5 hidden benefits of outsourcing payroll

While the main benefit of payroll outsourcing services — continuous cash flow to help you pay your employees and other related parties — is obvious, there are many hidden benefits you may not realize. Full-service payroll funding companies:


  • Fund and process all of your payroll. This is one of the main advantages of outsourcing payroll. Payroll funding is often a worry for staffing firms, as your employees are paid weekly but your customers often don’t pay for 30, 45, 60 or even 90 days, depending on your agreements. Outsourced payroll funding alleviates the worry of whether you’ll make payroll, while also taking away the time-consuming administrative burden of payroll processing. Many payroll funding services provide several payment options for employees, including live check, pay card or direct deposit.


  • Invoice your customer directly. Your clients see your name on the invoice but send their payments to the payroll funding company.


  • Make collection calls and notify you of delinquent accounts. This is done professionally by the payroll funding company’s employees on behalf of your staffing firm, eliminating your need to direct workforce toward this task and freeing them for more important duties, such as servicing clients. Keep in mind, though, that most payroll funding companies engage in recourse funding, which means you bear the risk and must pay up if your clients fail to pay.


  • Pay all applicable payroll taxes and files quarterly 941 payroll taxes with the Internal Revenue Service. This saves you from accruing penalties and/or interest due to late and/or forgotten payroll tax payment.


  • Generate W-2s for each temporary employee. Outsourcing payroll services eliminates this time-consuming administrative task, providing one less task to worry about.