This report on PSA software explains why a growing number of professional services firms are investing in these systems for their businesses.
10 Steps to Build a Successful Payroll Practice
With these systems, it is simple to set up routine procedures that are efficient and replicable across dozens or even hundreds of clients.
Payroll has changed dramatically in the last decade as firms, clients and their employees have grown increasingly connected by mobile devices. The innovations in professional payroll systems have been driven largely by cloud technologies that not only enable anytime access to data and reporting but, more importantly, offer automated processing that can make payroll services very profitable for firms.
What once was a tedious, time-consuming, and error-prone process that could expose businesses clients and the firm to fines and the ire of mis-paid employees, is now much more streamlined and the processes can be easily duplicated across all payroll clients by just a handful of staff. Here’s how your firm can build and maintain a successful payroll practice:
1. Use the right technologies and make your procedures replicable
Cloud-based payroll systems offer many advantages that simply weren’t available previously, including automatic program updates, anywhere access, and portals that let you share reporting and other files with clients securely. With these systems, it is simple to set up routine procedures — for receiving data, entering data, reviewing and processing — that are efficient and replicable across dozens or even hundreds of clients. The key to profitability is in the numbers: If it takes 30 minutes per week to process payroll for one client, but only 35 minutes to process two clients, and 40 minutes for three, you can see how the profit builds.
2. Let your clients do most of the data entry
Modern cloud-based payroll systems allow your clients to enter the same data into online forms, and that data moves directly into the firm’s payroll preparation system. This isn’t really different or more work for your clients. Under old systems, they were likely tracking payroll through time clocks or a spreadsheet, along with vacation hours used and other data, and then faxing or delivering the information to their payroll service provider. Now, that process is simply done online, but with great time savings for the for everyone involved
3. Maintain a self-service portal for employees and employers
Just as having an online portal for your clients to enter payroll data and other info dramatically reduces tedious work by the firm (and wasted time), a cloud-based payroll system that includes self-service functions for their employees can also reduce time and effort for firm staff. Most employee requests are simple but eat up time, for example: Requesting prior year W2s, past check stubs, or even requesting time off. These functions can be automatically performed by the system, and can even automatically send an email approval request for PTO to their manager, requiring no effort by firm staff for these admin tasks.
4. Automate your billing along with their payroll
The firm can bundle their service fees along with the payroll costs for a client before it is set up for recurring ACH billing. This reduces time spent billing and waiting for clients to pay their bills, since (hopefully) they are never late with their payroll obligations.
5. Require clients to submit payroll information two days before processing
Even though most payroll EFT/direct deposit systems can now process payments on the same day or the next, rushing things can lead to errors. Having clients provide their employee payroll data two days early is a simple means of making sure payroll runs go smoothly for everyone.
6. Set up all employees to receive payments electronically
Printing paper checks and delivering them to clients is time consuming and much more prone to errors and potential check fraud that the electronic option. It also leaves employees open to high check-cashing fees. Even unbanked employees can be set up to have their pay deposited to a no-bank-required payroll debit card.
7. Price competitively for your market
Your firm doesn’t need to be the least expensive to win clients, nor the most expensive to tout your expertise. However, you should be prepared to discuss differences in pricing with potential clients. Chief among the benefits you can offer them is automation of their payroll and compliance needs, along with anytime-access to their files in the portal, and anytime-access for their employees. Remember, you have value in being local and understanding the business. Add to this any specific expertise you have serving specific industries, particularly those with greater levels of regulation.
8. Use firm resources wisely, by having existing team members provide the service
While your firm is still building its payroll practice, it shouldn’t take much time to provide those services. As such, it makes sense from a productivity and firm management perspective to task one or two firm staff with the additional responsibilities. However, as the payroll practice grows, it may make sense to have staff dedicated to providing these services. In many cases, the workflow processes for a payroll practice generating more than $200,000 annually can be managed by two paraprofessional hourly staff members.
9. Conduct periodic reviews with clients
Since the payroll service relationship results in much more frequent client interaction than other services, your firm should have a good idea of how that relationship and service is going. However, for firm management, it’s important to at least meet annually with clients to discuss the service. This can be done as part of a broader annual client meeting during which other services are also discussed and potential new offerings can be pitched.
10. Keep your payroll practice thriving
There is a natural rate of attrition with clients, whether due to clients changing firms or clients going out of business. Even if you reach a point where you are no longer trying to grow your client base, you should continue to replace those you lose to attrition, and asking existing clients for referrals is the easiest, least intrusive way to do so. If your clients are happy with the services you provide them, hopefully they will want to let their peers know, too.
Follow these steps to grow a successful payroll practice and you’ll be able to sell the power of cloud-based, automated payroll services to clients both new and existing.