Payroll can be a sore subject for business owners. Having worked with many companies on operational improvements over the years, it seems that some managers are resigned to having two not-so-great choices for paying salaries. Businesses have been forced to choose between the high costs and limited control offered by payroll processing firms and the constraints of bringing payroll in-house. The latter is typically a time-consuming task performed on systems with limited functionality.
The Difficulties That Arise From Outsourcing Payroll
Few would argue that outsourcing payroll is inconvenient. It is a very good option for companies with limited staffing resources. However, outsourcing payroll brings a number of difficulties with it. The employer still has to capture workers’ hours and code payroll entries to their proper categories. The company is responsible for keeping track of changes to individual pay rates and employee statuses. Once the process has concluded, the accounting team then has to post the payroll entries to the accounting system. There are fees to pay. And, the payroll company generally wants the full amount of the payroll and taxes deposited with them several days in advance, which can negatively affect cash flow.
Challenges With Old In-House Payroll Systems
While paying fees to external payroll providers and tying up cash may feel like a burden, doing payroll in-house is not free, either. In fact, it may cost more over the long term than outsourcing payroll. The coding work may be detailed and time-consuming, particularly if workers belong to a union. Employee turnover adds to the administrative workload.
Compounding the problem is the reality that most industry-specific payroll systems are old. They tend to have gaps in core accounting and reporting functions. They aren’t easy to use. As often happens, the workflow distorts itself to accommodate the limitations of the system.
The New Approach
This disappointing dichotomy is now coming to an end. With the advent of modern, cloud-based Enterprise Resource Planning (ERP) solutions like Acumatica Cloud ERP, companies can now work with payroll as part of an overall operational and financial management solution. They can seamlessly connect payroll functions with all aspects of the business. Advantages of using a cloud ERP solution like Acumatica Payroll include:
- Flexibility and agility—Acumatica payroll is cloud-native and browser-based, so it can evolve to meet your company’s changing requirements with relative ease.
- Integrated—If your systems for timekeeping, payroll and accounting operate separately, you will likely be duplicating efforts and creating opportunities for payroll errors. Acumatica Payroll provides integration between timekeeping and payroll calculations. The full details are immediately available in the payroll application and financial statements.
- Automated—Ideally, your payroll solution should always be current with federal and state tax rules—but without requiring any manual updating to achieve this goal. Acumatica Payroll features an advanced, cloud-hosted tax engine that is updated automatically.
- Multi-state and multi-entity payroll—If your people work in different states, or for different corporate entities, Acumatica can handle the associated multi-state tax filing and multi-entity accounting processes.
- Customizable and secure—A modern payroll solution needs to be configurable to meet specific end user needs. At the same time, the entire system must provide granular security. Acumatica offers both of these qualities.
Cloud payroll offers a path out of the current, sub-optimal in-source/outsource choice in payroll processing. The technology gives you more control and flexibility, with the potential to save money at the same time. Cloud payroll solutions like Acumatica are flexible and well-integrated with financial systems, so you have a more accurate and timely sense of what’s happening with your payroll and its impact on your bottom line.
To learn more about financial management and cloud payroll or discuss how it can benefit your business, contact us for a free consultation.