Reasons to Choose Payroll Software Instead of a Payroll Service

In-House or Cloud Payroll Software Deliver Savings, Flexibility and Control

Payroll service firms, long-seen as the de facto choice for companies looking to manage sometimes onerous salary-related tasks, may no longer be the best solution for businesses.

The plethora of sophisticated, customizable and powerful payroll software applications could-well deliver cost-savings, business benefits and flexibility over service providers' offerings—without requiring onerous administration or technical skills. Even organizations loathe to take-on the information technology infrastructure and maintenance costs typically associated with in-house software applications have a non-payroll service option in the form of well-established and proven hosting providers.

It may well then be the right time to reconsider how your organization tackles the all-too critical task of company payroll.

In The House

So why should you consider stepping away from a payroll service firm?

As an organization grows it may become more cost-effective to reclaim control of payroll processing, saving money and eliminating partner-management tasks. What was once a nominal fee may expand as you add headcount and payroll complexities to your list of service-provider requirements. And since you may already have accounting and human resource professionals on-staff, it could be more cost-effective to bring payroll services firmly under your roof.

Payroll providers typically guarantee they will file taxes in a timely way. With the evolution of business software that also delivers online tax-filing and other tax options, businesses now have the same or similar abilities at their fingertips.

When it comes to data about peoples' salaries and benefits, security is, of course, a frequent barrier to external partnerships. Payroll service firms have infrastructure and steps in place to safeguard your data. But businesses may feel more secure using their own software with self defined tiered levels of access and security. Whether you ultimately select in-house, hosted, Software as a Service (SaaS) or cloud payroll, you need assurance of thorough information security and tiered access, depending on the users' responsibilities.

This may be a corporate culture issue, but some organizations are philosophically uncomfortable ceding any control to external firms. In some cases, the need for control is driven by the company's complexities or multi-national operations. In others, rapid shifts within the company - such as the frequent hiring and laying-off of employees typically associated with industries such as retail, agriculture and manufacturing - may make payroll software much more convenient and efficient than a payroll service.

Finally, executives love reports. Payroll software empowers department heads to create these analysis tools based on virtually any criteria - be it tracking salaries within a department, a geography or year-over-year. Need something different? Flexible payroll software empowers even the most creative reporting. Payroll software then lets managers export reports' data into a spreadsheet, PowerPoint or other format for presentation and review.

Cloud Payroll: Best of Both Worlds

Some businesses are legitimately concerned about the up-front costs of adopting payroll applications instead of a payroll service. However, organizations can have the best of both worlds - the flexibility and ongoing cost effectiveness of software with the infrastructure-friendliness, lack of maintenance and upgrades of a service.

Consider a hosted payroll provider, a third-party that runs, maintains and operates payroll software on their hardware and infrastructure while simultaneously providing you with the access, the data-malleability and reporting strengths that you need.

These hosting or cloud payroll companies expend their resources to select the strongest, most proven software applications, eliminating much of your leg work. With service level agreements (SLAs) and other guarantees, you know authorized users have consistent, reliable Internet-based access to your company's data. Your information is protected with leading-edge security technologies. Since you're using your internal knowledge employees to do the work and relying on your trusted partner to provide the IT infrastructure and business software, your monthly costs shrink and your control increases compared with payroll service firms.

The concept of paying people for jobs well-done may not have evolved much since the Industrial Revolution, but the tools businesses can use to oversee this necessary function continue to advance, making it important to revisit the topic to ensure you're using the most appropriate solutions for your company's payroll needs.