Among those offering a choice is Paychex, which provides traditional outsourced services. This year, it purchased SurePayroll, which markets an Internet-based system that enables customers to prepare their own payroll. Automatic Data Processing has rolled out its Run program that gives businesses a range of choices from handing off payroll to the processing giant, or using Run themselves to provide services to customers.
Options at Thomson Reuters are clearly described on its web page and is fairly typical of the options offered by payroll vendors. Accounting CS Payroll is designed for those who want to process payroll themselves. Firms can process payroll for clients via Accounting CS Client Access and the relatively new MyPay Solutions is a classic service bureau.
Paychex cited the fact it has not completed the new relationship with SurePayroll for its decision not to participate in interviews about payroll. Even though the deal was completed in February, a spokesperson says that "Our selling agreement with SurePayroll is still being finalized." However, the addition of SurePayroll helped the company broaden its product line. Paychex still provides the classic outsourced payroll service, but the acquisition of SurePayroll added an Internet-based payroll service that served small companies. SurePayroll has replaced Paychex's prior online service that had not been as successful as hoped.
And at Automatic Data Processing, the world is shifting away from the classic phone-or-fax-your-payroll model, according to Rich Wilson, SVP of development. With ADP Run, the web-based application that has been rolled out market-by-market over the last few years, there has been a reversal in how data is entered. Run is replacing the 30-year old EasyPay product.
"With EasyPay, 25 percent [of customers] were using online data entry and 75 percent were calling in," says Wilson "With Run, we only have 25 percent calling and 75 percent are entering data online. ADP also markets Run with wholesale pricing so accountants can use the engine to process payroll under their own brand.
Wilson says among Run's advantages is that it provides a real-time view of payroll data. Data can immediately be checked for accuracy and modifications can be made on the fly. Additionally, ADP offers a variety of bundled offerings that enables customers to pick which of the payroll tasks they would like to perform and which they choose to hand off to ADP
Not everyone wants to provide a variety of services. Hauppauge, N.Y.-based AccountantsWorld provides the processing engine for firms. But it has no intention of being anything other than a back-office processor, says CEO Chandra Bhansali.
"Accountants enter the payroll data or clients enter the data. We charge a very nominal fee for offering this processing center," says Bhansali. He describes the results this way: "We give you the same power that ADP and Paychex have."
Thomson went the other way a few years ago when it established MyPay to provide service bureau processing and put veteran SVP Jack LaRue in charge of the program. The company has about 500 accounting firms that have referred clients to MyPay, which is processing about 3,000 payrolls.
LaRue says that when it comes to operating a payroll business for clients "for you to be profitable you have to be all in or all out. It's very difficult to handle payroll as an accommodation for three or four clients." And while many MyPay customers hand off their entire business to Thomson, there are some who refer customers "who are not in their sweet spot or who have complex returns" while continuing to handle the rest of their clients' processing.
The end result of the MyPay service is that an integrated file is produced that the accounting firm can import into Thomson's write-up software or into QuickBooks. There is also one other result - Thomson pays for referrals.
"We also pay a 10-percent revenue share for the life of the client," LaRue says. Thomson paid out $150,000 in fees to accounting firms in the first two quarters of 2011.
