Common Misconceptions

An introduction to contingent workforce payrolling

“We can handle contractor payrolling ourselves”

Of course, you may think it would be better to let your own HR and accounting departments handle contractor payrolling. After all, they do so for your long-term employees, right? Here are some of the reasons why organizations rely on a third party to provide payroll services for their contract employees:

  • It’s easier to show auditors that the relationship is a contractual one
  • Their systems and staff don’t get overloaded with new requirements
  • Contractors expect to have their issues resolved promptly
  • You can focus on what your core business has set out do
Human figure surrounded by machine gears

“It’ll cost less if we keep it in-house”

Yes, there are fees associated with outsourced payrolling services, but keeping this work internal also has costs and risks. Many of those are hidden and can  potentially result in organizations spending more than what they would pay to outsource. Contractor pay rates are typically 10 -15% higher when sourced directly, rather than through a competitive channel.

  • The requirements to payroll contract workers is an added burden on your staff
  • New expertise needs to be learned to properly deal with contract worker issues.
  • Organizations are challenged to match the offerings provided by outsourced services.
  • Legislation for contingent workers is a constantly changing landscape.

“We can manage the risks of paying contractors directly”

Any business involves risk, and you may believe that handling the payroll for contract workers fits into the range of “acceptable risk.” But consider the risks you’re willing to take on: that you’ll miss an aspect of the onboarding process such as hiring an unqualified worker, paying too much, or that payments to the worker will go astray.

A protective shield
An arrow hitting a target bullseye

Sourcing contractor payrolling services from a qualified and experienced service provider will not only help reduce the chance of bad things happening, it will insulate your organization from potential problems.  Using an experienced and qualified payrolling provider will help you save money and time.

Up next: Where do I start?

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If you want to reduce the cost of your contingent workforce, assess and avoid employment risks to your organization or you're having trouble finding the right talent, contact Procom today.  

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