General Blog


Modernization is a Call to Outsource Payroll Function

Imagine heading into Memorial Day weekend with big plans for the family. You leave work and head to the bank only to discover you cannot withdraw the money you need, despite Friday being payday. Apparently, a glitch in the payroll system means you and your colleagues have not yet been paid.

The scenario just described actually happened to city workers in Mount Vernon, New York at the end of May. Due to a glitch in the state’s updated payroll processing system, employees were unable to access their pay as scheduled on the Friday before Memorial Day. But that is not the half of it.

In addressing the situation in his city, Mayor Richard Thomas reminded city workers that the entire payroll system for public-sector workers in the NY suburb is terribly outdated and doesn’t work well. He is quite correct.

Former state Comptroller Tom DiNapoli issued a statement two years ago revealing that an investigation conducted by his office found serious flaws, including some employees being overpaid and others not being paid enough. DiNapoli said that the city’s system had no means of adequately tracking whether workers actually show up for work or not.

Mayor Thomas has called on current city comptroller Maureen Walker to modernize the payroll system in Mount Vernon so as to avoid future problems. Whether Thomas knows it or not, the need to modernize is a clarion call for outsourcing payroll function to a third-party provider.

The Private Sector Does It Better

Working with an outdated payroll processing system that cannot even track time and attendance is unfathomable in the private sector. It probably happens to some degree, but the vast majority of private sector businesses simply cannot afford to allow that kind of inefficiency, inaccuracy, and downright complacency. Payroll is too costly to leave it to random chance.

According to Dallas-based BenefitMall, this is the very reason private sector payroll providers in in-house departments do a better job than public-sector systems. It’s hard to argue with that assertion. The city of Mount Vernon has no real incentive to modernize its payroll processing system because it’s not accountable to anyone. If they are losing money because they cannot effectively track time and attendance then it doesn’t much matter as tax revenues will pay for the losses.

In the private sector, no such luxury exists. Companies cannot afford to not be able to effectively handle payroll functions. They cannot afford to overpay workers – and they certainly cannot afford the litigation that would result from underpaying them either. Private sector companies have to be on top of things in order for payroll to be efficient and compliant with regulations.

It Is Time to Outsource

It should be obvious to city leaders in Mount Vernon that it’s time to outsource their payroll processing to a competent third-party provider. Whether they will do so or not remains to be seen. That aside, any private sector company struggling with payroll accuracy and legal compliance should strongly consider outsourcing as well.

A third-party payroll company like BenefitMall already has the state-of-the-art systems in place to ensure accurate, timely, and compliant payroll processing. They constantly update their infrastructure and systems as well, in an attempt to remain highly competitive in the industry. Clients benefit in that their payroll systems are always at the cutting-edge rather than lagging behind for years like public-sector systems do.

If your payroll system needs to be modernized, it’s a good bet your organization should be thinking about outsourcing. The need for modernization is a clarion call to put payroll in the hands of experts.