How much is your time worth?
Is this being considered when looking at the bottom line of a payroll company’s quote?
Even if the payroll company’s proposal is close to the amount that you’re already paying, or even much higher, for the same basic services you’re already getting, take a closer look at all of the features and services and consider your time because the amount saved might be much more than the amount quoted.
There are many determining factors when deciding on the best payroll service and, believe it or not, the amount in time saved might save much more than the cost of the service itself.
If you currently do the payroll internally, analyze the cost for each service and compare it to the amount of time you spend doing each one. Or if you currently outsource your payroll to another service, compare that system to the one being proposed. Is it easier to use and navigate? Can you access it remotely? Are there more usable features to take on some of your other tasks? Are there any disruptions like frequent updates? How responsive is the service department? Understanding the time saved by using the new system might justify the overall cost.
For example: A Paperless Payroll requires that every employee has direct deposit. Obviously, there are cost savings by eliminating the payroll delivery, check signing and stuffing the checks into envelopes which might offset the added cost of direct deposit for everyone. What is sometimes overlooked by companies is the time saved by outsourcing all of this which actually saves more money than the added cost of putting everyone on direct deposit.
Depending on how often you need to reprint pay stubs or W-2’s for employees, by having the Paperless Payroll service, your employees can access all of this themselves online.. Another time saver.
Here are some other examples of the savings seen in other services:
Tax Filing services are one of the biggest reasons businesses use payroll services because any miscalculation or missed payment can result in paying penalties and interest. If a deduction is set up incorrectly or if the tax tables aren’t kept up-to-date, it can be costly.
Workers Compensation offered through the payroll service should also save money and will help your budget. Workers Compensation is traditionally based on an estimate of your payroll each year. At the end of the policy term, the insurance company audits your payroll and if they underestimated your payroll amount, you must pay the difference. Many times, the difference is in the thousands and might interfere with your budget. If your payroll company offers a Workers Compensation Pay-As-You-Go (PAYGO) service, it might be very beneficial to your business. The insurance providers that the payroll companies go through are the top names in the industry so you can rest assured that your coverage is good.
A Pay-As-You-Go plan is based on your actual payroll so there is no annual audit or payment that is needed. This is because the payroll company sends the payroll information to the insurance company after processing each payroll and they adjust their rates throughout the year. The cost of the PAYGO policy might also be slightly less than a traditional Workers Compensation policy. The only time saved by having this service is in the audit preparation so this is more of a cost savings for the policy itself and will eliminate the annual adjustment.
If you are required to participate in the Affordable Care Act, the amount of time spent tracking and monitoring everything is significant. Staying in compliance with it all can also be time consuming as well as the form preparation at year-end. Depending on the payroll company, they might be able to help you with every aspect of the ACA or they might only take on a portion of it. The amount of time saved should cost much less than the payroll company’s ACA services.
Time Clock systems are often overlooked because most people see the cost before considering the savings which is ironic because a good time system will return the largest savings. The initial cost of a time clock system might look to be out of the budget but after analyzing everything, it might actually cost less than the amount you’re paying without having it!
How much time does it take to manually calculate all of the time cards? Beyond the time card calculations, there is also time spent researching and correcting missed punches and watching each punch closely to enforce your company’s punch policies. A time system will eliminate all of this. There will still be missed punches but if the schedules are built inside of the time clock, it will be quick and easy to add the correct time.
A time clock system is computerized and can be set up with all of your company’s punch policies and enforce them automatically. When you’re ready to process your payroll, it’s just a matter of entering any missed punches and importing all of the hours into the payroll system by the click of a button.
Enforcing your company’s punch in/out policies automatically not only saves you time when processing the payroll, but it helps to save overtime costs.
For example: If a $10.00 per hour employee punched in 5 minutes early each morning, it might not seem like much and might not even be noticed. The employee might also think that it’s no big deal but at the end of the 40 hour week, they would have 25 minutes of overtime! It doesn’t amount to a large amount, $3.75 but if this happened each week with multiple employees, the additional costs could be in the thousands each year, and this is not including the additional Social Security and Medicare taxes that you would have to pay.
Time theft is a very common occurrence and it can also cost thousands each year. Time theft is when one employee punches another employee in so they won’t be late. This is very hard to catch without standing next to the time clock all day but a biometric time clock will eliminate the costly problem. A biometric clock requires a fingerprint to punch in or out so the employee must be present to punch in. Because it is difficult to catch, there isn’t a good way to estimate the savings by adding a biometric time clock but you will be able to notice a difference in your hourly wages over time when compared to previous years without the clock.
Remote Access might not save a significant amount of time but it will be more convenient. If you currently have to be in your office to do anything regarding the payroll it may be a problem if you are unable to make it into work or if there’s an urgent matter that happens while you’re on vacation. Having a payroll system in the cloud allows you to log in from wherever you are and take care of everything.
Payroll companies offer a number of other services that might also save time and money or might help to keep your company in compliance, like the tax filing services, which will prevent paying penalties. So if you are accepting bids for your payroll, be sure to compare the amount of the proposal to the amount saved for your time because you might be surprised at how much money you’ll end up saving your business.