Business Tools

Weighing up the cost

Dec 09/Jan 10 issue

For many companies that use a payroll service, it is one of the great outsourcing no-brainers.

‘It’s been very cost effective, a few pounds per employee,’ says Piers Carey, founder of IT reseller Teneo, which employs about 30 staff. ‘When you’re a small company, keeping up with changes in legislation, tax rates and so on is very difficult, and there is always the worry that you’ll get something wrong. So it’s much easier to get specialists to do it.’

Ann Bevitt, a partner at law firm Morrison & Foerster, says that companies dipping their toes in the water when it comes to outsourcing tend to start with payroll and recruitment. For small to mid-sized businesses in the UK, she observes, there are plenty of good providers and it’s unlikely you’ll run into any problem.

That might change as your company becomes more complex. ‘Problems do arise with larger, multi-jurisdictional organisations,’ Bevitt adds. ‘I’ve seen cases where the first payroll run after the outsourcing is implemented, people don’t get paid. That’s usually as part of a bigger deal, where you thought payroll would be the easy bit.’

On the whole, though, outsourcing payroll tends to reduce the likelihood of mistakes, as well as allowing those running the business time to do exactly that. According to Clive Lewis, head of SME issues at accountancy body the ICAEW, ‘Payroll procedures can quickly get very complicated, particularly with things like statutory sick pay. An outsourcing company can help you avoid getting caught up in all those issues.’


Editor's View Business Bulletin Trailblazers Business Tools Finance Expansion Strategy Leadership Flotation Exits Columns Enterprise News Deal Listings Backchat	Business Tools Weighing up the cost Dec 09/Jan 10 issue For many companies that use a payroll service, it is one of the great outsourcing no-brainers. ‘It’s been very cost effective, a few pounds per employee,’ says Piers Carey, founder of IT reseller Teneo, which employs about 30 staff. ‘When you’re a small company, keeping up with changes in legislation, tax rates and so on is very difficult, and there is always the worry that you’ll get something wrong. So it’s much easier to get specialists to do it.’ Ann Bevitt, a partner at law firm Morrison & Foerster, says that companies dipping their toes in the water when it comes to outsourcing tend to start with payroll and recruitment. For small to mid-sized businesses in the UK, she observes, there are plenty of good providers and it’s unlikely you’ll run into any problem. That might change as your company becomes more complex. ‘Problems do arise with larger, multi-jurisdictional organisations,’ Bevitt adds. ‘I’ve seen cases where the first payroll run after the outsourcing is implemented, people don’t get paid. That’s usually as part of a bigger deal, where you thought payroll would be the easy bit.’ On the whole, though, outsourcing payroll tends to reduce the likelihood of mistakes, as well as allowing those running the business time to do exactly that. According to Clive Lewis, head of SME issues at accountancy body the ICAEW, ‘Payroll procedures can quickly get very complicated, particularly with things like statutory sick pay. An outsourcing company can help you avoid getting caught up in all those issues.’