Wednesday 8 July 2020
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Beware of ‘Too Good to Be True’ Payroll Services

The competition between players in the emerging online payroll sector can create some interesting marketing pitches aimed at reaching new customers. The payroll industry is no different than any other in that most of its players are reputable companies that can be fully trusted to look out for the best interests of clients. However, there are others that should be approached with caution. If a payroll provider is offering services and fees that appear too good to be true, that may very well be the case.

At Benefit Mall, a Dallas-based provider of payroll and benefits administration services, they make every effort to be upfront and honest with all their clients. Just looking at their website shows a level of detail that not a lot of other payroll provider websites offer. Furthermore, Benefit Mall also makes a point of not marketing their services in ways that make them appear too good to be true.

What Too Good to Be True Really Means

The whole idea behind the concept of being too good to be true is found in the phrase itself. In other words, we all know that there is no such thing as a free lunch. There is no such thing as a free payroll service either. If a company has the audacity to make such claims, you can bet that there’s something going on in the background. The company has to make money to stay in business.

For example, consider the case of an Australian payroll provider known as Plutus Payroll. When the company was first founded, they began marketing a zero-fee payroll solution for small businesses. As you might expect, the company consistently faced the question of how they made money when they were providing payroll services for free. Their official response was that they marketed other financial services to their payroll clients.

Lo and behold, the company was busted a few years later for skimming money from client tax accounts. Rather than paying those taxes on behalf of clients, as they were legally required to do, they used tax monies to line their own pockets. Plutus Payroll was a clear-cut case of a payroll service offering a solution that was too good to be true.

Know What You’re Buying

Benefit Mall says that even payroll providers that aren’t doing anything illegal may still be offering great deals that are not quite what they appear to be. Saving money on bi-weekly payroll processing is definitely a good thing, but are you making up for it with higher fees for other services?

A good way to frame this discussion is to think about new car sales. How often have you seen ads advertising cash incentives for buying a new car? Well, dealers and manufacturers are paying customers thousands of dollars from their own bank accounts. They are simply adding the real cost of those incentives to the prices of the cars they sell. Customers who bite on the offers are essentially financing the incentives by increasing the size of their loans.

If a payroll provider is able to offer cut rate services in one area, they are most likely making up for it in another area. This is not necessarily a bad thing. It’s business. The point is that clients have to be careful to know what they are buying before they buy. Whether you are talking payroll processing, time and tracking software, or even retirement benefits administration, a deal that seems too good to be true probably is. You really do get what you pay for in the payroll and benefits outsourcing arena.

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