Switching over to payroll outsourcing

In-house accounting staff have more time to support key and critical business processes of the company. This approach enhances financial efficiency by reducing the risk of errors and penalties from regulatory authorities.

Necessary steps to start payroll outsourcing

In order to change over to payroll outsourcing successfully, a company needs to take the following steps:

1. Appoint persons responsible for interacting with the outsourcing company and gather a project team.
2. Transfer historical data to the outsourcing company: database copies with employees’ personal data and other information in agreed formats. Additionally, provide data on accruals and contributions for the previous 12 months.

The outsourcing company may require additional information for implementation and reconciliations, such as registration documents, statutory reports, and descriptions of existing processes and algorithms. The final step of the organizational phase is signing of a payroll service agreement.

Client involvement during the transition period

Company specialists thoroughly study and agree on the upcoming processes. Several meetings with the representatives of the outsourcing company are planned:

• initial meeting, where the participants discuss project milestones and plan;
• weekly meetings focused on project status update;
• expert meetings involving payroll professionals necessary for processes transfer.

Company management should clearly define the required services. Ideally, a statement of work is prepared and tasks are set to help both parties understand their rights and responsibilities better.

Stages of transfer to payroll outsourcing

1. collection, analysis and approval of data for implementation
2. accounting system setup and testing
3. parallel payroll run
4. transition to regular payroll processing

Potential challenges during transition period

• timelines issues (delays, lengthy approvals, project plan disruptions);
• data migration problems;
• obtaining employees’ consents for personal data transfer.

Reconciliations during transition

During the transition period, the following checks are made by the provider:

• reconciliation against registration documents;
• verification of statutory reports;
• ensuring compliance of processes in the master system (calculation algorithms and reports formats) during the parallel run;
• report forms verification;
• checks of balances on payroll accounts.

Factors affecting transition timelines

The transition time depends on the data transfer format and the complexity of algorithms to be set up. The duration of the implementation and testing period is determined at the project start.

Interaction regulation

Interaction will be determined by a detailed payroll calculation and reporting schedule, developed and agreed upon during the implementation process. The schedule includes deadlines for information provision by the client and calculation results delivery by the provider, as well as timelines for sharing and uploading of GL files into the accounting program etc.

Confidentiality of personal data

Confidentiality of the employees’ personal data is a key aspect of the outsourcing company's work. Unistaff Global Services ensures complete confidentiality of the received and transferred information, using secure data transmission channels and specialized software to prevent external interference.

Additional advantages of payroll outsourcing:

• ability to set up corporate reports upon the client request;
• access to the database for the client representatives;
• support of interaction with employees when necessary;
• legislative changes support;
• assignment of a project manager and a permanent point of contact;
• substitution and continuity on the project.

Changing the provider during the financial year

It is possible to change the provider in the middle of the reporting year by following certain procedures:

• transfer of the reports and submission of corrections if necessary;
• agreement upon the completion of previous periods' reporting with the previous provider;
• notification of the previous provider in accordance with the terms of the contract;
• approval of the reports status for the period covered by the new provider.

How the client can ensure the project success

To make sure everything is going smoothly, the clients are given access to accounting system the outsourcing company uses. This allows companies to fully control the payroll calculation process and retain some functions in-house if necessary.

Unistaff Global Services is your reliable partner in the outsourcing market, providing payroll services by specialists with deep knowledge and experience in this field, and keeping track of all legislative changes.