For employees, a regular paycheck represents much more than money in the bank. It represents stability, achievement, and trust that their hard work will pay off, literally.
For employers, payroll isn’t quite so symbolic. Payroll management can be fraught with potential errors, compliance pitfalls, and requires a significant investment of time. In fact, 32% of corporations in a recent survey said inaccurate data in the payroll system is a challenge. Another 30% said complying with regulations in the post-COVID environment is troublesome.1
Managing payroll data is complex.
For most large corporations, payroll data is usually spread across many functions (e.g., finance, HR, accounting). Hourly rates, time off and retirement contributions are just a few of the data included in employee pay. And they must be calculated correctly.
The pandemic added even more complexity as employers adopted remote models to ensure safety, while maintaining productivity. Overseeing employees in multiple states or countries with different tax structures, as well as all the necessary data, can be especially thorny. Entire departments may now be spread across many locations, often creating disparate data sources and technologies. The potential for errors is limitless. It’s no surprise that evaluating the tax implication of remote work in multiple jurisdictions was a priority for 58% of payroll professionals last year.2
Failing to withhold, calculate and report employee taxes in a timely manner can be costly to companies. Employers could be penalized depending on the error, size of the company, amount owed and timing of payment. There are also penalties for improperly filing W2s. Penalties may include up to 15% plus interest for late filings, as well as property liens, civil and criminal sanctions, and jail time. After looking at total costs, it makes sense to outsource payroll functions.
Professional payroll service providers stay abreast of government regulations as part of their job. Their level of compliance knowledge can’t be matched by most in-house payroll processors. In addition, most payroll companies have teams of experts who can research questions and provide answers to employers and employees.
Companies need payroll strategies.
As the workplace evolves, companies recognize the need for strategies to manage employment-related change. Yet, 33% of organizations don’t have one.3 Do you have a plan to scale your payroll functions for growth, while reducing risk and complexity?
Outsourcing payroll goes beyond just paying your employees. The right payroll partner can help determine “must-have” services versus those which are “nice-to-have.” Some additional choices might include new-hire reporting, software integration, vacation management, employee self-serve and mobile access.
Payroll outsourcing offers many benefits.
The reasons for outsourcing payroll vary, but there are key benefits that all companies will enjoy.
Saves time. Consider all the tasks involved in payroll processing: tracking benefit deductions, wage garnishments, new hires and terminations, paid time off, and so on. These are important but repetitive tasks that require extreme attention to detail and flawless data inputs. Outsourcing these responsibilities frees employees and managers for more mission-critical, strategic endeavors.
Saves money. If time is money — and it is — it may make more financial sense to outsource than to hire staff to manage the payroll function. Consider the wages and benefits consumed in-house by the payroll team, plus confidentiality concerns and accounting efficiencies.
Minimizes mistakes. For employees, mistakes in deductions, hours or pay rate can be costly and frustrating, and can damage employee-employer trust.
Promotes self-service. Employees want self-service access to their payroll platform. In addition, 84% of HR leaders identified employee self-service options as key to their success.4 An integrated payroll platform allows employees to print their own tax documents, preview pay information, access pays stubs, change tax allowance forms, and update their personal contact information. Letting employees complete these tasks themselves saves them — and your HR team — time and headaches.
Enhances security. Payroll data is particularly sensitive because it contains personal identifying information. Outsourcing to a trusted partner enhances security with state-of-the-art IT, including redundant systems and data storage protocols.
Employees expect accurate, timely paychecks. You want to meet these expectations — and satisfy compliance and reporting requirements. Outsourcing payroll could be a viable option for all concerned. Synovus Commercial Banking or your Relationship Manager can help sort through your payroll processing needs and options. Contact us to discuss next steps.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
EY Global, “How Can Payroll Build Value in an Organization,” March 2, 2022
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