After the paycheck is cut – now what?
Hooray, you made it through getting all the right information into the paycheck calculation engine, and gross-to-net looks good. You submit your payroll, and paychecks are issued. Whew, the burden of processing payroll is now done, right? Not quite.
For the payroll person and team, the post-payroll processing tasks are just as important and tedious as calculating gross-to-net for the paychecks. Does the following sound familiar to my fellow payroll managers out there?
1. You must submit your ACH files in order to get direct deposits initiated and funded.
2. Paychecks (live and direct deposit notices) must be printed and distributed to employees, and posted to employee self-service platforms.
3. All the payroll taxes withheld must be reconciled, files created, and payments funded.
4. Third-party vendor and garnishment payments need to be remitted for all the deductions withheld.
5. GL files are created and sent to the finance teams.
Then of course there are a variety of standard reports that are typically generated with each payroll run…feels like the work is never done.
What is the best, and most efficient, way to complete these tasks after processing payroll? That really depends on the resources and knowledge you have in-house. Some companies have staff that are responsible for these tasks, so they prefer to handle these processes themselves. Other companies choose to outsource these processes to payroll service providers. There really is no right or wrong way, it just depends on your own company’s comfort level with their ability to effectively complete these payroll tasks with in house expertise.
There is nothing wrong with wanting to keep a process in-house. You may have a strong staff member that really enjoys reconciling taxes, and working with taxing agencies on filings and reports and remitting payments. More power to them, as that is probably one of the hardest processes to master. Or maybe you have a person that has a lot of experience working with garnishment agencies, and depending on your industry or location, you may have quite a few employees that seem to just continually have garnishment orders that follow them. Or maybe it’s the opposite, you have very few garnishment orders, so the cost of having this service outsourced doesn’t make sense.
If you decide to use a payroll service provider and outsource, there are a lot of options in the market. And for most of them, they offer a full suite of services. But what happens if you just want one or two tasks to be outsourced, and the rest you want to complete in-house with your own staff? That can narrow your options down quite a bit, but there are service providers that do support choice in the services they provide.
When evaluating the strategy that works best for your company, think about these three things:
Your staff’s knowledge and availability. Does your staff have the right knowledge to perform the tasks, and how much time and costs will it take to stay current with laws and regulations to stay compliant?
Cost of doing in-house vs. outsourcing. There is a basic cost of fully loaded personnel salary for performing the tasks, and is that a savings compared to service provider contracted fees?
Time constraints. If you are taking the time to do these tasks in-house, think about what you may not be getting to that would support your business? Are there reports and data sets you can’t develop for your leadership and operations? Are there projects you are not able to kick-off, like a new hire onboarding experience or updating process flows?
Once you understand what processes and services would benefit you by being outsourced, choosing your service provider becomes much easier. A couple of things to consider when choosing a payroll service provider:
Data integration. Does a data file have to be generated separately, or does your payroll software have post-payroll services that automatically and seamlessly transfer the data? It’s best when no data integration is needed, and you don’t have to spend time mapping data fields to match your payroll service vendor’s file formats.
Customer support model. Do you have separate customer support numbers to call for each different part of the process? Check printing vs. distribution, another for ACH funding, and yet another for tax filings? Or, is there just one number to remember for both payroll processing and post payroll services? Is your vendor’s customer support model a single team that gives you the expertise you need for all your payroll processes, any time of the day?
Pricing. Is there simple, transparent pricing so you know exactly how much it will cost, every month, regardless of the services you choose? No hidden fees for extra reports or filings. No extra costs for data mapping, or file generations.
Bottom line, there really is no set best practice to follow. Look at your own processes and staff, and decide what the best service solution is for your team and company. Getting payroll right is every company’s most important job, and remember, choice in services is to your advantage.