This document compares the costs and benefits of outsourcing payroll processing versus handling it in-house. It finds that while outsourcing saves time spent on tasks like processing, reports, remittance, and tax filings, it has costs like submission deadlines and lack of flexibility. Keeping payroll in-house reduces costs per employee but requires spending on processing, reports, software, and withholdings. A cost comparison for a company with 250-500 employees over 3 years shows that outsourcing would save over $33,000 versus in-house processing. Factors to consider include benefits beyond costs and a free analysis of current systems.
2. Agenda
• Internal Costs
• Ratio of time
• Benefits of Outsourcing
• Costs of Outsourcing
• Costs of In House Processing
• Benefits of In House Processing
• Cost Comparison
• What to Consider
• Demonstration
• Free Analysis
• Questions
4. Ratio of Time
In most, but not all cases, the ratio of time is as follows:
– 35% - Time collection and approval
– 10% - Time summarization
– 5% - Adjustments to gross payroll
– 10% - Entry or submission of hoursgross
– 10% - Processing of ChecksDirect Deposit
– 5% - Processing of Reports
– 5% - Remittance of withholdings and employer taxes
– 10% - Tax authority filings
– 5% - Process other disbursements
– 5% - Recording payroll into the general ledger
7. Benefits of In House Processing
Cost/Employee Drops
Cash Management Improves
Flexibility
Access to Data
Improved Reporting
8. Costs of In House Processing
Processing Time
Processing Reports
Remittance
Software Fees
Withholdings
9. Cost Comparison
250 to 500 Employees Year 1 Year 2 Year 3 Total
Outsourced Payroll $ 20,000 $20,000 $20,000 $60,000
GP Payroll for BRL
Payroll Licenses $ 5,000 $ - $ - $ 5,000
Direct Deposit $ 2,000 $ - $ - $ 2,000
Federal Magnetic Media $ 750 $ - $ - $ 750
Support Plan $ 1,938 $ 1,938 $ 1,938 $ 5,814
Implementation Fees $ 12,500 $ - $ - $12,500
Annual Costs $ 22,188 $ 1,938 $ 1,938 $26,064
Yearly ROI $ (2,188) $18,062 $18,062 $33,936
10. What to consider
What other benefits can be
derived at my organization?
Better Employee Service
Improved internal processing and reporting
11. Demonstration
• Direct Deposit
• Checks
• Payroll to Payables Integration
• General Ledger Posting
Processing Payroll
• Smartlists,
• SQL Reporting Services
• Report Writer
Reporting
• Tracking Paid Time Off
• Tracking Property, Licenses and Training
Human Resources Management
12. Free Analysis
• Review of your systems
• Findings documented
• Reviewed with your staff
• Highlight areas for improvement
• Discuss options & the related
costs and benefits
14. Contact Information
• Bruce Lane
– blane@verticalsol.com
– 412-220-5755
• Tina Featheringham
– tfeatheringham@vericalsol.com
– 412-220-5754
Notes de l'éditeur
Time collection and approvalTime summarizationAdjustments to gross payrollEntry or submission of hours\grossProcessing of Checks\Direct DepositProcessing of ReportsRemittance of withholdings and employer taxesTax authority filingsProcess other disbursementsRecording payroll into the general ledger
Save time on various tasksProcessing of Checks\Direct DepositProcessing of ReportsRemittance of withholdings and employer taxesTax authority filingsWhat is that value to you?
Service provider feesVarious services may be ala carteTime value of funds transferred to the service provider in advance of the due dateIn flexibility of timing of submissionAccess to your data in a format that is usefulReporting may be weak
Within a relevant range the cost per employee will drop as you grow or add new featuresService provider charges by employee and services provided whereas most of your internal costs will be fixed within a relevant rangeCash management improves since you manage your own fundsFlexibility of timing of processingComplete access to your data in a format that is usefulReporting is more powerful and useful
Time spent on:Processing of Checks\Direct DepositProcessing of ReportsRemittance of withholdings and employer taxesTax authority filingsSoftware licenses costs
Besides cost savings what other benefits can be derived at my organization?Better employee serviceFlexible direct deposit optionsMore sophisticated and accurate PTO trackingImproved internal processing and reportingBetter cost tracking by integrated posting of benefits and taxes to the specific departmentsIntegrated payroll to payables posting eliminating creation of vouchers for tax and withholding remittances
This even applies to those of you already using Dynamics GP Payroll and Human ResourcesReview of your entire payroll\human resource management systemDocument prepared and reviewed with your staffHighlight areas for improvementDiscuss options to improve and the related costs and benefits