With all the attention focused on the hot topic of the moment--document management--it's easy to miss a resurgence, or at least a mini-resurgence, in payroll processing for accountants.
Well, it's at least a resurgence in vendors trying to convince accountants that they ought to offer payroll services to their clients.
The payroll business has always been something that accounting firms love or hate. The ones who hate it, claim there's no way to make money on such services. The ones who love it say that it's profitable and that performing a client's payroll binds them to the firm in a way few other services do.
PayCycle, the online provider that always catered to this market, introduced its wholesale payroll processing service this year. ADP introduced its Web-based wholesale offering in June. But the bigger news was that Intuit, which has spent the last few years buying payroll processing companies and then trying to get them to work right, has introduced its QuickBooks payroll services.
During the services introduction, the company claimed to be the biggest payroll processor, ahead of ADP and Paychex. But that was more than a little ingenuous since Intuit is selling software for accountants to use, not doing the processing itself. Still, payroll is the fastest growing segment of Intuit's revenue, and if the company puts some emphasis on marketing this to the millions of QuickBooks users and links them to its ProAdvisors somehow, there's a real potential for accounting firms to substantially increase their market share of the payroll processing business.
There's room to grow since most surveys report that the percentage of businesses using outsourced services has stayed in the mid-20s for several years, despite the attempts to convince companies that performing their own payroll is an onerous business.
It strikes me that there's one other player that could spur growth of payroll. That, of course, is Microsoft, which is reportedly ready to make another run at the low-end accounting marketing with a product that is code-named Magellan. I've felt that Microsoft could probably get some leverage if it could bring a payroll product for accountants to market. Microsoft has already linked Money with PayCycle. It could easily go further.
Will more or the market turn to outsourcing? Perhaps, but then again, maybe all those business just like doing their own payroll.
