Questions to Ask Before Outsourcing

Growth and change are inevitable. And as your organisation grows, you will need to decide how to manage the increased amount of specialised, non-specialised and mundane work.

One of the first departments worth outsourcing to handle the increased workload is often payroll. This is due to its technical nature and role in supporting the business. Outsourcing your payroll should have a positive impact on your organisation. 

To find the right payroll provider with a beneficial solution, you need to know which questions to ask and what services to request. 

The following are a few questions to help identify this payroll service provider for your company.

1. What services do they offer?

Understanding the full scope of services a payroll provider offers will aid you in making a quick call on if they can fulfil your organisation’s needs. Additionally, getting a list of services they provide might expose you to additional services that can benefit your business.

2. What complementary services do they provide?

Payroll service providers often offer services that complement payroll. These services could benefit you in the same way payroll outsourcing does, saving you time and increasing your flexibility to focus on business growth. Human Resources is the most sought-after complimentary service as it closely relates to the payroll function. Payroll and HR Consulting and Tax submissions are often sought after.

3. How does the service provider manage compliance?

Asking how compliance is managed and maintained is one of the most important questions, as it will identify what responsibility falls on your end. It takes more than managing payslips and taxes to remain compliant. Ask the payroll provider how they will ensure compliance for the company and employees. Also, consider your organisation’s role in providing data needed for compliance.

4. Do they manage tax payments and file tax returns on my behalf?

One of the main reasons many companies outsource is to ensure that they are 100% compliant, and this sometimes involves entrusting a payroll provider to release payments and file tax returns. If this is a service you want, find out if the Payroll Provider can do this and if it costs extra.

This could include EMP201, EMP501, IRP5, UIF and WCA/COIDA returns.

5. How user-friendly is their platform?

This question focuses on your administrative team and on the difficulties they can face when adopting the platform. This is only relevant when your company is involved with updating employee info, which is often not the case. Nonetheless, you want to be able to assess if your administrative team will be happy with the platform.

6. How user-friendly is their ESS (Employee Self Service) platform?

This is the first question to ask from an employee’s perspective; after all, payroll is about people. Please do not be shy about this question. It will be in your best interest to get a walkthrough of what the employees will face when signing up and using the platform.

7. How will they protect your data?

Payroll contains a large amount of sensitive data. Being consciously or unconsciously irresponsible can have enormous repercussions. That is why the protection of your data on every front is paramount. Ask how you will be sending and storing sensitive information. Ask what measures are in place to ensure data protection on the platform and in their databases. Ultimately, you want an accurate insight into the organisation’s security to determine what vulnerabilities you might be facing.

8. What is their service history?

We all know there’s more to a book than the cover, like there’s more to a payroll service provider than their catchy service description. Payroll service providers handle your most sensitive information; one slip-up and the damage is done. You can drastically reduce your risk by doing some background research. Find out about their service history, how long they have been around, and which other companies trust them and look at their reviews.

9. What is their pricing structure?

There are multiple functions inside payroll, such as handling payslips, updating employee and company information, payroll reporting, integrations, and extra features such as ESS or a WhatsApp Bot. Take time to understand how each of these functions are priced, as this can bring in additional costs in the future. 

10. How timely and costly is the implementation?

A payroll implementation can range anywhere from a week to a year. This is dependent on the complexity of your payroll setup, the volume of payslips and the information to load. Before the provider can adequately answer this question, they will conduct a needs analysis. A thorough needs analysis will help you understand the organisation’s needs and provide you with the best-suited solution for your payroll with a detailed quote for the service.

11. What experience do they have in your industry?

One of the first places an industry-related setup can help you is with your industry-specific contributions, such as union contributions. Secondly, your company can have any combination of employees, such as trainees, shift workers, part-time employees, full-time employees and contractors.

Will your payroll provider be able to navigate the complexities that can arise in your workforce in your company and industry?

Each industry has a unique set of challenges that often require experience to manage well.

You can benefit immensely by using a payroll provider that knows the ins and outs of the industry’s payroll requirements. This will improve the setup and management of your specific payroll in order for it to be as optimised as possible to your company and the employee’s needs.  

12. Can they scale as your business and needs grow?

Payroll Service providers are typically experts in payroll and will almost always be able to handle small to large organisations. The real question is, “how do they secure resources to manage my business as it grows?”. Remember, they are running an integral part of your business, so make it your business to know how they will keep your business serviced.

13. How will their solution be at the forefront in the future? Is it Future Proof?

The solution you receive may be frontline and great for today’s workforce, but what will their solution be like ten years from now? How will they ensure that their software and service can still succeed in the changing world? Are they adopting new solutions, such as cloud instead of local hosting? Is it future proof?

14. How do they ensure availability and customer support?

Brilliant customer support should be a prerequisite. When asking about customer support, you want to avoid only finding out if they have support. You want to find out how accessible the support is and if they will help you immediately or if you are only making the provider aware of the problem. The next point covers this more clearly.

15. Who is dedicated to your payroll account?

Business is about who you do things with, and this is where you need to know the exact person who manages your payroll. It should be a pleasure to talk to this person as they will be the one you will trust most with the management of your data.

16. How will our employees be supported?

Payroll Outsourcing companies should understand that your employees are your priority. That is why employee portals have been created for employees to access and update their information. But what happens the day an employee struggles on the portal and cannot download their payslip? Will your service provider be able to help the employee directly, or will they support the organisation’s HR? The answer to this can vary between providers, although most Payroll Outsourcing Providers do not interact directly with employees inside other organisations. However, they may provide this as one of their separate HR services. Ultimately, you want to know how your employees will be supported, so be sure to get clarity on this question.

17. What reporting functionality do they offer?

Financial and HR reporting is a primary requirement.

It is essential that your service provider will be able to meet all your current reporting requirements and that they will be able to create custom reports if you require them to in the future.

It is also worth enquiring whether they offer API integration for dashboard reporting and Power BI reporting.

18. How will they work together with your HR/financial team?

If your organisation has an HR and financial team, you will want to know how communication will happen.

Ask how monthly payroll tasks are handled and how the finance team will be notified of salaries, wages, tax payments, and the payroll service invoice. Some organisations have other specifications unique to their business, so take a moment to find out how it will be handled.

19. What other platforms can the payroll platform integrate with?

Integrations can be extremely valuable. One of the first integrations you may be interested in is how to integrate your payroll with your budgeting and accounting solution. This is because payroll influences your whole financial structure, and having uniform data across platforms is imperative for smooth operations.

Perhaps you have an HR system, Collaboration app, or CRM you would like to integrate to manage your employees more smoothly. It will then make a satisfying difference if you find a solution that can save your company more time and resources. Such solutions used to be too pricey and only something enterprises could afford, but today it is a realistic option for many companies.

20. What level of support will you require?

Most businesses have a generic payroll. However, you may have a customised payroll setup that requires extra attention on your periodic PaySlips, in other words, a higher level of support unique to your needs. Understanding your support level will be critical information for your possible service provider. Assigning this process to your current financial team is beneficial, but if you do not have a dedicated financial team, we would advise contacting a payroll consultant or a third-party payroll service provider that would be able to help you identify what level of support you require.

21. What is the termination agreement?

Before getting into a deal, be sure you know how to get out. A service agreement should always be fair and protect both parties interests. The last thing anyone wants is to be locked up in an unfair deal that serves one party only.

Along with this, understand your contract length; most providers offer six months to one-year contracts. Also, understand what conditions can allow premature cancellations of the contract.

Remember, protecting your data is vital, so there must be a defined and signed-on way to receive all the data when the contract is terminated or comes to an end. Include how they should completely remove your data from their devices in the agreement.