Why You Should Outsource Your Payroll

An outsourced payroll may sound like a strange idea at the outset – why entrust your company’s finances to people outside the company? – but the data shows that more businesses are switching to it. Statista shows that payroll outsourcing statistics have been on the rise for the past few years, with many businesses considering payroll outsourcing as an essential part of their operations.

But what is payroll outsourcing, and is it the right pick for your business? If you’re wondering about the benefits of payroll outsourcing and whether it’s a good fit for your business, this article is for you.

What Exactly Is Payroll Outsourcing?
Payroll outsourcing involves letting another entity or company take care of your payroll management for you. Because payroll is an administrative process that scales with the size of your company, it can be difficult for your own internal resources or personnel to take care of it. As your company grows and develops, your payroll system will need to develop with your needs.

The most significant benefit of payroll outsourcing is that it frees up resources, personnel, and time away from your management and lets them use it on the important things in your business. By outsourcing your payroll, you can allocate your time and effort to the core functions of your company, allowing you to become more productive in your day-to-day operations.

Pros And Cons Of Payroll Outsourcing
While payroll outsourcing can offer you significant benefits, there are also some considerations that you need to keep in mind when integrating it with your company’s operations. Here are some factors that you should consider if looking into payroll outsourcing:



Allows you to be compliant with your industry’s rules and regulations about taxations

Need to pick a company that can best suit the specific needs of your business

Your employees can focus on doing their work instead of worrying if they’ll be paid on time

Company needs to be adequately experienced, licensed, and have access to the tools required for payroll management

Frees up resources from your finance/HR department to focus on other areas of their work

If any irregularities in the payroll are detected, it’s often your company that’s still held liable

Prevents you from getting involved in issues like payroll fraud by hiring the right personnel

You might be paying for services or tools that your company doesn’t really need

Access to rapidly improving payroll management tools, software, and strategy

It may have high upfront costs or require extensive time to integrate into your normal operations

Is Payroll Outsourcing The Right Fit For Your Company?

Given all the above pros and cons, how would you know if payroll outsourcing can work for your company? If you’re still on the fence about outsourcing your payroll, these questions can help.

How large is my company?

Payroll outsourcing really shines when it’s used in a large organisation, since the requirements for payroll management grow with company size. However, it also risks being redundant if the company is large enough to have a dedicated/highly trained finance department.
If your company is a small to medium enterprise (SME), you’re best suited to outsourcing your payroll since it frees up resources without costing too much. It’s still possible for smaller or larger companies to outsource their payroll – but it requires finding the right company that can adjust both their services and pricing to their needs.

How much am I willing to pay for payroll outsourcing?

Even if one of the core goals of payroll outsourcing is to save your company time, effort, and resources with your payroll management, it’s still a service that you’ll have to spend on. This can be an issue if you don’t have the funding to pay for outsourcing, which can be a serious problem for most business owners who want to outsource payroll for small businesses.
Fortunately, payroll outsourcing companies can be flexible with the terms and payments that you’ll need to make to use their services. There are even some companies that can base their pricing on how many employees your company has, allowing you to budget your spending for outsourced payroll services more efficiently.

How comfortable am I with outsourcing my company’s payroll?

Payroll outsourcing companies don’t handle all of your company’s finances, but they will have visibility over data relating to your employees and how they are paid. As a business owner, you’ll need to leverage the risks vs. the advantages of letting your company’s payroll be overseen by an entity not within your company.
A good way to assuage any worries you may have is to partner with a company that can provide transparent oversight into their operations, regular updates with how they’re managing your payroll, and a proven track record in their industry. This gives you the peace of mind you need to hand off your payroll to a company that you can trust.


Payroll outsourcing can be a great way for your company to save costs, make sure that you pay your employees accurately and on time, and also offload some of your own resources and personnel for your own operations. But if you already have a sizable finance department of your own or can’t pay the upfront fees, it might be best to wait until you can.

ClockOn provides outstanding outsourced payroll services to Australian businesses, with our simple and transparent pricing policies that cater to all company sizes. We pride ourselves on having a dedicated, experienced payroll team servicing a secure server system that can keep your data and finances safe.

QUICK QUOTE Request a formal quote for outsourced payroll


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