Internal Payroll Vs Managed Payroll – Where’s the Best ROI?

For many, the least attractive part of any payroll project is determining the ROI. Every organization strives to operate efficiently, earn visible profits, and become well-known as an established company in the economic climate. For this propose alone, indentifying where every penny goes and how much is it reaping as ROI becomes crucial for the company.

There was a time when outsourcing simpler tasks, such as that of generating payrolls, were looked down upon as many companies did not find the need to do so. Organizations didn’t understand the necessity of outsourcing as they didn’t have many employees working under them. But as these same organizations began to expand, they realized how time-consuming such processes became and investments had to be incurred with little to no return on investment as profits. Before we move forward to identify whether in-house (internal) or outsourced (managed) payroll harvests better ROI, let’s take a brief look at the significant features of both.

Internal Payroll: Managed by the Company’s own HR Department

  • Familiarity
  • Employee trust
  • Ownership
  • Better communication
  • Cost control
  • Ad-hoc reporting
  • No extra fees

Managed Payroll: Hiring External Companies to Handle Payroll-related Processes

  • Staff saving
  • Space saving
  • Better management
  • Improved IT systems
  • Recruitment handled by providers
  • Contingency planning
  • Disaster Recovery

Where’s the best ROI?

For organizations operating on a tight budget, ROI is an important deciding dynamic because the influence of less control, lower productivity and flexibility, management of basic controls, and difficulty in information assessing can result in considerably lower profits.

As an employer, it is your job to identify what processes earn you a better return on investment. ROI measures the loss or gain on an investment. In this instance, if an employer goes for an in-house or internal payroll management system, he would have to think about all the costs incurred. Hiring new people, training them for the job and upgrading payroll software are the prime concerns. In this stance, the need for new employees and better systems would continue to grow as the company expands. The more the employees, the bigger the HR team required and the more the need for better software systems. If one was to make a guess, it would eventually up the costs of investments and would continue to shoot up as years pass by.

On the other end, outsourcing your company’s payroll management would involve hiring other companies to get the job done for you. No need for new hires and investing in their training and development.  By linking payroll, HR, benefits and time, an integrated payroll system promises to deliver all those perceived benefits and in-house payroll system offers with added efficiency. It brings with itself significant value-added advantages, such as improved visibility of processes, world-class confidentiality, real-time processing and superior sale economies.

Therefore, managed payroll systems seem like an ideal choice for expanding businesses.

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