Payroll Service Indonesia: Benefits for Construction Businesses

Why Construction Businesses in Indonesia should Leverage Payroll Services

  • InCorp Editorial Team
  • 1 February 2021
  • 4 minute reading time

The construction industry in Indonesia has great growth potential due to the sizable infrastructure demand and strong support from the Indonesian government. According to BMI research, the construction industry in Indonesia, especially in the high-value infrastructure sector, will continue to grow sharply up to 2026. If you are interested in opening a construction business in Indonesia, you need to keep in mind that this business is rather unique in that it usually employs thousands of workers and has to provide proper compensation. To mitigate risks and errors and to comply with the regulations, payroll service in Indonesia from a third party are deemed ideal.

Benefits of Outsourced Payroll Service for Construction Industry in Indonesia

The following benefits of outsourced payroll service for the construction industry in Indonesia can help you make an informed decision if this solution is what you need for your business.

1. Payroll Outsourcing is Cost-Efficient

We all know that the construction business is an expensive undertaking. Costs related to labour, recruitment, operation, and licenses are high. For example, a construction company in Indonesia is required to register its construction workers for participation in the Work Accident Insurance and Death Insurance programs provided by the BPJS.

Therefore, you don’t want to unnecessarily increase your expenses by hiring more employees to handle your payroll. Hiring full-time employees to form a payroll team can be extremely pricey especially when you have just started out.

With payroll outsourcing, you can achieve cost-effectiveness because you no longer have to invest heavily to manage a full-time payroll team but still have proper and professional payroll management.

2. Payroll Outsourcing Helps Your Business Achieve Full Compliance

A construction business requires different types of employees and workers. It is not uncommon for the construction industry in Indonesia to hire full-time, part-time, seasonal, contractual, and even daily or hourly staff. And, one thing that foreign investors have to take note of is that the hiring of these different types of workers and employees require separate sets of regulations and compliance.

Unless you have a team of payroll experts who are familiar with all the regulations, you run the risk of legal complications. Hiring a full-time payroll team to ensure full compliance can be very costly. However, a payroll outsourcing provider can help you manage all these compliance requirements affordably.

3. Payroll Outsourcing Provides Proper Reporting

Even though payroll reporting is essential for risk analysis, not a lot of companies make good use of it. A third-party payroll outsourcing professional can provide you with effective and insightful payroll reporting, allowing you to understand your payroll structure to come up with a useful payroll strategy based on current company circumstances.

Furthermore, accurate payroll reports help you to find errors and correct them immediately before those mistakes bring more irreversible negative consequences.

4. Payroll Outsourcing Ensures Healthy Cash Flow

Businesses of the construction industry in Indonesia often encounter challenges of being unable to handle their cash flow properly, which may result in bankruptcy. Between 2014 and 2018, there were approximately 37,000 construction companies in Indonesia that were not able to survive due to improper cash flow management.

Poor in-house management of bookkeeping and accounting can jeopardise the company’s cash flow and give rise to delayed salary payment, ultimately leading to employee dissatisfaction and high turnover.

Payroll outsourcing, on the other hand, can guarantee adequate management of accounting and bookkeeping for proper cash flow and payroll payment cycles.

5. Payroll Outsourcing Cuts Downs Hassles

It is absolutely hassle-free when you employ assistance from a payroll outsourcing expert. With their profound expertise and experience, you no longer have to be anxious about tax reporting, payment deadlines, and other legal compliances. The payroll outsourcing provider will make sure that all payroll-related issues are taken care of so that you can concentrate on your core business activities.

Payroll Outsourcing in Indonesia with Cekindo

Cekindo’s flexible, comprehensive, and tailor payroll outsourcing solution can help streamline and simplify your payroll. We manage payroll for businesses of all sectors including the construction industry in Indonesia across the largest archipelago in the world to make sure you remain compliant.

As a human-centric service provider, Cekindo takes privacy and data protection very seriously. Therefore, our expert payroll team has taken every step meticulously to ensure your payroll’s compliance not just on a local level, but also on a global scale.

Cekindo is here to help you grow. Meet our payroll experts today. Fill in the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

Health Insurance and Social Security Insurance (BPJS) are mandatory. The company and the employee, respectively, will bear a certain percentage. Another obligation is tax withholding. The percentage and type of taxes vary from case to case.

There are many benefits of payroll outsourcing in Indonesia. However, some of the most noteworthy ones include cost reduction (no need to build an internal team), compliance (Indonesia is well-known for its constantly changing payroll regulations), and core business focus (payroll is a non-revenue-generating task).