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How to cut costs in your payroll department

Payroll automation and payroll outsourcing
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Processing pay is an important exercise albeit an expensive one.  However it doesn’t mean that it has to be though. expensive.

How much is it costing you for payroll?

To cut costs it’s important to know how much they are in the first instance! The best way is to apportion it down to a per payslip cost. Cost per payslip can help you easily compare the cost while creating a metric that can be tracked over time.

Calculating the cost

First let’s gather your total cost for processing pay for all your staff. You need to incorporate the following costs.

Salary costs
• payroll staff salaries and wages including superannuation

Systems and services
• any applications used for payroll, time and attendance and employee self service

• consulting and legal costs
• education and training costs
• memberships or associations
• travel

To calculate the cost find the above costs, total them up then divide by the number of payslips processed in one pay cycle. This will give you the average cost per pay slip.

The Hidden Costs

Keep in mind that without payroll automation it can be very easy for payroll staff to make mistakes. Some time they can go unnoticed. Mistakes can be extremely costly for the business – which typically aren’t even accounted for- especially the time taken to fix such such mistakes.


  • Re-works due to errors
  • Penalties
  • Over payments in tax
  • Over payments in pay


Updates in legislation can also create hidden costs and unnecessary payments. To compensate for this payroll staff are required to maintain their qualifications as well as complete ongoing training. Training and additional education- once again adds another layer of expenses.

Cutting Costs

Cutting costs comes down to three core pillars of any business; process, people and systems. Making sure each one is running at optimal efficiency is obviously key to keeping your costs low, however, much harder than said.

Streamline your process, people and systems

Continuous improvements can often be overlooked within the payroll department. It’s just deemed a necessary cost- after all, everyone needs to be paid right?

But making small and incremental changes to streamline processes within payroll can exude large dividends.

Getting tools streamlined, creating templates, and reducing wastage is just as important within payroll as with any other department. This helps the ‘people’ within the payroll do better jobs. Which means less reworks and more time to focus on the right tasks.


More and more Australian businesses are opting for outsourcing their payroll functions. This removes the headaches altogether, but you also lose control, data, and vital information that can be otherwise used to improve not just payroll but other areas of your business. Insights into overtimes, hours worked, leave fluctuations and demand, and data coming in from time sheets, can help you much more operationally.

However on the pro side, outsourcing can exude substantial cost savings to your business. It removes costs such as salaries, training, education, as well as removing the need to constantly keep up-to date with legislation and tax changes.

Prodoreda can help you find the right payroll provider at no cost. Speak to one of our friendly advisors today.

Automation Software

With an explosion in cloud services recently, there are now several options to really streamline your systems, cut operational costs, and focus on your core business. Cloud solutions bring several advantages. This includes not having to worry about managing different tools, templates, and systems. Payroll automation software is no exception to this. You can read more about the benefits to automating your payroll here. If you want to keep control over your payroll the using automation solutions is definitely the way to go.

Prodoreda will help you find the right automation solution. Our software specialists help you to determine what you need then find the right solutions for you. Speak to us today.