Saving money and reducing risks are basic goals for procurement professionals everywhere. And, by implementing the right payrolling solution, you can accomplish both of these, and then some.
But how do you get started? And, how do you know which payrolling program is best for your organization? It starts with understanding the industry challenges, and then making sure to ask the right questions.
First, let’s define what payrolling is, and isn’t, for the purpose of this post. Contingent worker “payrolling” refers to non-employee labor that is identified by the organization and sent to the contingent labor provider to be screened. This worker is then sent back to the job at the customer site as a W-2 employee of that contingent labor provider. These labor resources can include:
Payroll “processing,” on the other hand, is a company that processes a member/customer “employee” payroll and then cuts the checks.
Benefits of a Payrolling Program
I’ve mentioned that a payrolling program can help you accomplish cost savings and reduce risks, but let’s discuss these a little bit more to give a better understanding of exactly what you gain with this type of offering.
A lot of companies are overpaying for candidates that they are finding themselves because these companies are also paying a mark-up, which includes recruiting costs. This adds up really quickly. However, some payrolling models remove recruiting costs when you hire candidates to your contingent workforce, ultimately saving you money.
Additionally, you can eliminate your unemployment compensation and worker’s compensation risks/costs that are the responsibility of the payroll provider.
Misclassification risks pose considerable dangers to employers. Between fines and back taxes on both the state and federal level, misclassification costs can be extensive. This can all be avoided by using a payrolling program with a reputable partner. Their team of experts will know all of the details to make sure your contingent labor is compliant.
Questions to Ask Your Payroll Provider
So, how do you make sure you choose the best program for your organization? Here’s a set of questions to use when you are evaluating your payrolling offering:
- Is payrolling a focus of the company?
- Is the back office structure set up to support payroll engagement needs?
- What are the benefits’ offered? (Including ACA compliant options)
- Do they offer payroll services?
- Can they provide transition services for any pre-identified contingent labor I currently have?
- Do they specialize in 1099 / independent contractor compliance services?
- Who are their current customers?
- What size are the programs?
- Do they have a customer service support model?
Did you answer “no” to any of these questions during program discussions? Then that particular program might not be the best fit. Your payroll provider needs to be able to guide you through the nuances of this service to create the solutions that work best for your organization – and that probably won’t happen unless you can enthusiastically answer “yes” to the questions above.
The Value of a GPO Payrolling Program
Looking to a Group Purchasing Organization (GPO) solution for a payrolling program also has a lot of benefits. Here, you will use the buying power of the GPO and the partnership they have formed with a payrolling provider to get the best program and rates, possible. An added bonus? You will also avoid a costly and time-consuming RFP process, since the GPO has already vetted out leading providers.
Learn more about why a GPO makes sense for a payrolling solution — download our contingent labor payrolling infographic “Do You Get Your Rebates?” today.