plays a key role in ensuring compliance against legislation and pay conditions for each employee within the business.

Modern day businesses operate with a workforce made up of a mix of full time, part time, contractor and casual employees requiring payroll services to maintain minimum pay rates, pay conditions, leave and public holidays, superannuation, compensation and tax benefits for individual staff with the risk of litigation for non-compliance.

By outsourcing your payroll you not only gain access to experts who can provide advice and ensure compliance against changing legislation but provide access to payroll software with benefits such as inbuilt Modern Awards, time & attendance, rostering, employee self-service and a pay conditions engine. Employment Innovations supports KeyPay which is Single-Touch Payroll ready and integrates seamlessly with popular accounting and HR software solutions.

Efficiently leverage new technology

Pure Cloud-based software has helped kick start a global revolution in business operations and employment. Remote working and flexible working arrangements are growing exponentially on the back of the ability to access operating systems from anywhere with an internet connection. Software platforms such as Xero, KeyPay and Employment Hero are leading the way in Accounting, Payroll and HR respectively.

Small and medium businesses are a major benefactor of this change, as a shift towards software vendors now charging on a ‘per-user’ model makes it affordable for them to subscribe to previously cost prohibitive industry-leading technology solutions. This has levelled the playing field between small, medium and large businesses by dramatically decreasing the fixed cost of infrastructure.

Outsourcing the payroll function compounds this advantage further. As payroll software is commonly coupled with HR software,  employee onboarding and contracts can now be managed entirely digitally. Payroll and automatic Modern Award interpretation can be managed by an expert remotely all within the same ecosystem. A seamless experience with a professional overseeing the process for a fraction of the traditional in-house cost.

Business continuity and risk

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

HR and payroll generally sit in the top ten most critical of business processes, with small and medium businesses almost always point dependent on a single resource for their delivery. This person is often a senior person ‘wearing many hats’ or the business owner themselves. Although key person risk can be substantial for businesses of any size SMB’s are most at risk. Partnering with an outsourced payroll provider eliminates this risk and allows time-poor senior staff to focus on activities producing more value add to their business.

Payroll fraud costs a business a lot of money and can arise in a number of different creative ways such as ghosting, exaggerating timesheets and misallocating funds. They often occur when businesses lack controls without an appropriate division of duties. Small businesses typically do not have the resources or budget to appropriately de-risk in this area. By outsourcing to a company that specialises in payroll services, a business can operate with the confidence that the risk of payroll fraud has been greatly reduced.

Discover all DBS Partner solutions for complete human resource outsourcing, including payroll in the Brazilian market at



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