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Mar 16, 2021 ConnectPay

Are Outsourced Payroll Management Services Worth It in 2021?

Payroll in 2021: do you still need payroll management services?

Let’s face it; payroll didn’t get any easier in 2021. The worldwide pandemic ushered in an uncertain economy and an endless amount of new rules and regulations connected to necessary programs like the Paycheck Protection Program (PPP).

Payroll is more complex today than ever.

Yet, while payroll management services may be needed now more than ever before, not all of them are the same. In this article, we’re going to pull back the curtain and show you the honest truth about payroll management services so you can determine whether or not the benefits justify the price.

Are Outsourced Payroll Management Services Worth It?

Before we go on, it’s important to know that ConnectPay is an outsourced payroll management service. So, our opinion may be a little biased. However, we see companies struggling with payroll on a daily basis. That’s why we genuinely believe payroll services are worth the investment.

6 Pillars of Payroll

Benefits of Outsourced Payroll

There are a lot of benefits when outsourcing to a payroll management service. Granted, while not every payroll management service offers all of these, this is some of what we offer our clients:

  • You don’t have to worry about tax compliance.
  • Payments can be automated and direct-deposited to employees.
  • Workers’ comp payments are integrated so you pay as you go.
  • You get access to knowledgeable representatives when you need help.
  • You can get branded 3rd party payroll reports.
  • You have access to resources that help manage HR compliance.
  • You get time back to focus on running your business instead of handling payroll.

We’ve discovered that the value an outsourced payroll management service brings to your business largely depends on two questions:

  • Are you paying for the right things?
  • Are you getting what you pay for?

Paying for the Right Payroll Services

We have people come to us all the time because their current payroll service isn’t providing them with the services they needed. We consistently find that, when there are problems, there is almost always a mismatch between what the customer needs and what they pay for. In many cases, we find that companies pay for all kinds of services they don’t need or use while failing to get support in the areas they actually do need.

Unnecessary Surcharges

One company, for example, was paying a “next day” surcharge every payroll because they processed their payroll on Thursday for a Friday check date. They did this repeatedly, not out of necessity, but because they were never told they could move the run date to earlier in the week and avoid that charge.

Unnecessary Services

Some payroll management services offer discounted employee onboarding for an ongoing fee as part of their “bundle” deals. Most small businesses don’t have constant employee turnover, which means they don’t need to onboard employees. Still, tons of companies are paying for that service.

Unnecessary Expenses

In some cases, companies end up spending too much because their payroll service isn’t well versed in their area of business. Workers' compensation is one such area we often see people spending too much. For every employee, there are specific classifications, and some workers’ comp classifications are more expensive than others. Some payroll companies may try to do the easy thing and classify all workers the same, which almost always means overpaying.

Getting What You Pay For

Overpaying for a bunch of resources and services you don’t need is one thing. Not getting what you pay for is another.

When you hire an outsourced payroll management service, you should receive service in exchange for the cost. It seems simple, but it’s not always that cut-and-dry. There are many ways we see companies failing to get the service they pay for, and for most of them, it’s a terrible frustration - and rightly so!

Customer Support

Customer support may not be top of mind when someone searches for an outsourced payroll management service, but it should be. When something goes wrong, the quality of customer support is all that matters. Period.

Here are some real-life stories:

  • Some larger payroll management services outsource their support calls to foreign countries. We’ve talked to people who couldn’t get an answer about regulatory compliance because their “support rep” wasn’t located within the US and wasn’t versed in local laws.
  • Before coming to us, one of our clients had a horrible experience with their previous payroll service provider. After receiving a tax notice from the IRS, they reached out for help. The tax notice was due to an error on the part of the payroll service, yet when they asked for help, they were transferred from one person to another but never received help in resolving the issue.
  • Small businesses report to us that they are experiencing wait times of more than 45 minutes any time they call their payroll service provider.
  • A common complaint we hear about ‘big box’ payroll providers is that customer support phone numbers are always answered by someone different, and they have to repeat every detail about their problem, even if they’ve spent hours talking to another representative earlier.

We hear these stories all the time, which is why we ensure our clients never reach voicemail during business hours. We have embraced this “no voicemail rule,” and our clients love it.

Whenever there is a timely need, being able to call up and get your rep on the phone immediately is not just valuable for peace of mind, but it helps solve your problems faster so you can get back to work.

Our clients call when:

  • Something is wrong with an employee’s payroll
  • There’s a tax issue they need to figure out
  • Something urgent has come up, and they need advice
  • They need a friend (not really - but we’re here for you if you do!)

Taxes and Payroll Done Right the First Time

According to the IRS, more than a third of SMBs incur a payroll-related tax penalty every year. The average penalty is more than $800. If your outsourced payroll management service is sloppy, the likelihood of getting a tax penalty or fee notice is very high.

If you’re paying a professional to handle your payroll, you shouldn’t have to worry about them doing it wrong. Their mistakes should not fall on your shoulders to correct, and you should never play endless phone tag to get a tax notice or penalty resolved.

At ConnectPay, for example, we give our clients a 'no tax penalty or fee guarantee.' We take responsibility for our payroll work. And we guarantee that, if we ever do make an error, we incur the penalty and fee for that error, not the client.

Local and Industry/Domain Knowledge

There are two main thrusts of great payroll service support:

  • Does the payroll provider know my area? Your location has unique laws and regulations, and your provider should not be far removed from that.
  • Does the payroll provider know my industry? A great payroll provider will do the work of immersing themselves in everything needed to serve your industry. Our clients rest easy knowing we are not just reachable, but we have membership in industry-specific associations, like the Retailers Association of Massachusetts.

Relationships Over Databases

Large enterprises have so many locations and companies within companies that their payroll services are often massive databases of providers working together like a small army to handle payroll.

Small businesses, on the other hand, need a different kind of service. They need to be able to put a face to the name of their representative and build a trust-based relationship with that person over time.

At ConnectPay, we believe in relationships, not call centers and databases. We build relationships with our clients, but we also build relationships with business partners.

For example, when a client needs a service or has an issue outside of our wheelhouse, we can connect them with trusted CPAs, bookkeepers, brokers, and the like, within their own community. And because we have close relationships with these providers, we know they have our customer’s best interests at heart.

Getting the Right Outsourced Payroll Management Service

If you decide to outsource your payroll to a payroll management service, you deserve the best. That said, what is “best” is subjective. What is best for a small business, for example, may not be near a good fit for a medium-sized business in the same town.

We recommend evaluating multiple payroll services before making your final decision. Of course, we would love for you to give us a chance to earn your business as an outsourced payroll management service. However, we know we’re not the best fit for everyone.

Our specialty is small businesses, and we aim to be the best provider available for our clients. If you want that kind of experience, and if you’re a small business, don’t hesitate to connect with us.

We would love to talk to you!

If you want a little more information on our approach to payroll, I recommend downloading our free PDF, the Six Pillars of Payroll.

6 Pillars of Payroll

Published by ConnectPay March 16, 2021