Eight questions to ask your prospective payroll outsourcing company



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10 mins

The benefits of payroll outsourcing are compelling, so it’s no wonder more organisations are choosing this as an alternative to hosting expensive in-house operations.

Not only does making use of a payroll outsourcing company free up vital time and resources in the payroll team, it also means organisations benefit from the latest software, knowledge and expertise, as well as ensuring compliance with legislation. Businesses will also have access to vital information around pay and employees, helping them shape their strategy in other areas, and can benefit from additional solutions such as P11D reporting of benefits to HMRC at year-end.

Yet not all payroll outsourcing companies are created equal, and failing to do your due diligence on a potential provider could prove a costly mistake. There are a range of elements to consider, including the all-important issue of data security, as well as the functionality of the software, the time required to process requests, customer service and the pricing structure.

Here, we’ve produced a series of useful questions to ask potential outsourcing payroll companies, to help ensure you partner with the right provider for your business. If you need more help getting to grips with outsourced payroll, check out our handy outsourced payroll FAQ.

Eight questions to ask any prospective payroll outsourcing company

  1. Can payroll integrate with my HR system?
  2. How do you ensure your services remain fully compliant with UK legislation?
  3. What is the payroll cut-off time?
  4. Are there different payroll service levels?
  5. What level of customer support can we expect from your offering?
  6. What is the pricing structure?
  7. How long does it take to implement the service?
  8. Can you give examples of how your services have positively impacted a similar organisation?

1. Can payroll integrate with my HR system?

Ensuring your payroll provider’s software solution can integrate with your HR system is essential. If this is not in place, in-house payroll teams will end up taking information out of HR systems and putting it into a different format, such as a spreadsheet, to then send to the outsourced payroll provider. This is clearly inefficient and also increases the chances of errors creeping in, which could ultimately mean employees are paid incorrectly.

You need to make sure, therefore, that there is a secure integration built into the payroll software so the HR system can provide it with a single source of accurate and approved data. Information should flow both ways too, so employees can access their payslips through their employee self-service log-in on your HR platform.

It’s not just an HR system that payroll should integrate with, either. Payroll software should also integrate with time-and-attendance systems to ensure accurate information around hours or days worked and overtime earned, as well as pension systems or providers. Benefits and finance teams also need to access pay data so they can analyse it for broader insight.

2. How do you ensure your services remain fully compliant with UK legislation?

It’s vital that any outsourced payroll provider is able to comply with the law, and reporting requirements. Some providers, such as Ciphr Outsourced Payroll, will operate as an agent for HMRC, meaning they can handle anything associated with reporting compliance. This allows them to receive tax notices, such as tax code changes, and make payroll submissions, and they may even be able to accept earning enquiries on your behalf.

You’ll also need to check software complies with auto-enrolment requirements and the associated reporting, as well as wider employment legislation such as calculating the correct holiday pay, which can be a complicated area. Make sure providers are BACS1-approved too, which will allow them to pay employees or HMRC on your behalf.

Ensuring compliance with GDPR is essential. Questions to ask of a potential provider include how secure the data is, whether it is stored in the UK, who will have access to it and what security accreditations the provider and its cloud server provider hold. If the provider has ISO 27001 accreditation that should provide some additional reassurance.

A final point here is to ask how payslips are distributed to employees. We still hear of them being sent over email, which is not a secure way of doing it, even with a password. Online payslips should be accessible from a secure portal, ideally using single sign-on technology, or through the employer’s HR platform. A process should also be in place to ensure those leaving the organisation can still access their payslips and P60s.

3. What is the payroll cut-off time?

This is an often overlooked but extremely important area to think about. Each provider will have a cut-off point when they require any updated information to be with them ahead of the next payment run. For some, this can be as much as three weeks in advance, meaning any new joiners are unlikely to be submitted in time for the next pay run. Similarly, there’s potential to overpay people who have left the company or those who have gone on long-term leave, such as sick leave.

Having as late a date as possible is obviously advantageous, particularly in sectors such as retail where many people will be relying on overtime rates to earn enough money for the month ahead. Failing to get this kind of information included ahead of a pay run could lead to disgruntled staff, as well as unnecessary payroll administration.

You’ll also need, though, to think about whether you need to adjust your own internal processes in line with cut-off times, to ensure there is enough time for your own checking and approvals.

4. Are there different payroll service levels?

Payroll providers should be able to adapt their offering depending on your precise needs. You may have in-house staff who can take care of certain elements but require help in other areas, for example.

Find out how easy it is to upgrade or downgrade elements of the service, and whether this can fluctuate if required. For instance, you may need to increase the number of payslips issued if you suddenly take on a lot more staff. Identify charges for the regular service, but also any extras, such as tax year-end, P60 production or P45 distribution. Again, make sure providers are BACS-approved if you require them to make payments on your behalf.

It’s important here is to verify the credentials and expertise of the provider. BACS approval, for instance, is an expensive accreditation to get and maintain, so it’s a mark of quality. It’s also worth checking the qualifications of the people who will actually be working on your payroll, and the staff turnover rates at that business, which can provide additional reassurance.

5. What level of customer support can we expect from your offering?

This is another essential to ask, as the last thing you want is to have an outsourced payroll provider that is unresponsive or fails to deliver what you need in a timely fashion.

One sign that you will get the service you deserve is if the provider assigns a designated customer success executive or payroll administrator to you. This will ensure a reliable and consistent service, and means you have a single point of contact should there be any issues. It also means they will be able to spot any issues themselves, as they will be familiar with your business.

If you have any specific concerns, ask the provider how they would deal with a particular situation. It’s also worth checking opening hours and any out-of-hours support that may be available.

Another issue to think about here is how the provider will keep you informed of any changes, particularly around software upgrades or tax-year changes, and whether there will be any regular webinars or other sessions to help keep you up to speed. Ciphr’s next webinar, for example, which will cover legislative changes for the 2023/24 tax year, is on 9 March (click here to register now).

6. What is the pricing structure?

Payroll outsourcing costs in the UK can vary. Most outsourced payroll providers will operate on a ‘per payslip’ basis but other factors to consider include how complicated your requirements are and how many pay-runs will be needed in a particular period. Ciphr, for instance, offers a single price that includes everything but other providers may charge extra for additional services such as undertaking P60, P45 or tax year-end work.

It’s also worth establishing if there are any additional fees for emergency or supplementary pay runs that may need to be made to particular groups of employees. And, as mentioned above, find out if you can add on additional services should your needs change, and what the cost for this would be.

7. How long does it take to implement the service?

It’s important to know the likely timescales involved in switching to a new outsourced payroll provider, and to break this down into stages which clearly outline the responsibilities of both the provider and your organisation.

As a general guide, implementing a single payroll is likely to take three to four months for a full implementation. But this could be longer if there are multiple payrolls involved, for instance, if your organisation has acquired businesses along the way and is currently operating multiple different payroll systems.

Be wary of organisations that claim to be able to do this much quicker; a proper implementation process will require a lot of checking and validation to ensure the whole process works properly. Ciphr, for instance, builds into a typical payroll implementation project two parallel runs – running your old payroll process alongside the new payroll software and then comparing the results – to ensure that all the payslips, reporting and integrations are working correctly.

Having a single point of contact at the provider is essential, as that way you will have one person to speak to who can answer all your queries during the installation process. Find out who will be configuring the payroll and migrating the data, and make sure to ask about security processes during the transition process.

Finally, remember to ask about what training will be provided during this period, to help you and your team get up to speed, and any other resources that will be available on an ongoing basis.

8. Can you give examples of how your services have positively impacted a similar organisation?

This is perhaps the most important question to ask, as it should give you external and independent validation of the service and software on offer. Ask outsourced payroll providers for examples of businesses of a similar size, sector or situation to your own, and ideally see if you can speak to them directly rather than relying on written material.

Ciphr, for instance, has a section on its website containing case studies, videos and testimonials of existing customers, and those reaching the final stages of a selection process can speak directly to customers about their experiences. This might involve one longer-term customer that has been using its services for some time, and a newer business which has recently been through the onboarding experience.


Taking the decision to make use of UK payroll outsourcing services is one that can bring your business significant benefits, but it’s not to be undertaken lightly. Being armed with the right information around pricing, service levels and that all-important HR and payroll software integration – as well as elements such as compliance and payroll cut-off times – means you can make the right decision as to which outsourced payroll provider to choose. Once that’s done, you can enjoy the benefits that come from outsourced payroll.

To find out more about how Ciphr outsourced payroll can help your business manage its payroll more efficiently, download our brochure or request a demo now.