Payroll outsourcing: is it right for your company?

By Maëlys De Santis

Published: 7 November 2024

Payroll outsourcingis a relevant solution and a guarantee of peace of mind for all companies.

The challenges of payroll differ according to size, but the advantages and disadvantages of outsourcing remain the same.

Take the pressure off your human resources management by outsourcing payslips and social security declarations, including the DSN.

It's up to you to take on higher added-value HR tasks, or to concentrate on your core business!

See all software Holiday Management

What is payroll outsourcing?

Definition

Payroll outsourcing involves using an external service provider, a payroll outsourcing firm or a certified accountant, to delegate all or part of the payroll management tasks.

This is also known as payroll outsourcing.

The tasks of the payroll outsourcing service provider

Your service provider's tasks may include :

entering and calculating variable payroll elements
producing and issuing pay slips,
checking that they are correct
sending them to employees
payment,
archiving and storing documents,
making social security declarations, including the DSN.

Advantages and disadvantages of payroll outsourcing

Advantages of outsourcing payroll

Advantage 1 - Ensuring legal compliance

French regulations on payroll are among the most complex in the world, and company directors cannot always improvise themselves as payroll managers.

Payroll outsourcing firms, on the other hand, are experts who have a thorough grasp of the regulations and know how to apply them to ensure compliance with employment law. General cases and exceptional events (redundancy, contractual termination, increase, bonus, etc.) are thus taken into account without ever leaving the legal framework.

👉 The result: less risk of payroll errors, and peace of mind for businesses.

Advantage 2 - Controlling costs

The entrepreneur has not yet expressed the need to hire a human resources manager, or does not have the necessary budget.

By using an external payroll service provider, they can optimise their costs.

Advantage 3 - Simple management of all payroll configurations

Payroll isn't just about writing a cheque for the same amount every month. And entrepreneurs sometimes discover this late in the game!

On the contrary, you need to take into account :

the different types of contract (permanent, fixed-term, temporary, work experience, etc.),
the different statuses (employee, manager, etc.),
different working hours (full-time or part-time),
variables and bonuses,
reimbursement of benefits (luncheon vouchers, transport costs, company health insurance scheme),
expense accounts or specific flat-rate deductions,
unpaid leave, etc.

Legal jargon that's hard to understand for entrepreneurs focused on developing their business? Not for a payroll service provider!

Advantage 4 - Hassle-free DSN reporting

Every month, employers have to file their Nominative Social Declaration. While the service provider is compiling this unified file from the payroll information, the manager is persuading new customers to sign up.

The payroll manager transmits the information relating to employee social protection to the relevant bodies (URSSAF, CPAM, AGIRC ARRCO, tax centre, special scheme funds, Pôle emploi, supplementary bodies, etc.) in a timely manner.

Advantage 5 - Relieve the burden on your in-house team

Do you have an HR manager, a CFO or even an administrative team on your payroll? Reduce their workload by outsourcing payroll. That way, they can concentrate on other core tasks, such as improving employee well-being.

What's more, it also means financial and time savings, as you don't need a specialised tool to manage payroll.

Advantage 6 - Benefit from sound advice on employment law

When a new business owner starts up with new employees, he or she needs to know what to expect and how to do things in compliance with employment law: He or she needs a personalised audit, expertise and legal advice to start on a solid footing, and to secure all the social procedures involved in payroll.

Later, when your company has grown, you continue to benefit from relevant legal advice.

Disadvantages of payroll outsourcing

You are dependent on a company or an independent payroll outsourcing provider: take the time to make your choice, you won't be changing every month!

Disadvantage 1 - Dependence on the skills of the service provider

You don't have in-house social and legal skills: if you have any questions or doubts, you depend on your service provider.

💡 Choose them also for their responsiveness and reputation.

Disadvantage 2 - Keep an eye on hidden costs

Avoid hidden costs and nasty surprises at invoice time if your team is growing and, naturally, the volume to be processed in payroll is greater.

💡 Study your contract in detail before signing it.

Disadvantage 3 - Exporting and transmitting your data

You need to export and transmit your holiday data to your external payroll manager.

💡 Pay attention to personal data management to ensure the security of your employees' data.

Outsourced payroll management: for what type of business?

Very small businesses, start-ups and associations

These small organisations sometimes don't have anyone in-house to deal with HR issues or personnel administration.

Outsourcing avoids this task falling to managers, who have other priorities.

International companies

Companies with international teams have legal obligations relating to payroll that differ from country to country.

Outsourcing simplifies payroll management by ensuring that it complies with local regulations.

SMEs, ETIs and large groups

For some organisations, bringing payroll in-house can be very costly given the number of employees to manage.

Outsourcing payroll allows them to concentrate on larger-scale HR tasks such as :

skills management
career management
training management, etc.

How do you outsource payroll?

The accounting firm or specialist payroll service provider

Some chartered accountancy firms employ people who specialise in payroll processing and government declarations.

This can be advantageous if the same firm already handles your accounts, in terms of both costs and data transmission.

Micro-businesses often use this type of comprehensive service.

Specialist payroll companies also offer their services, for more extensive payroll management. They have the advantage of being up to date with the latest regulations, particularly on exemptions from applicable charges.

They tend to be used by medium-sized to large organisations.

🧐 What are the rates for payroll outsourcing?

It all depends on the number of employees, as rates can be degressive. You should expect to pay around €15 to €25 per payslip. You may also need to add a flat-rate fee for social security declarations.

Compare this with the cost of an employee dedicated to payroll management and see what is most cost-effective for you.

Payroll management software

Would you like to keep your payroll management in-house, but are worried that your lack of legal skills could get in the way?

How can you avoid errors linked to obligations and benefit from expert advice without completely outsourcing your payroll management?

Choose the compromise between in-house HR tools and payroll outsourcing to get the best of both worlds.

👉 For example, with Lucca's HRIS and Payroll offer, you benefit from an HRIS to prepare payroll production (personnel administration and holiday management, for example), then payroll management is entrusted to a trusted payroll service provider. You then distribute the pay slips to your employees.

👉 Sage Business Cloud Payroll is tailor-made: you can choose the formula that suits you for payroll processing, between partial, total outsourcing or in-house. You have the choice of delegating this responsibility to business specialists while retaining control over your payroll, it's you who decides the level of support you want.

👉 Leave management software such as Figgo or ManaTime Congés can be used to transmit leave information to payroll software, so there's no need to re-enter data.

👉 You can also opt for simple payroll software, such as PayFit, and rely on its team of experts to answer your questions and avoid any errors. You continue to control payroll in-house, but you're protected from legal mishaps. Ideal for SMEs that don't have many exceptional cases to manage.