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Use an Answering Service to Reduce Payroll Expenses

Use an Answering Service to Reduce Payroll Expenses

One common reason to hire a telephone answering service is to reduce payroll costs, both the direct and indirect expenses. Don’t overlook this wise cost-management option.

Outsourcing Is Cheaper Than Hiring: It’s costly to add a new employee to answer your phone. In addition to their hourly rate, there are hiring costs, management expenses, and a costly benefit package. All these expenses are eliminated when you outsource your phones to an answering service.

The benefit of using a telephone answering service is that you convert a payroll liability to a line-item expense. Answering services excel at handling phone calls and can do so for less money than you can. By aggregating their services over many clients, answering services enjoy an economy of scale that an individual business can never realize. This allows the answering service to provide quality service at an affordable price that you can’t match in house.

Eliminate Overtime to Answer Phones

Most employees work eight hours a day, but most businesses are open for more than eight hours. This means that to have someone answer phone calls during business hours, an employee must work overtime to cover all your hours of operation. This might include coming in early, staying late, or skipping lunch. In any of these scenarios, the result is overtime pay. This serves to increase your already high cost of labor for phone coverage by 50 percent.

To avoid this payroll hit, businesses have experimented with adding part-time help or drafting other employees to cover the phones, which is never received well. At best these band-aid approaches only mask the real problem, which is the high cost of labor to answer the phone. Answering services can solve that.

Avoid Pay Premiums for Expanded Coverage

To pay internal staff to answer your phone 24/7, you often need to offer pay premiums. This might include a third shift differential, premium for weekend work, or double time on holidays. Again this pushes up the employee compensation cost of answering your telephone. When you use an answering service, you encounter none of these premium labor costs and avoid all these payroll pains.

Adjust Phone Coverage Without Affecting Payroll: When you use an answering service it’s easy to ramp up or ramp down your service coverage to match changing business conditions and opportunities. This is much harder when you have phone staff on your payroll.

To expand the hours of phone coverage in house, you need to hire more help. This means you must run a help wanted ad, interview candidates, and hire the best selections. Then you must train them and hope they work out.

Conversely, if you need to scale back your business, this requires you cut the hours of existing personnel or lay off staff. Either option hurts the morale of remaining employees and makes optimizing your operation all the harder.

However, when you use an answering service, these changes happen automatically, based on the hours of coverage needed and the number of phone calls received. Interestingly, whether ramping up your business or cutting back, the result is usually more work for your answering service and less payroll expenses for you.

In summary, one of the compelling reasons to use an answering service is to reduce payroll costs and control escalating labor expenses. Don’t keep phone answering in house when you can hand it over to your answering service and save money.


Richard L. Hutcherson is the director of operations for Answering Service One, a new kind of answering service that wants to become your number one resource to handle your communication needs. Contact Richard at 865-505-0456. Peter Lyle DeHaan is a freelance writer from Southwest Michigan.

  • By: admin
  • On: October 09, 2018
  • In: Blog Post
  • Comments: 0 Comment

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