Payroll management is a key component of every business in Singapore. The question that comes to mind is, what is payroll? What is payroll management? These questions need to be answered before we consider the benefits of outsourcing payroll.
What is payroll management?
First, payroll entails the financial records of wages, bonuses, salaries, net pay, as well as tax deductions of a firm’s employees; and the art of coordinating and managing payroll is known as payroll management.
For anyone who has been involved in the process of managing a company’s payroll, one thing that they can all agree on is that it’s both a stressful and time-consuming process. This is mainly because acute attention has to be given to details such as keeping track and record of statutory regulations, accurate calculations, making sure of compliance to Singapore law as well as timely payouts.
The Employment Act in Singapore outlines the duties and rights of a company’s employee under a contract of service with the employer, with exceptions given to seamen, civil servants, domestic workers in executive and managerial offices.
Amendments to the Employment Act are regularly made after review of the Act and public consultation. All employers are stipulated by law to create and keep employee records, give written records of KETS (Key Employment Terms), and give itemized pay slips to staff.
Any breach of these requirements could lead to stiff penalties.
With all these requirements, how can businesses, especially small businesses, make sense of the regulations, make timely payments to their employees and at the same time cut down the time spent on payroll management in Singapore?
The answer is quite simple.
They have to outsource the payroll management to a capable, reputable and knowledgeable payroll outsourcing company, who are able to process their payroll in Singapore
In the remaining part of this article, we are going to be taking a good look at the key benefits to outsourcing your payroll in Singapore, and we will look at five of such benefits.
5 key benefits to outsourcing your payroll in Singapore
1. Save loads of time for the company
As mentioned earlier, payroll management is both a stressful and time-consuming process, depending on the number of people employed by the company. This is because wages and salaries have to be paid monthly, then an immense amount of data that varies from staff to staff needs to be input and checked for errors constantly.
This does take time, and vital duties that affect the growth and bottom-line of the company might get sidetracked and neglected; things like customer support system, sales, marketing, etc.
This is where outsourcing plays a key role.
By outsourcing payroll, precious time is freed up, giving room for employees to attend to other important tasks that require their immediate attention or continue to manage your company’s business operations.
2. Helps with reducing overhead costs
In Singapore, outsourcing payroll in Singapore can help with reducing costs and risks. There might have been instances where employees have been unknowingly overpaid due to difference in employee’s time and a rigorous time record system. If a biometric fingerprint system is put in place, this would assist with tracking both time and attendance, thus eliminating such incidents and help with saving money.
Additionally, when it comes to tax, huge penalties can be incurred by late / wrong filings or the breaching the Employment Act requirements. When payroll is outsourced to a specialist who understands employment and tax laws, all unwarranted spending / expenses can be totally cut off.
There is no mincing word that time is equivalent to money. When you balance outsourcing against the time your employees are losing due devoting time that would have been used for activities that increase overhead into payroll management, the need for payroll outsourcing becomes even more obvious.
For example, if you give a dollar value to the hour equivalent being spent in payroll management related activities, instead of focusing on key company tasks, you will realize that a lot of potential income is being left on the table due to time wastage.
If this is measured against the money that would have been used for outsourcing payroll, the difference becomes really transparent.
Firms and organizations who do their payroll management in-house often end up burning money.
Outsourcing payroll all ensures that salary information is not leaked by your in-house human resources / accounting personnel. External payroll management in Singapore maximizes confidentiality, cuts down altercations in the workplace and helps prevent any form of misunderstanding.
3. Ensures access to expertise and technology
Access to expertise and technology is another key reason and benefit of outsourcing payroll in Singapore.
Keeping up with amendments to regulations and making available time to constantly study would be a big problem to payroll-related staff.
In Singapore, employers are mandated to prepare tax forms and wage reports, keep a record of all staff income and deductions, make a monthly payment to the SDF (Skills Development Fund) and CDF (Central Provident Fund) on behalf of their staff as well as make provisions for paid annual leave.
There is an immense number of deadlines and regulations that employers have to keep up with, but by outsourcing payroll, a small business in Singapore can leverage the expertise of external payroll management specialists. This ensures that all your Human Resources and payroll needs are taken care of on time.
Having access to the latest technology is also key for many small business owners to scale up their businesses. With this growth, more staff are employed, and this means more reporting. Having the means to channel immense amounts of data into portable reports easily by the use of a payroll system or software cannot be overemphasized.
Note also that staff do expect technology. In this modern business era, staff want to access their pay slips, leave management, timesheet, etc. independently; and in the same vein, managers want and expect the capability to approve leaves, timesheets and claims through a payroll management system.
Employers who are not able to make this available stand at an immense disadvantage to the competition.
4. Improves data security
This is another key benefit of outsourcing payroll. Managing your payroll inhouse often comes with some amounts of risk. Any of the following can happen:
- Identity theft
- Embezzlement of funds
- Tampering with company files for personal gains
This is all because staff records can be accessed by the employees handling the payroll.
Aside from staff risks, there is also the issue of server and network risks to consider.
- Is the payroll data in your company’s server or network really secure?
- Are there security risks that exposes your data and leaves it open to theft?
Most payroll consultants have the technology to immediately spot and alert you to any payroll fraud or anomalies. Additionally, such payroll consultants often invest in topnotch and latest systems for storing and protecting data as well as backups, several server locations and a state-of-the-art encryption technology.
5. Guaranteed statutory compliance
The potential costs of making a payroll mistake can be quite stiff, but with outsourcing to a payroll specialist, you can rest assured that everything will be well taken care of.
With a payroll processing specialist, an employer doesn’t have to worry about penalties for errors, omissions or late filings of tax. If payroll is done in house, the company will be legally responsible for any form of misrepresentation or the failure to accurately file up with the statutory agencies. Outsourcing payroll takes care of all these nuances.
As earlier mentioned, the payroll policies are constantly updated by the Ministry of Manpower, and this would be difficult for your employees to study and keep up with. However, professional payroll consultants are always abreast of the rules and regulations, as well as any changes in the tax and employment policies.
This ensures that you stay compliant; and if there happen to be mistakes anywhere, a professional payroll outsourcing consultant will take on the costs of the penalties and liabilities.
By outsourcing your payroll in Singapore to a professional, you can reap loads of benefits that lets you stay ahead of the competition and increase company bottom-line while saving time.
Staff are saved the time and stress of processing payroll, while you are assured and guaranteed an error-free payroll and tax submissions. Cost-wise, it is definitely more affordable to engage in a payroll outsourcing company compared to hiring and training more employees just to take care of your payroll needs.
In addition, you get access to a state-of-the-art technology that makes life easy for you and the employees, and ensures that your company’s data is safe and secure. With the peace of mind that comes with outsourcing of payroll, every company should consider engaging in a payroll outsourcing company to process their payroll in Singapore.