Payroll-processing companies increasingly see the CPA firm as a convenient way to attract small businesses as clients.

One such payroll company, MPAY, has been increasing its outreach to CPA firms in recent years. MPAY CEO Geoffrey Duke stopped by SourceMedia’s Accountants Media Group offices here today to talk about what his company has been doing. Duke has been in the business a long time, having sold green ledger books years ago and directed product development at accounting firm CBIZ’s payroll division. Many of his employees come from CBIZ, which is also a major customer of his company.

Duke has been moving his company into the software-as-a-service space, and has been seeing record business this year from sales of biometric time-and-attendance software as more companies try to keep close track of their employees’ time to reduce labor costs.

Only about six CPA firms are now using the SaaS model so far, with another 25 to 30 licensing the software from MPAY, and several more via CBIZ. But Duke sees a lot of potential in the CPA market and has been making the rounds of many of the same accounting shows as his fellow payroll vendors. The recession has been hitting many customers, but it also has given MPAY the opportunity to grow by making four acquisitions last year.

Payroll is going to continue to be a competitive market, and CPA firms are helping companies like MPAY broaden their reach while giving CPAs a relatively painless way to process payroll for clients. Duke warned about doing business with fly-by-night payroll companies, though, as there have been some recent cases of payroll service bureaus not paying their clients’ payroll taxes. A few months ago, Manhattan District Attorney Robert Morgenthau indicted two executives who formerly ran Citypay Payroll Services for operating what amounted to a $1.7 million Ponzi scheme. Citypay used to advertise free payroll services, but in the payroll business few things are ever truly free.