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What do payroll management companies typically offer?

Payroll Outsourcing

All payroll management companies offer similar core services: calculating payroll and tax obligations for each employee, printing and delivering cheques, arranging BACS payments, and providing reports for management and HM Revenue & Customs. Payroll services can handle business for pay periods that run weekly, fortnightly, or monthly.

Beyond these basic transactions, a payroll management company can provide other related services at an additional cost. These costs can add up quickly, so be clear on which features you need, and if they are available in packages.

The three general categories of added-cost payroll options are payroll distribution, data collection, and benefit management features.

Payroll distribution
Payroll management services offer a number of options surrounding actual distribution of your payroll come pay day. You'll want to pick and choose which of these is right for your employees.

Automatic cheque signature
Is the person whose signature is on each cheque hard to pin down? If so, you might find value in automatic signatures. A computer-generated signature appears on each cheque, eliminating the need to sign them manually. Even if you take advantage of this option, you can still choose to put the cheques in envelopes and distribute them yourself.

Payroll management companies can also transfer payroll funds directly into employee bank accounts, issuing a pay statement instead of an actual cheque to each employee. Highly regarded for its convenience and security, BACS (Bank Automated Clearing System) is one of the most popular options of payroll services.

On the administrative side, BACS speeds up cheque reconciliation, so that businesses know exactly when funds leave the payroll account. Also, since funds transfer electronically, employees often have the option of depositing money into several different accounts. BACS also reduces the number of trips to the bank!

Prepaid cards
Prepaid cards are not yet common with all payroll management providers. They allow employees that do not have bank accounts to receive a prepaid card in the amount given on their pay statement. Employers don't have to print cheques for employees that can't take advantage of direct deposit.

The system works like a debit card issued by a bank, allowing the employee to make purchases and withdrawals. However, the employee pays a fee for each transaction, with the amount dependent on the service provider you choose. When using this option, you should receive payroll registers at least a day before payday to catch mistakes before they transfer to your employees' accounts.

Cheque delivery
You have a choice of delivery options for cheques, including first class mail, overnight delivery, or courier service.

Data processing/reports management
By definition, data processing is how your company's payroll information is processed. Companies with hourly workers, for example, may have employees swipe time cards through machines so that hours are automatically calculated and easily transferred to the payroll service. Another option is an electronic time sheet, which you can send to the payroll service provider for processing.

To help keep track of this data, payroll management services can issue reports summarising each payroll period. Most reports include information such as payroll totals and tax totals for each employee, in addition to total payroll and tax obligations. You can also have more detailed information, including breakdowns by department or by location. You can have reports customised for an additional charge -- or you can choose from existing formats.

Most payroll management providers also offer payroll data transmission over the Internet; their customers can therefore download payroll information from anywhere.

In addition to the payroll-specific services currently offered, many service providers have an ever-expanding menu of services to enhance and facilitate employee benefits. From pension planning to career counselling and CV screening, payroll providers are becoming one-stop human resource departments.

Pension plans
Without attractive benefits like a pension plan to offer, smaller businesses have difficulty competing against their larger counterparts for the best employees. Payroll services help even the score by offering plans designed by investment companies.

Employee manuals
As your company grows larger, you will probably need to have more formal "rules of the road." Some payroll management services offer employee manuals that address the vast range of rules concerning employee conduct and related regulatory information. This can be a particularly effective way of not having to reinvent the wheel or invest the time necessary to keep up with the latest government regulations.

Integrated HR systems
Integrated HR software systems aggregate the benefits-related information that you need to record for each employee. These systems keep track of pertinent data such as holidays, sick days, pay rates, and benefits levels for each employee in addition to normal payroll data.

By housing the data in one place, you can eliminate redundant data entry and facilitate employee benefit tracking as it relates to payroll issues. These systems are usually most appropriate for medium- and large-sized businesses.

Other forms of help
In addition, many payroll management providers offer to complement equal opportunity and counselling services with other HR tasks such as maintaining management manuals, screening CVs, and designing personnel forms.

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