Every business runs payroll. It’s a necessary component of business operations regardless of company size. That’s why more banks, CPAs, and benefits providers are including payroll as part of their services offering. Payroll is not only an essential part of running a business, but the complexities involved in paying employees and maintaining compliance are critical to get right. However, many small business owners simply don’t have the time or expertise necessary to navigate those complexities.
Though many banks, CPAs, and benefits providers are interested in adding payroll services to their product offering, they’re often afraid that clients won’t sign on. But according to a recent survey, 38 percent of small businesses expect their financial advisors to handle payroll for them. As a trusted advisor to your clients, they welcome your advice, assistance, and expertise. Navigating payroll complexities is not your clients’ focus; only 43 percent feel confident they’re paying employees on time and only 25 percent think they’re accurately calculating payroll taxes.
In today’s economic climate, your firm is also likely looking for new revenue streams. By adding payroll services to your product offering, your firm can solidify its relationship with clients and add a stable, recurring revenue stream. Find out why payroll is an essential business and how it actually works to strengthen client retention and profitability. Discover five reasons why more banks, CPAs, and benefits providers are adding payroll to their client services offering.
Payroll is an essential business
Payroll is an essential function for every business. Federal and state laws require employees must be paid accurately and on time for work performed and employment taxes must be filed and paid. And from your employees’ perspective, there’s nothing more essential than a paycheck during the uncertain times we’re living through right now. However, payroll is also complex and burdensome–especially for smaller businesses.
Small business owners know that payroll is a critical function that affects every aspect of their business—from employee morale to regulatory and tax compliance and financial stability. Yet they can’t focus on growth and innovation by spending all their time on the administrative tasks that go along with accurately completing payroll.
Why your clients want payroll services
Small business owners need help to manage it all—and their accountant, banker, or broker is a natural solution. As a trusted advisor, your firm is already handling some piece of the company’s financials. Your clients gain peace of mind when outsourcing payroll to you because it:
Saves time so clients can focus on business growth.
Increases accuracy of payroll and automates compliance requirements.
Minimizes risk and cost associated with payroll tax penalties.
Five reasons banks, CPAs, and benefits providers are adding payroll services
Many banks, CPAs, and brokers are adding payroll services to deliver increased value to existing clients. But it also helps them secure new clients and new sources of revenue. Consider these five benefits when building a business case for adding payroll services:
Expand your market. Since payroll is essential, it makes everyone a potential client. Adding payroll services to your product offering creates a huge opportunity to secure another entry point into prospective client businesses. Plus it may be a competitive necessity. If you’re not offering payroll services, your competitors are. According to a recent survey, 53 percent of small accounting firms were already offering payroll services, and another 20 percent were considering it. In addition, providing payroll services to your clients gives you deeper insight into the economic health of that business. For example, for most businesses, payroll expenses should fall between 15 to 30 percent of gross revenue. If you see that percentage rise, you can provide timely advice to your client so they can make appropriate adjustments. You’ll have eyes on the business and the data needed to provide advice that drives growth.
Diversify your services. Product diversification is one of the top reasons why trusted advisors get into payroll services. It’s a strategic part of a firm’s growth strategy as well as a natural extension to its existing portfolio of financial services. Since payroll acts as a health barometer of a business, having access to payroll data is critical to banks, accountants, and brokers.
For example, for banks in today’s zero-interest environment, payroll provides a product offering that doesn’t rely on interest income. Instead, payroll generates predictable fee-based income that is based on per payroll or per employee per month. Additionally, payroll data is critical to help small businesses apply for Paycheck Protection Program (PPP) loans and support compliance with those terms as well as other aspects of economic assistance legislation.
Add recurring revenue. Banks, CPAs, and brokers offering payroll services also add reliable, predictable, and stable income. Payroll fees don’t fluctuate dramatically because they are based on a predictable schedule. Your firm can accurately plan for the future knowing you have a steady stream of income coming in throughout the year to help offset any transactional or seasonal services. It’s also interesting to note that payroll services provide passive recurring revenue—meaning it’s not a labor-intensive service since many clients will enter the data directly into the system.
Gain resiliency. Employees need to get paid on a regular basis. Though there may be slight decreases in the number of employees or clients, the need for payroll is always there. For example, while many businesses weathered the initial shock of the COVID-19 crisis, other businesses began to thrive such as delivery services and grocery stores.
Strengthen client retention. Payroll naturally extends your existing services and enhances your role as a trusted advisor. Your firm is also providing great customer service with a more intimate knowledge of your client’s business. By providing all of these services, your firm creates “stickiness” which ultimately drives customer retention and loyalty. Even the larger payroll service firms report customer rete
ntion rates above 90 percent.
Expand your services offering and solidify your role as trusted advisor
Regional and industry-based payroll service providers play an important role in the success of many locally-owned small businesses. Asure offers white-label payroll software so you can grow your business while you help your clients grow theirs. Download our white paper “Why Banks, CPAs, & Benefits Brokers Should Offer Payroll Services” to find out why you need to be in the payroll business, then visit our website to learn more about Asure HCM for Partners.