Pay­roll and the new back of­fice A cen­tral ser­vice

Spe­cial Re­port: More firms are putting pay­roll at the center of a suite of back-of­fice of­fer­ings

Accounting Today - - Assurance - By An­toinette Alexan­der See PAY­ROLL on 26

Ask small-busi­ness own­ers what keeps them awake at night and there’s a good chance they’ll say “pay­roll.”

Hu­man er­ror, missed dead­lines, new laws, lack of cash flow and non­com­pli­ance penal­ties are just a few of the pay­roll prob­lems that can deal a dev­as­tat­ing blow to a busi­ness. So it comes as lit­tle sur­prise that a grow­ing num­ber of them are look­ing to out­source their pay­roll, with a re­cent Pay­chex sur­vey find­ing that out­sourc­ing the func­tion is among the top five pay­roll pri­or­i­ties for busi­ness own­ers in 2019.

“Pay­roll is one of those im­por­tant ser­vices that busi­ness own­ers said … keeps them awake at night. They don’t like do­ing it and they get in trou­ble the quick­est through not pro­cess­ing their pay­roll cor­rectly. So, that’s one of the first things that a busi­ness owner will ask us about, ‘What kind of pay­roll ser­vices do you have?’” said Michael Ur­ban­ski, man­ag­ing part­ner for Maumee, Ohio-based CPA firm Ti­tus & Ur­ban­ski.

That’s good news for ac­coun­tants. As a trusted ad­vi­sor, ac­count­ing pro­fes­sion­als are ideally po­si­tioned to help clients nav­i­gate the com­plex­i­ties of pay­roll.

“We see pay­roll as a nat­u­ral fit for ac­coun­tants, as an ad­di­tional ser­vice of­fer­ing to their clients. We re­cently sur­veyed small pub­lic ac­count­ing firms serv­ing small busi­ness with Source­me­dia Re­search, and we found that one in four small-busi­ness clients be­lieve re­ceiv­ing pay­roll ser­vices from a trusted ad­vi­sor is the most im­por­tant con­sid­er­a­tion when look­ing at out­sourc­ing pay­roll. Plus, ac­count­ing firms say more than four in 10 clients need pay­roll ser­vices,” said Ja­son Copeland, vice pres­i­dent of sales for Sure­pay­roll, a Pay­chex com­pany.

For some ac­coun­tants, re­fer­ral part­ner­ships with pay­roll providers are ideal, but for a grow­ing num­ber of pro­fes­sion­als pay­roll is be­com­ing a part — or even a ma­jor cor­ner­stone — of their out­sourced back-of­fice ser­vices for clients. “About four or five years ago, I re­al­ized the one thing I hated do­ing in my of­fice was pay­roll. I ac­tu­ally out­sourced my pay­roll for the CPA firm, and we were ser­vic­ing a lot of book­keep­ing clients also at the time that had started us­ing some out­sourced com­pa­nies as well, like ADP and Pay­chex and things like that. I re­al­ized at that point, when I de­cided that I wanted to out­source mine, that there should be a good mar­ket for that,” said Robb Hurst, pres­i­dent of Douglas, Ge­or­gia-based Hurst & Hurst CPAS.

Ea­ger to make a push into the pay­roll space, Hurst es­tab­lished a sis­ter com­pany, called Pay­roll South, and to­day spe­cial­izes in of­fer­ing clients all as­pects of small-busi­ness ac­count­ing un­der one roof. “I re­ally think [pay­roll] started out just as a ran­dom piece of the puz­zle, but now I re­ally think it’s a cor­ner­stone be­cause part of my sales pitch to po­ten­tial clients is, ‘Look, we can take care of ev­ery­thing. We can solve all of the prob­lems you’ve got that ev­ery small busi­ness has,’” said Hurst. “I think it re­ally gives us an­other hook into the client and keeps them re­ally con­nected to our firm.”

Hurst is not alone. While pro­vid­ing pay­roll pro­cess­ing to clients isn’t a good fit for ev­ery firm, a grow­ing num­ber of pro­fes­sion­als are find­ing value in the of­fer­ing.

“We’re see­ing a trend over­all in the in­dus­try where book­keep­ing firms as well as CPA firms con­tinue to use pay­roll as a key cor­ner­stone to their out­sourc­ing prac­tice. Not only are we see­ing that on the small end of the mar­ket with small book­keep­ing firms that tra­di­tion­ally have done this but, more im­por­tantly, right now what we’re see­ing is more mid-mar­ket firms and larger firms start­ing to re­ally adopt this strat­egy, as well, and re­ally cre­at­ing full-ser­vice out­sourced prac­tices within their firm,” said Mike Triantos, head of part­ner de­vel­op­ment for Gusto, a pay­roll, ben­e­fits and HR so­lu­tions provider.

A win­dow into fi­nan­cial health

Client ac­count­ing ser­vices — which rep­re­sents out­sourced ac­count­ing, fi­nance and back-of­fice sup­port, in­clud­ing AP, AR, pay­roll, vir­tual CFO ser­vices and the tech­nolo­gies that sup­port them — con­tinue to be on the rise among firms, and for good rea­son. CAS helps firms strengthen their foothold as a trusted ad­vi­sor, and clients ben­e­fit from hav­ing greater fi­nan­cial in­sight into their op­er­a­tions and more time to fo­cus on the busi­ness.

The 2018 “Client Ac­count­ing Ser­vices Sur­vey,” con­ducted by Bill.com with sup­port from Cpa.com, found that 80 per­cent of CAS clients said that they have more time to fo­cus on their busi­ness. And half of the CAS clients said they worry less about mis­takes.

The types of ser­vices of­fered un­der CAS can vary but, as more firms look to build their CAS prac­tices, pay­roll is no doubt prov­ing its role as a key com­po­nent.

“The No. 1 con­cern that a [small-busi­ness owner] has is cash flow. With the pay­roll as­pect of this, which is typ­i­cally a com­pany’s largest ex­pense, of course, that’s why we see book­keep­ers and ac­coun­tants want to re­ally un­der­stand and have that be a cor­ner­stone of it be­cause

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