How Much Does Payroll Outsourcing Cost?

Benefits of Payroll Outsourcing

Outsourcing payroll to a payroll service provider is becoming increasingly popular for companies seeking high-level payroll expertise and focus on their core business. While easing data security and compliance burdens, outsourced payroll also frees up internal resources for more strategic HR and people management tasks.

Moving to an outsourced payroll provider is becoming more conventional. Below are some of the major advantages our outsourced payroll customers experience:

1. Timesaving: Payroll processing requires a large amount of data, time and accuracy. Outsourcing to a seasoned payroll service provider enables your internal team greater freedom to focus on core business activities.
    
2. Compliance: Most businesses endeavour to avoid hefty fines from regulatory bodies for compliance issues, but not all succeed. Keeping track of rapid changes such as STP Phase 2, Fairwork Awards, Superannuation regulations and Super Stapling requirements can be overwhelming and hard to keep track of which leads to stress and burnout.
   
   
3. Cost Savings: Payroll outsourcing is commonly misunderstood to be more expensive than in-house processing. However, considering the recruitment and training costs of hiring payroll talent and the outlay required for payroll software, you can easily see the cost savings of outsourcing payroll to an expert.
   
   
4. Peace of Mind: If you encounter payroll staff shortages or downtime, knowing you are compliant and paying your employees on time gives you peace of mind. 
   
   
5. Scalability: Payroll processing requirements change as your business grows and evolves. Outsourcing combined with online payroll software and workforce management software enables your business to forecast for the future and manage labour costs in real-time from a single data source.  

It is important to be aware of both the benefits and potential risks of outsourcing payroll. To read a more comprehensive analysis refer to our blog covering the Top 10 pros and cons of outsourcing payroll for your business. 

Payroll Outsourcing Cost

The outsourcing payroll cost per employee in Australia is typically calculated on a per payslip, per pay run basis. 

Depending on the complexity of the payroll services you choose, the average cost can range from $6 to $20 per payslip, per pay run. 

The lower end of this range is generally for basic payroll outsourcing costs for small businesses, and the higher end is for much larger businesses with complex payroll and workforce management requirements. 

Calculating the exact payroll outsourcing costs ultimately depends on several factors such as; the number of entities, number of employees, pay frequency (weekly, fortnightly or monthly) and the complexity of your payroll processing needs.

What Payroll Services Are Provided?

Every payroll service provider offers a slightly different solution. Access Payroll Outsourcing is a full-service, end-to-end, flexible, payroll provider that partners with your business. Some of the services we offer are outlined below.  

Payroll Management 

A dedicated, qualified Payroll Officer to handle the entire payroll processing cycle, including calculating employee wages, deductions, bonuses, overtime, sick leave and annual leave,   reporting, lodgements and any other applicable requirements.

Payments

Outsourcing services include arranging the payments of employee salaries, wages, PAYG, and superannuation including third-party payments. 

Payroll Tax 

Payroll tax assistance is crucial and your dedicated Payroll Officer helps you meet your tax obligations by managing the calculation and lodgement of all state and territory taxes on your behalf.

Single Touch Payroll 

Ensuring your business complies with ATO reporting requirements including Single Touch Payroll (STP) and the latest STP2 regulations. The Access Group is a certified STP provider, so we are at the core of ensuring your business complies with the latest requirements.

Superannuation

Management of superannuation obligations and payments will soon change to every pay run with Payday Super. 

EOFY Reconciliation & Rollover

Outsourced payroll service manages your EOFY reconciliation including STP lodgement, data integrity checks and annual statements made available for each employee. 

Employee Experience 

Employee experience is a growing priority for businesses to empower their workforce with an Employee Self-Service (ESS) mobile app. Access Definitiv comes with a mobile app that ensures employee engagement, productivity and autonomy. 

Employees use the app to access, payslips, personal information, time and attendance, leave management, and rosters. Managers have access to the app for announcements, onboarding, approvals, updates, and team directory.

ERP / Financial Integration

Data flow is important for any company and can often be a time-consuming task. Access Definitiv automatically produces a customised payroll journal that can be imported into your finance system for data continuity.

Other Cost Considerations With Outsourcing Payroll

There are many factors that determine the final outsourced payroll cost to a payroll professional in Australia. Below we have outlined other general cost considerations with the example of Access Payroll Outsourcing using our cloud-native payroll software Access Definitiv.

Additional Payroll Software Modules

The additional modules of Access Definitiv tie into the requirements for your business when assessing your outsourcing package. Not all businesses need all the modules on offer and the cost is calculated based on the modules your business requires.

• Onboarding Module: Most payroll providers charge an additional license fee for onboarding capabilities or require third-party integration. Employee Onboarding is a standard offering for Access Payroll Outsourcing services at no additional cost.
  
  
• Compliance Module: Stay on top of your employees' compliance records. The compliance module ensures you meet your operational and regulatory requirements with compliance checks, notifications and reporting.
  
  
• Work Restrictions Module: Proactively manage WHS, overtime and annualised salary outer limits. You can set different policies and rules for your workforce groups from office to factory and casual to full-time.
  
  
• Plant & Equipment Module: Manage and easily report all your plant and equipment. The Plant and Equipment module helps record and report on physical assets assigned to individuals and jobs, ensuring your operation runs smoothly and your business has full visibility of costs.

Additional Payroll Services & Requests  

Payroll outsourcing annual costs fluctuate depending on the level and frequency of additional services and requests. Listed are some additional services that incur additional costs, at either a per instance charge or at consulting rate.

• Training & Implementation
• New Employee Setup 
• Out of Cycle Payments
• Additional Requests: Includes queries, leave audits, back pay calculations, late or additional data, a re-run of reports, additional reports, system or award updates, and bulk employee changes or updates.
• Payroll Tax Annual Reconciliation and Lodgement 
• Redundancy Quote
• Separation Certificate 
• Mid-year STP ‘Finalise’ Event

Is Payroll Outsourcing Cost-Effective?

Determining the cost-effectiveness of outsourcing payroll is a question each business must explore. All businesses aim to strike the perfect balance between the quality of their payroll function and the cost of running it.

Typically, outsourcing payroll to an expert provider is seen as the option with the fewest overheads and the most certainty over fixed end-to-end costs. It also eliminates paying for emergency cover when a key payroll team member is absent or decides to leave the business at short notice. 

The most obvious cost saving is the salary of full-time payroll professionals, however, it’s important for a business to have a holistic view of all the associated costs involved in processing payroll internally, such as payroll software, professional training, employee benefits and equipment and compliance adherence, these are often overlooked at the hiring phase.

All things considered, outsourced payroll services generally offer better value for money and certainty compared with in-house departments, especially for small and mid-market businesses. Many large enterprises choose to outsource for expertise, compliance, convenience and peace of mind, ensuring employees are paid on time and correctly.

The Access Group is a Gold Accredited industry partner of the Australian Payroll Association.