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
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