Debunked: Your 5 Misconceptions about Payroll Outsourcing

Posted by Gillian Vitug

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Aug 2, 2016 12:30:00 PM

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There are many unsubstantiated information about outsourcing payroll to a third party. There could be a myriad of reasons why these misconceptions came up, but the thing is, with the evolving times, companies have been realizing the benefit of innovative ‘off-premise’ business functions. Managing payroll takes up a lot of time and effort which could otherwise be used for other activities to grow the business. Why stress on salary calculations and tax deadlines when you can have experts do it for you perfectly with ease?

Here are the five most common misconceptions about outsourcing payroll and how it can translate to something even more beneficial for your business.

1. “Only large businesses can afford to outsource payroll.”

Fallacy. As the trend of outsourcing payroll continuously develops, even the top payroll outsourcing companies are addressing the needs of the small business sector. Even if you have less than 10 employees, don’t get intimidated with hearsays; take time to research and get those free consultations with your potential payroll providers to get a better view of their fees and processes. You’ll be surprised that a number of well-known vendors offer competitive pricing for small businesses, which could equate to something even lower than the salary of an in-house employee in charge of payroll.

2. “The payroll outsourcing setup is too complicated.”

Payroll services providers follow a standard onboarding and setup procedure, which means that they will prompt you in advance for all the required documents for transitioning your payroll to them, and they will work behind the scenes before making your system live. It will require only a bit of your time which will pay off greatly, in terms of the amount of time and money that you can save in the long run.

3. “Payroll outsourcing means you lose full control of your payroll activities.”

Don’t think that outsourcing your payroll equates to just another business transaction. Think of your potential payroll provider as a partner, to help you out in streamlining your payroll functions. With the personalised reports that your vendor provides you with, you still have full access and control over your payroll data. You may still cut checks as long as you inform your payroll provider to have it properly accounted for.

4. “Payroll outsourcing providers only offer generic solutions.”

The only time you’ll know when the payroll provider is right for you is when it allows you to modify the payroll solutions that it offers, to fit the requirements of the current phase of your business. Generic, “one-size-fits-all” payroll strategies will never work as every business is unique. The payroll provider should fully understand the nature of your business and shall work with you to customise a solution that will fit your budget and requirements adequately.

5. “Payroll outsourcing makes you susceptible to leakage of sensitive information.”

Entrusting your payroll activities to trustworthy payroll providers can even be more advantageous for you, in the sense that it can avoid employee fraud. Doing it in-house means that your payroll information is exposed to several members of your organisation who have access to these payroll numbers. Thus, it isn’t uncommon for employees to connive in committing falsified wages by manipulating the pay rates, commission schemes, or payroll software. Some might even create ghost employees and have that money deposited to their own accounts.

Having your payroll outsourced means that only you, the employer, will have access to your sensitive payroll figures. Concurrently, your employees might be allowed to access their timesheets and pay slips online but of course, with limited access that they definitely couldn’t hack their way into.


If payroll outsourcing is any of these things mentioned above, why do many businesses (large or small) still do it? It’s about time that you decide for yourself and decipher on how a process innovation like payroll outsourcing can help make better use of your time and money.

Let D&V set the record straight. Get a free consultation with our Payroll Specialists and see how we make payroll easier for businesses in Australia (for now).

Download the Australian Payroll Management Whitepaper

Topics: Payroll Services

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