Does payroll worth it for a smaller business?

Miklos_HollenderMiklos_Hollender Member Posts: 1,597
edited 2014-06-27 in General Chat
I have worked on upgrading a payroll add-on in the UK and every time I visited a client it was fairly big, factories with 100-200 workers. Does internal payroll worth it for smaller ones like 10-15 employees? Or at least 10-15 employees per country, as usually every country subsidiary needs a totally different payroll right?

The problem is the usual one: it is not possible, or at least I don't know how others do it, to estimate the total costs of bringing payroll in-house. When you have 15 employees outsourced payroll costs like €5000 a year in France in Austria maybe €3000 a year. In-house means a roughly €10K one time investment (roughly €2-3K licence, roughly 6-10 days consulting, I was thinking 2-4 should be enough but I just received a 10 day offer from a solution center in France, maybe France has complicated laws...), then maintenance, upgrades and the training of new users if the old one leaves. Let's assume now that the actual cost of doing it is 0 - you employ an accountant already who has some free time and you have mostly fixed salaries so it is easy.

Still, there can be other costs? Because somehow I don't see other smaller companies or smaller subsidiaries doing it?

Perhaps on a larger note, how does one even estimate the cost of bringing any outsourced operation in-house? I just have no idea, this is why my idea is to ask if others do it at such sizes. Basically I am hunting for examples of people saying "oh we thought it will be cheaper and then there was this X, Y, Z unforeseen cost and it was not".

I wonder if this is how business really works, you cannot foresee your costs, just learn from the mistakes of others? Basically you need an expert who already made the mistakes? (Niels Bohr: being an expert means making all the possible mistakes in a narrow field and learning from them. Miklos: yes, that is why we are C/AL experts :) )

So I would be both interested if any methodology for estimating the cost of in-housing operations exists, and in your opinion why do I see that in-house payrol does not quite worth it for companies with 10-15 employees.

Comments

  • davmac1davmac1 Member Posts: 1,279
    The trend I personally have seen in the USA, is companies of all sizes abandoning their in house payroll systems in favor of outsourcing.
    I have not seen a new payroll install in years.
    Maybe other people are still selling it regularly. I would be interested to know.
  • matttraxmatttrax Member Posts: 2,309
    davmac1 wrote:
    The trend I personally have seen in the USA, is companies of all sizes abandoning their in house payroll systems in favor of outsourcing.
    I have not seen a new payroll install in years.

    Seconded. At most 1 per year. I don't exactly see every project that comes through our company, but Payroll implementations are few and far between.
  • Miklos_HollenderMiklos_Hollender Member Posts: 1,597
    Thanks guys. What I was thinking that Payroll is typically an "island", this is why it so often gets outsourced, that it does not really have a lot of connection with the rest of the system. So instead of dropping a lot of cash on a NAV add-on, one could just buy or rent really cheaply an external software for like 10% of the cost of implementing an add-on. Then it just takes one XMLPort or DataPort to upload the results to a G/L Journal.

    Maybe this is why you don't see a lot of implementations of it - not only because of outsourcing but also because it does not really have to be an integral part of ERP and external apps are much, much cheaper. (An additional bonus is that you can upgrade it without upgrading the ERP or the other way around.)
  • matttraxmatttrax Member Posts: 2,309
    Then it just takes one XMLPort or DataPort to upload the results to a G/L Journal.

    Spot on. And most of our customers want to be able to import a General Journal from an Excel file anyway.
  • geordiegeordie Member Posts: 655
    Thanks guys. What I was thinking that Payroll is typically an "island", this is why it so often gets outsourced, that it does not really have a lot of connection with the rest of the system.

    I think also because most of the times is by purpose not intended to have a connection with ERP or other systems: very often HR departments require a separate application due to confidentiality, in order to avoid technicians or other IT guys looking into colleagues and managers pay slips.
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