Hidden traps in the organization – payroll process due diligence

There are many publications explaining the advantages of payroll outsourcing that anyone can find with a well-targeted Google search, but despite that, it is still not easy to assess the risks associated with different decisions and to choose a direction to follow. We need to put a lot of trust in the payroll service provider for this. Before making such a decision, it may be helpful for the HR manager to identify as a first step the material and human risks associated with the current payroll processes. A payroll process due diligence can answer this. In the case of large enterprises, we frequently see situations where the continuity, professional quality, and legal compliance of internal payroll and the satisfaction of the employees depend on a single person responsible for the payroll. In such cases, the absence of substitutability, the sharing of professional knowledge, and control points integrated into the processes may lead to serious negative consequences. Companies in such a situation may face hidden tax and labour risks, the potential financial consequences of which are difficult to assess from the perspective of the senior executive. Outsourcing may seem to be a good solution for minimizing this risk and reducing human exposure, but it can only be successful if we do not forget to rethink our internal processes either.

When reviewing the labour processes, it is practical to deal – among others – with:

+ the procedures related to the enrolment and exit of employees,
+ preparatory activities related to payroll,
+ the process of end-of-the-month and mid-month payroll,
+ the process of transferring wages,
+ the administrative steps related to benefits in kind,
+ the system for recording working hours and the associated processes,
the order of data provision,
+ reporting,
+ and the annual opening and closing processes.

The BPiON team can support its clients in the course of such due diligence by identifying redundancies in the processes and legal non-compliances, assessing and displaying in a numeric form any tax and labour risks, pointing out any missing control points, and making suggestions for optimization of the payroll, labour and HR administration processes. If required, as a result of the due diligence we can prepare internal regulations and list the specific steps of transformation of the processes.

The goal of a due diligence process may also be to prepare the company for outsourcing to take place soon and to develop processes that are appropriate for collaboration with a payroll outsourcing provider. With conscious preparation and diligent planning, the lead time of outsourcing can be decreased, and success and employee satisfaction can be ensured. 

And how to start payroll outsourcing? Payroll outsourcing in CEE – Things to consider


Rafał Nadolny
MD Poland,

Daniela Zsigmond
MD Romania,

Tamás Kovács
MD Hungary,

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