Improving Client Service through Online Payroll

By Anu Sanghvi

Accountants across the country are pursuing payroll clients like never before. Thanks to online solutions, payroll has become the “hook” to improve client service, enhance loyalty and gain incremental business.

That’s good news for the 5.1 million small businesses with fewer than 20 employees. These companies have the same tax burden as large employers, but they don’t have nearly the same resources to keep up with all the regulations and deadlines.

Small firms rely on the accounting profession to handle their back-end offices so they can focus on growing their businesses. The story is no different when it comes to payroll. According to the National Payment Corporation, 90% of small businesses prefer that their accounting professional handle their payroll.

Accountants have shunned payroll work for decades, citing reasons such as there’s no value-add, it takes too much time and it’s not profitable. Yet, small business clients want their accounting professionals involved.

“My clients expect me to do payroll,” says Martin S. Kofman, CPA, of Needham, Mass. “If I care about what they want, I have to do it. It’s as essential as providing accounting and tax services.”

According to IDC, the payroll industry is poised to grow to $13 billion by 2008. Today, there are nearly 6 million employers in the U.S., of which 89% (or 5.2 million) have less than 20 employees.

The majority of these small employers are currently doing payroll by hand, which opens the door for errors and penalties from the Internal Revenue Service. In fact, according to the IRS, one out of three businesses is penalized each year, for an average penalty of $1,300.

The advent of “software as a service” payroll technology and electronic initiatives has made it possible for accountants to get involved with payroll again.

By offering live payroll services, accountants solidify their role as a trusted adviser to clients and ensure that they form a strong foundation of client loyalty that is bound to result in word-of-mouth referrals over time. Most importantly, they ensure that their clients are compliant with government regulations and deadlines at all times, and not just at quarter-end.

There are several advantages to this approach:

With online solutions, there’s no up-front investment in software or ongoing tax tables to download. Client data is securely stored on servers that are protected and automatically upgraded. As a result, professionals can retrieve client data from any location, using a single online dashboard. All professionals need is an Internet connection. There’s no need to be tied to the office on payroll deadlines.

Some online solutions also allow professionals to decide how to get involved on a client-by-client basis. Clients can be set up to log in and manage payroll on their own, while the accountant maintains real-time access to their information online. Or the accountant can use the payroll solution as their “back-office” tool to offer payroll services under their firm name.

Some online solutions provide toll-free support with payroll experts that become an extension of their accountants’ staff, so that professionals can offer the service confidently without having to invest in training or prior payroll experience.

With today’s technology, accountants can manage payroll in minutes at very affordable prices, which creates an opportunity to make payroll profitable. Paycheck calculations are instant and there are several options to pay employees, including direct deposit, local paycheck printing on blank and pre-printed check stock. Some providers also send email notifications when pay stubs are ready, making the entire payday process paperless.

Many online services offer a flat monthly fee with no extra charges for direct deposit, electronic tax payments and filings, W-2s and customer support.

Once accountants recognize the client service benefits of online payroll, they begin to explore how to grow that practice. But many worry that their lack of marketing experience will impede this endeavor.

First of all, any competent accountant already possesses marketing savvy. The simple acts of delivering quality services and caring about your clients are the most basic tenets of successful marketing. By simply nurturing and sustaining client relationships with integrity, quality work and trust, accountants attain what larger companies spend huge sums on advertising to achieve.

Nevertheless, many online payroll services recognize that accounting professionals appreciate some coaching in this area. As part of their subscription package, they offer marketing tools such as firm-branded websites, demos, editable sales letters and ready-to-print customized brochures. These tools help professionals promote their payroll services without having to invest marketing dollars.

In spite of the rapid adoption of online services that are making client payroll easier to manage and profitable, many accountants remain cautious about online security. That’s not surprising. It’s what clients expect from a trusted adviser. To ensure that their systems are secure, the leading online solutions employ the highest standards of technology that are used by the largest U.S. financial institutions.

Those accountants that do switch to online payroll solutions find that they are solidifying client relationships, and attracting new small-business clients to whom they can cross-sell other services in the months and years ahead.

This article has been adapted from an article published in The CPA Journal, March 2007, copyright 2007, with permission from the New York State Society of Certified Public Accountants.

Author’s Biography
Anu Sanghvi is the director of the Accounting Professionals Program at PayCycle, the leader in on-demand payroll for professionals that serve small business clients. For more information about PayCycle visit, www.PayCycleReport0307.com

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