Payroll outsourcing: is it right for your company?

By Maëlys De Santis

Published: November 7, 2024

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

Payroll issues differ according to size, but the advantages and disadvantages of outsourcing remain the same.

Take the pressure off your human resources management by outsourcing pay slip production and social declarations, including DSN.

You'll be able to concentrate on your core business, or take on more value-added HR tasks.

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What is payroll outsourcing?

Definition

Payroll outsourcing is the use of an external service provider, such as a payroll outsourcing firm or a certified public accountant, to delegate all or part of the payroll management tasks.

This is also known as payroll outsourcing.

Your payroll outsourcing provider's tasks

Your service provider's tasks may include :

entering and calculating variable payroll elements,
producing and issuing pay slips,
checking their conformity,
sending them to employees,
payment,
document archiving and storage,
preparation of social security declarations, including DSN.

Advantages and disadvantages of payroll outsourcing

Advantages of payroll outsourcing

Advantage 1 - Ensuring legal compliance

French payroll regulations are among the most complex in the world, and company directors can't 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 companies.

Advantage 2 - Cost control

The entrepreneur hasn't yet expressed the need to hire a human resources manager, or doesn't have the necessary budget.

By using an external payroll service provider, you can optimize your costs.

Advantage 3 - Simple management of all payroll configurations

Payroll isn't just about writing a check for the same amount every month. And that's something entrepreneurs sometimes discover only later in life!

On the contrary, you need to take into account :

the different types of contract (permanent, fixed-term, temporary, internship, etc.),
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),
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 must file their Déclaration Sociale Nominative. While the service provider is compiling this unified file from payroll data, the manager is convincing new customers to sign up.

The payroll manager transmits employee social security information to the relevant bodies (URSSAF, CPAM, AGIRC ARRCO, tax authorities, special schemes, Pôle emploi, supplementary organizations, etc.) in due time.

Advantage 5 - Relieve your in-house team

Do you have an HR manager, a CFO or even an administrative team on staff? Reduce their workload with payroll outsourcing. 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, since you don't need a specialized tool to manage payroll.

Advantage 6 - Benefit from expert advice on employment law

When an entrepreneur starts a business 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 personalized audit, expertise and legal advice to start on a solid footing, and to secure all payroll-related social procedures.

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 provider's skills

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

💡 Choose them for their responsiveness and reputation.

Disadvantage 2 - Watch out for 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 carefully before signing.

Disadvantage 3 - Exporting and transmitting your data

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

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

Outsourced payroll management: for what type of business?

VSEs, start-ups and associations

These small structures sometimes have no one in-house to deal with HR issues or personnel administration.

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

International companies

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

Outsourcing simplifies payroll management by ensuring compliance with local regulations.

SMEs, ETIs and large groups

For some organizations, in-house payroll management can be very costly, given the number of employees involved.

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

skills management
career management
training management, etc.

How do I outsource payroll?

The accounting firm or payroll service provider

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

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

Micro-businesses often use this type of comprehensive service.

Specialized payroll companies also offer their services, for more substantial payroll management. They have the advantage of being up to date with the latest regulations, notably on applicable tax exemptions.

They are mainly used by medium-sized to large companies.

🧐 How much does payroll outsourcing cost?

It all depends on the number of employees, as rates can be degressive. Expect to pay around €15 to €25 per pay slip. 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's most cost-effective for you.

Payroll management software

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

How can you avoid errors linked to legal 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 leave management, for example), then payroll management is entrusted to a trusted payroll service provider. You then distribute pay slips to your employees.

👉 With Sage Business Cloud Paie, it's all about customization: you can choose the formula that suits you for payroll processing, between partial, total or in-house outsourcing. You have the choice of delegating this responsibility to business specialists while retaining control over your payroll; you decide the level of support you want.

👉 To transmit leave-related information, leave management software such as Figgo or ManaTime Congés communicate with payroll software to avoid re-typing.

👉 You can also opt for simple payroll software, such as PayFit, and rely on its team of experts to answer your questions and avoid potential 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.