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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.



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Top five reasons why you need payroll automation

Payroll automation software helps reduce costs and streaamline your business
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Some of the world’s top performing organisations are investing in best practice and lean processes. Not only does this provide lower operational costs, it provides key insights, intelligence and reduced risk. Anyone in payroll knows that compliance – or keeping up to date with it- can be a huge pain point. Payroll automation severely reduces this pain point and makes compliance much easier to manage.

Payroll automation costs less

The more manual the process, the more hands you need to throw at it. Payroll staff is expensive. Salaries can range on average from $60,000 pa for payroll officer to $120,000 for senior and manager roles. The cost actually is much higher when you consider the total cost of hiring and retaining payroll staff:

  • hiring (recruiting) costs
  • training staff
  • stationery and IT
  • memberships to associations

So have you considered the average cost you are paying to process per payslip?

$202.41 per pay slip*

*average cost per pay slip for small organisation with less than 50 employees◊

As the organisation gets bigger the costs decrease at an accelerated rate. Top performing organisations however are able to cut their costs per pay slip by well over 50% of averages.

Mid size organisations paid $15.06 on average in 2016. However the top performer in this category only paid $5.08. Where do you fit? top performing? or average?

Cut Down Costs

Time is money, and payroll automation software definitely helps reduce the time it takes to process payslips and related activities.

Automation can also help cut down on printing costs, such as pay slips, which employees can check online instead.

You can more easily add new employees and make salary adjustments to records when an employee quits or is terminated. If tax rates change, your tax tables can also be automatically updated in a computer-based system.

cut-costs using payroll automation software

Reduce errors- pay correctly

Automating payroll has a major benefit that it ensures accurate payment to employees. Paying inline with awards and overtime, whilst considering employee benefits and leave, can all be automated. You can reduce errors further by integrating payroll software with other applications such as HR, ERP or accounting systems.

Pay your taxes right

Reckon it’s important to pay your taxes correctly? we do too. With ongoing changes to tax legislation it can be very difficult for businesses, even with payroll staff, to keep up to date with. However, with tax with-holding automated through payroll automation software, businesses can avoid non-compliance and potential large penalties from the tax man.

Streamlined Processing

Running a lean mean smooth machine?

Payroll automation can cut down on the process of running payroll, data gathering, information processing, disbursement, and reporting.

The right payroll software can easily integrate into other business systems such as HR  and accounting software. This allows you to gather key insights from pay or employee data that can be used to further streamline other business processes- giving you the domino’s effect.

Payroll often gets neglected come time for Kaizen (ahem, continuous improvement!). This is often an overlooked function for such initiatives. However even simple changes and alignment to legislation can mean savings of 1000’s to hundreds of thousands of dollars. This is even more true if there are errors in your payroll process.

Insure Compliance

Hmm, we’re guessing this might be another important one to keeping your organisation up and running?

Australian taxation law is constantly changing, tax margins and bands are always moving, and legislation is becoming stricter. Although this may be good for businesses and employees, it can present challenges for organisations as they need to constantly remain up-to date with such changes. They also need to provide ongoing training for payroll staff. Expensive!

According to the Australian Payroll Association:


of employers have no external advisory regarding payroll◊. Do you know what that means? it means these employers are taking unnecessary compliance risk .

Not only would a company be liable to fixing any error they make, they may also incur penalties for failure in compliance. This makes it critical for businesses to look at payroll automation or pay-roll outsourcing.

◊ Data based on Australian Payroll Association 2016 Payroll Benchmarking Study.