How Does Outsourced Payroll Work?

The current boom of the digital workplace hasn't left the payroll function out, in fact quite the contrary.

Even though payroll mistakes aren't commonplace, running payroll is a time-consuming task that will be best spent either increasing the business's productivity or finding ways to expand the business. And it is because working out how much needs to be paid out to your staff at the end of the month takes up so much time that payroll has been integrated into the digital workplace.

How Exactly Does Outsourced Payroll Actually Work?

Outsourced payroll allows every part of the payroll function to be integrated into one place. It allows you to manage payslips, new starter and leaver paperwork, as well as p60 forms. The service works the payroll out automatically so all you have to do is provide a spreadsheet with all the employee details, and how much you owe each one of them will then be calculated automatically. Once the system and the accounts team agree with the result of the calculation, then the outsourced payroll software will allow the user to complete the BACS authorisation, therefore saving valuable amounts of time.


The other important thing to take into account is that outsourced payroll is very flexible. The accounts time can personalise the payroll cycle so that the staff salaries are paid in at a date which is predefined each month, reducing employee questions about how much they got paid or when they got paid (saving your business time fielding those queries).


After salaries have been processed, an outsourced payroll provider will also laser print the payslips into pressure sealed security envelopes which can either be sent in bulk or to the employee's home address, adding a further layer of security to the process. Another advantage of outsourced payroll is that it provides your accounts team with reports on a regular basis, so you are able to track the evolution of the wages (payroll) costs over a given period.




Some of the reports offered by outsourced payroll suites include an analysis of payments and deductions in a single report per pay period and a payroll summary year to date amongst others. These reports are of importance from a financial analysis point of view because they allow the accounts team to track payroll relative to productivity. Furthermore, any report will be tailored to your business to provide feedback to the directors/managers and gain insight into how the money has been spent.


In addition to these reports, an outsourced payroll service is able to provide you with a feed which can be integrated directly integrated into your payroll system, thus saving time and considerably reducing the chance of transcription errors.

However, it is not just from a payroll point of view that an outsourced system allows you to save time, it is also useful at year-end when the system will automatically calculate each employee's P60 form which the payroll provider will then laser print.


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A Free Guide To Outsourcing Your Payroll