Payroll outsourcing in New Zealand: What is it, and how to start growing your business
As companies start to scale, hire more employees and take on more audacious growth goals, payroll can sometimes fall to the wayside. Although a necessary “evil” of every business, it’s often seen as time-consuming, expensive to dedicate resources to, and messy. There’s also the risk of non-compliance with local legislation; especially in New Zealand.
Many businesses decide that the risks and legal implications of getting it wrong are too great to ignore, and choose to put their faith into a trusted professional to handle payroll for them. That’s where you come in - or could potentially come in, if you’re considering whether or not to start your own outsourcing business!
But why choose to start an outsourcing business, and how do you grow your business to generate revenue?
Types of payroll outsourcing in NZ
Payroll outsourcing is the perfect option for businesses of all sizes as it relieves administrative burdens, reduces costs and saves time for busy managers. Processing pays can take SMEs anywhere between 3-8 hours per pay run which is often spent on manual calculations, entering timesheet data into payroll and reviewing New Zealand legislation to ensure compliance. This time could be better spent on strategising ways to grow their business, improving customer service, driving sales and so much more.
As every business needs payroll (and given that there’s approximately 530,000 SMEs in New Zealand), there’s a significant market of untapped potential to be reached. There are many options that prospective clients can consider when looking for a business to outsource payroll to, with a few of these being:
- An accountant or bookkeeper: Many offer payroll services in addition to their usual tasks. By offering payroll on top of reporting and financial analysis, this gives advisors a value-added competitive edge in the market and an additional revenue stream.
- A bureau: Often providing both in-house and outsourced payroll services, a bureau handles payroll admin tasks and allows some control to be retained by the client. For example, one of KeyPay’s New Zealand partners, Brunton, offers both outsourced payroll services and software (read on to find out more about this!) to their clients.
- A software provider: Some SMEs may instead choose to purchase payroll software and handle this themselves. For outsourced providers, software like KeyPay allows advisors to purchase and brand the software their own, without needing to create payroll software from scratch to resell.
Why might clients consider payroll outsourcing?
One of the main things for SMEs to consider in favour of payroll outsourcing is compliance. The Holidays Act (2003) - and its upcoming amendments - are difficult to navigate, leaving a wide margin for costly errors and legal risk. In New Zealand, employers are required to keep wage records for at least 7 years.
If an employer fails to keep accurate wage, time, holiday and leave records as required by NZ legislation, the business could be fined more than $100,000. By outsourcing payroll to a bureau, these costly mistakes can be avoided.
KeyPay streamlines payroll legislation from IRD reporting to leave calculations and PAYE deductions. Through automating leave calculations and showing transparent calculation panels to explain employee pay methods, Holidays Act compliance is achieved with ease.
2. Cost and infrastructure
Outsourcing payroll also eliminates the need for the technology infrastructure and security associated with payroll. Desktop-based payroll software is locally run on PCs or servers that incur maintenance, support and security cost to protect important data. The inflexibility of such outdated software (ie. requiring your team to come into an office or specific location to access the server data) also holds businesses back from being progressive and is no longer sustainable in the changing business climate as COVID-19 evolves.
As a cloud based solution, KeyPay allows payroll professionals to access data at any time and from anywhere. KeyPay is ISO/IEC 27001:2013 certified which means that the confidentiality, integrity and availability of company and customer information is managed securely. We also use 256-bit Secure Socket Layer (SSL) encryption technology for sensitive/credit information, which takes approximately one trillion years to break. Your data will always be in safe hands with us!
3. Time savings
Arguably one of the most important factors, SMEs can save time by outsourcing payroll to a bureau. No more manual calculations, data entry, building rosters in Excel or collating timesheets in time for payroll - as a bureau can handle all of this for you.
In turn, payroll bureaus can also save time and reduce admin by leveraging powerful cloud software. Embrace tools like automated pay runs, online timesheets, employee self service and easy employment agreement configuration to help save your team time to take on more clients.
Take this example where payroll bureau, Brunton, was able to provide outsourced payroll services to save time and achieve compliance for their client. They were approached by a logistics company to help alleviate some of the pressure that their office manager faced in each pay run. Chasing staff up for timesheets, spending hours preparing data for payroll, and then running the payroll itself required a huge amount of time and effort, which left little time to focus on other areas of the business.
By leveraging powerful cloud payroll software through KeyPay, Brunton guided their transition to a fully outsourced payroll which allowed staff to focus on their business growth objectives. No more worrying about paying their team compliantly and on time - which has resulted in client satisfaction and positive word of mouth referrals for Brunton to bring on more clients as a result.
If you’re a business of any size in New Zealand who’s looking to partially or fully outsource payroll to a bureau, get in touch with Brunton.
Growing your outsourced payroll bureau
For over 20 years, Brunton has been managing payrolls for small, medium and large companies throughout New Zealand and Australia. They have offered clients peace of mind and freedom from the intensive tasks of managing their payrolls, to allow them to focus on business growth and development. Their technology team can also integrate any payroll service into Accounting or ERP systems to ensure that clients are effectively managing their most important resource - their people.
Some tips for growing your outsourced payroll bureau:
- Adopt cloud-based software: Don’t settle for old, desktop-based software. Harness new technologies that will create value that clients didn’t even know existed. As a bonus, opt for payroll software that can also integrate with accounting, HR and other software - to provide your clients with a full-service offering that they can’t get elsewhere.
- Add value to businesses of all sizes: When defining your services and offerings, be specific. Do you cater to all industries? Can you handle clients of all employee sizes? Where does your value lie for each industry? Clearly show prospective clients why they need to outsource their payroll to you.
- Constantly seek feedback and client advice: Remember to constantly nurture your clients even after they’ve come onboard. Ask them what’s working, and what’s not. What are their goals and objectives? What else do they need from you in order to achieve these? How can you add further value for them? Taking the time to find out about their experience is two-fold; from this, you can create a testimonial that speaks to your value for other prospective clients, and you’ll also make your existing client feel more satisfied with your services if they feel that they’re really being heard. This will create positive word of mouth referrals and allow you to grow your business through simple client to prospect networking.
Bureaus should also considering branding their own payroll solution with software such as KeyPay. Brunton was able to leverage KeyPay's payroll solution and brand it as their own - BizPay - to improve client trust and retention, as well as provide a consistent, on-brand experience.
Find out more about how to get started and partner with KeyPay today.