Outsourced Agency Payroll Services vs In-House: Which Is Right For You?

June 13, 2023

Categorised in: Payroll

Managing payroll is critical for any business, and it becomes even more complex for recruitment agencies due to the unique nature of agency workers’ pay and compliance requirements.

As a recruitment agency, deciding whether to handle payroll in-house or outsource it to a specialised agency payroll services provider can be a challenging decision. We’ve put together the pros and cons for each option so that you can make an informed choice for your business.

Expertise and Compliance

Outsourced Agency Payroll Services

Payroll service providers specialising in agency payroll services bring expertise and deep knowledge of the intricacies of managing agency worker pay. They stay updated with ever-changing tax regulations and ensure compliance with HMRC and industry-specific requirements like the GLAA. By outsourcing to such an expert payroll agency, you can reduce the risk of errors and non-compliance for your business.

In-House Payroll

Managing payroll in-house requires you to invest time and resources in developing expertise within your HR or finance team. While your team will be familiar with your company structure, staying up to date with changing regulations and compliance requirements can be challenging and may increase the risk of errors or penalties from mistakes.

Cost Efficiency

Outsourced Agency Payroll Services

Payroll services for recruitment agencies offer cost-efficient solutions by streamlining payroll processes and leveraging economies of scale. They can handle:

  • Calculations
  • Deductions
  • Tax obligations
  • Pension contributions
  • Compliance and legislation

Handling these parts of payroll reduces the administrative burden on your agency. Additionally, outsourcing to a payroll agency eliminates the need to invest in software, training, and ongoing maintenance, boosting your bottom line.

In-House Payroll

Managing payroll in-house involves extra costs associated with payroll software, employee training, IT infrastructure, and dedicated staff. These expenses can add up significantly, especially for smaller agencies with limited resources.

A picture of someone counting money

Time And Resource Allocation

Outsourced Agency Payroll Services

Outsourcing payroll to a company specialising in agency payroll services frees up your internal resources, allowing your HR and finance teams to focus on core business activities such as recruitment, employee development, and strategic decision-making.

Your payroll service provider handles time-consuming tasks like processing payments, generating reports, and managing compliance, so you can get back to growing your agency.

In-House Payroll

Managing payroll internally requires dedicated staff and diverts resources away from other essential functions. Your team must allocate time for payroll processing, resolving payroll-related queries, and keeping up with regulatory changes, potentially impacting productivity in other areas.

Scalability and Flexibility

Outsourced Agency Payroll Services

As your agency grows, using payroll services for recruitment agencies provides scalability. Payroll service providers can easily adapt to changes in your workforce size and handle fluctuations in payroll requirements. These companies are specialist, niche businesses with the infrastructure and systems in place to accommodate your business growth without disruptions.

In-House Payroll

Managing payroll in-house can become challenging as your agency expands. Hiring additional staff or implementing new payroll systems to support growth may require significant investments and time-consuming process adjustments.

Choosing between outsourced agency payroll services for recruitment agencies and in-house payroll management requires careful consideration of your agency’s specific needs, resources, and growth plans.

Whilst in-house payroll may provide more control, outsourced agency payroll services offer expertise, compliance, cost efficiency, and scalability advantages. By partnering with a specialised agency payroll service provider, you can streamline your payroll processes, reduce compliance risks, and focus on driving your agency’s success.

If you’d like to talk about using the agency payroll services offered at HIVE360, please get in touch here.