Pivoting payroll management: in-house, outsourced – or somewhere between



Read time
10 mins

Our payroll management supports every option: outsourced, bureau or integrated with your HR system

If it’s time to update your payroll management, you’ll probably be looking for more efficient software, a fully managed arrangement, or something in between. But have you considered the value of integrated HR and payroll software as a single source of information? Let’s take a closer look at all the options

If you’re thinking about changing your payroll provider, likely, your current solution isn’t working for you as well as it could be, or perhaps once was.

That might be down to the software or provider itself. Perhaps it’s just not as accurate or efficient as it should be – or it could be that your current setup is no longer fit for purpose and it’s time to consider other options, such as integrated HR and payroll software or a fully managed payroll service. This might be the result of someone leaving or planning to retire, taking huge amounts of knowledge and experience with them. Or it might be that you’ve realised you could potentially save money by outsourcing to a trusted partner.

For those looking to make a change, there are three main options:

Payroll management system

Payroll management software

If you have an established in-house team and are not looking to change that, then you may wish to upgrade to more efficient payroll software from a trusted partner such as Ciphr.


Our software is fully Bacs accredited and accommodates all legislative requirements, including submissions to HMRC and pension providers. You’ll still be in control of your payroll, including making sure all data is correct and submitting pay runs.

Julie Lally, managing director, payroll, at Ciphr, says this option will make sense for some organisations, but warns against introducing risk by retaining payroll management in-house. “My advice is to evaluate your payroll procedures manual every single month so if the payroll person goes off sick, someone can pick up that manual and follow the process,” she says.

“You should always have times-three cover,” she adds. “You need the person who does the payroll all the time, somebody else who shadows it, and a third person who has enough of an idea of how to use the software and can follow the procedures manual to get payroll processed if the other two aren’t around. If you can afford that, do it in-house. If you can't afford that, you should look at either a bureau or managed payroll service.”

Managed payroll – bureau


Managed payroll (bureau) allows organisations to combine an in-house team with support from Ciphr’s team of payroll experts.

Depending on your needs, we can handle the entire payroll process or just elements of it, such as making payments and the production of P60 and P11D documents.

“Some organisations just need us to process the Bacs and make the payments because they’re not accredited themselves, as there’s a cost to that every three years,” says Lally. “Some finance institutions will want us to process everything up to that and then they’ll process the payment.” Ciphr’s team of fully trained, UK-based professionals can liaise with pension providers and other organisations, and can also generate analysis reports for finance teams.


For those organisations that still want to retain payroll in-house, it’s important to check that a bureau service is available from your provider should it be needed. “This means if your payroll person leaves or goes on long-term sick, your software provider will be able to step in with their own bureau to run the payroll for you,” says Lally. “It’s almost ludicrous that people wouldn't have that as a service-in-waiting for in-house payroll.”

Another issue to think about with selecting a bureau provider is where data is processed, she adds, as some providers will offshore this, and this is more of a risk in the post-Brexit era. 

Payroll management: fully outsourced

Outsourced payroll management

For those looking to move away from an in-house team and rely on the expertise of a trusted partner, a fully managed or outsourced payroll solution may be the answer.

There are many reasons why this makes sense, but a primary one is the financial savings. “You’ve got no labour costs, so you're not having to hire and replace people,” says Lally. “All the responsibility for paying people accurately and on time is on your provider. They have an army of payroll experts so if the normal person who’s doing your payroll in the bureau goes off sick, there’s always someone else who can pick it up and run it.” The benefits of this kind of arrangement were evident during the Covid-19 pandemic, when many organisations found themselves without staff for prolonged periods of time.

There are other benefits to this arrangement, too. Ciphr, for example, will act as a PAYE-registered agent office for all HMRC submissions. We can also submit reports to other parties such as pension providers, courts, unions, or savings schemes. You won’t have to worry about training up payroll staff either, as our team is fully up to date with the latest legal requirements and changes to the industry. You can also rest assured that all data is being processed in the UK and in accordance with GDPR regulations.

Although the payroll cut-off date is also often closer to pay day than it would be with an in-house operation, opting for fully UK outsourced payroll frees up time for your HR team to focus on other, more strategic initiatives.

It’s important, though, to find the right payroll outsourcing company, so make sure you ask about their specific processes and examples of how they have helped other customers.

Payroll management system: integrated HR and payroll software


Whichever model you choose, there’s a strong argument for ensuring you use a single provider for both HR and payroll software. This means there will be a single point of entry for all data, with information flowing freely from one to the other.

“Information usually starts off in HR and then goes to payroll so that passing of information will be easier if you’re on the one system,” says Jaspal Randhawa, director of product for payroll at Ciphr. “When you’ve got a HR system that’s recording, for example, timesheets, and that information has got to get across the payroll to calculate, it can break when you’ve got separate systems. If you’ve got one system, that transition that is easier.”

This also means that it’s easier to extract information from both systems, she adds, such as putting a cost on how much staff absence is costing the business. This means HR teams can access the information they need to make more informed strategic decisions, including identifying any potential issues around staff absence, overtime, or annual leave.

Amanda Barnden, sales manager at Ciphr, points out that HRIS and payroll systems do not just take information from – or feed data to – each other. “There could be any number of different third parties involved,” she says. “It should be possible for anyone in the organisation to pick up the payroll manual and find out how they calculate pay, how they record that and who they should be reporting that to. All these questions cascade out from one event happening. It ties in with having a single point of data entry.”

From a data protection perspective, having a single provider makes it easier to track how and why data is being collected, where it is being stored and that it complies with GDPR regulations. “If a business has a lot of workarounds with data on spreadsheets and in filing cabinets, that media needs to be absolutely tracked for GDPR because they are security risks,” she warns. “The more that you can get into a single system, the more chance you’ve got of tracking where your data is and who is using it.”

Having a single provider also makes sense from an account management perspective, adds Lally. “It means you have one relationship, one account manager and one customer success manager helping you with both goals from HR and payroll.”

Ciphr’s GDPR compliant HR software allows employees to upload their personal information and HR teams to view and manage this. It includes a data-retention dashboard which flags up records that are about to expire or need to be deleted, and seamlessly integrates with our payroll system to avoid the need for manual data entry and eliminate errors.

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Things to think about when deciding

As well as the right model, other issues also need to be thought about. Barnden emphasises the need for a provider that will be prepared to help meet your needs, and provide you with trusted advice when you require it.

“Can you pick up the phone and have a chat with someone?” she asks. “If you’re going through some kind of transitional change, such as acquiring a new business and you need to put those employees into your payroll, or you’ve got 10 payrolls and you want to bring them into one, is your payroll provider capable of supporting you through that?”

There will, inevitably, be concerns too about what could go wrong, which is why it’s vital you pick a partner with a strong track record. “The most obvious risk is that employees won’t get paid correctly,” says Randhawa. “Once you’ve calculated payroll, and tables have been finalised and your RTI has been submitted to HMRC, it’s very difficult to correct any mistakes. Trying to recover any overpayments can be difficult, particularly if people have left.”

Underpaying employees, meanwhile, risks forcing people into financial difficulties and is likely to lead to disgruntled staff, unnecessary attrition, and a damaged employer brand. According to the CIPP Payslip Statistics Survey Report 2023, the top three payroll queries employers receive relate to being unable to access an online payslip, querying the tax code that has been applied, and an underpayment as a result of data being sent to payroll teams late in the day. Any one of these can be hugely damaging. “In a worst-case scenario, the provider may even miss pay day,” warns Randhawa.


The Ciphr difference

With Ciphr, you can rest assured that your employees will be paid correctly, on time, every time. At least three people will know how to run your payroll, meaning even if you handle payroll in-house there can be support there should you need it. Our team of payroll experts all come from HR and payroll backgrounds and are based in the UK.

With a number of different models, you’ll be able to choose the set-up that best suits you, and can rest assured knowing that you can alter this should your requirements change. We are trusted by organisations across a wide range of sectors, including care homes, charities and schools, and process more than £2 billion Bacs payments per year.

To find out more about how we can help you pivot your payroll management, download our brochure or request a demo today.