Although there are many great guides like this one and this other one from Inc. magazine on choosing a payroll processing service, they are largely intended for wide distribution and don’t delve into issues of consequence to staffing companies.
This doesn’t mean they don’t offer great advice – they do! But if you’re in staffing, then you know we’re in a different world and might benefit from hearing from someone whose service is specific to your industry.
I first started doing payroll by hand in 1974 while working for my Dad’s temp service, a Manpower franchise in Sacramento, CA. While many things have changed about staffing over the decades, the key differentiator between payroll for staffing and that of other lines of business has remained largely the same.
Back then, with the tax tables in one hand and a giant paper spreadsheet known as a tag board in the other, we would spend Tuesday evening entering check after check with its gross pay, tax calculation and net pay. When that was done, we’d use that same tag board to create invoices on Thursday.
Pay, then bill. Same transaction for both. That was the system my Dad had come up with, and little did I realize then how things could run amok if you tried to separate the two. Of course, I eventually did.
Some of our first big contracts for Tempworks Software were to replace systems that tried to separate the two. The net of it all is that separating bill from pay in staffing introduces risks that run from fraud all the way down to simple invoice mistakes, the inability to collect on invoices as well as the inability to analyze gross margin on a transactional level.
So, there’s idea #1: If you’re a staffing or contracting type company, make sure your provider can do both paying and billing from the same system and that the two transactions are relational to each other.
Of course, there is more that makes staffing payroll different. And with temporary staffing, even more so. By including the word temporary, we get to the heart of the problem with non-staffing payroll services: they often don’t handle the temporary nature of staffing assignments well.
Their systems aren’t set up to have a temp work one week and not another, or to have one customer whose pay is weekly and another who is daily or bi-weekly. A further complication that is unique to staffing is the concept of an employee working under a different workers compensation code each day of the week. I’m not saying their software systems can’t handle it, it’s just that for them and their staff, doing temp payroll is well outside of their comfort zone. In general, you don’t want to handle a fundamental aspect of your business or life or even pleasure to someone who just doesn’t appreciate how different you are.
Read more about reviewing and choosing payroll processing services here.