If Johnny Paycheck had founded Paychex, his song might have been, "Take This Job and ... Let Us Do Your Payroll." The firm processes the payrolls of about 590,000 clients, making it the second-largest payroll accounting firm in the US after Automatic Data Processing. Other services include the production of accounting records and management reports; the preparation of payroll tax returns; and the collection and remittance of clients' payroll obligations. Paychex also provides human resources services, benefits administration, and group insurance management. Paychex focuses on small and midsized businesses (fewer than 100 employees) and owns more than 100 offices worldwide. The company was established in 1971.
Paychex has more than 100 offices in the US and Germany. German operations include offices in Berlin, Düsseldorf, Hamburg, and Munich.
Payroll services revenue accounts for 60% of the company's revenue, and human resource services (HRS) revenue accounts for the remainder. Its HRS operations include 401(k) plan record-keeping, time and attendance management services, and other administrative offerings.
Sales and Marketing
Paychex markets its services primarily through its direct sales force based in metropolitan markets, with sales representatives specializing within its portfolio of services. Sales representatives are supported by marketing, advertising, public relations, trade shows, and telemarketing programs.
In recent years, the company has increased its emphasis on the selling of ancillary services and products to both new clients and its existing client base. In 2015 it focused on segmenting its markets into payroll and retirement services.
It also solicits new client referrals through its relationships with existing clients, certified public accountants, and banks. About 60% of its new payroll clients come from these sources.
Paychex has enjoyed unprecedented growth over the past five years. Its revenue was $2.7 billion in fiscal 2015. That was an increased of about 9% compared to the prior fiscal period.
The company's net income also went up in fiscal 2015 compared to fiscal 2014. Paychex reported a net income of about $675 million for fiscal 2015, an increase of 7.5% compared to the previous period.
Paychex’s strategy focuses on providing a comprehensive suite of value-added services and making strategic acquisitions. The company continues to invest in its business, particularly in technology. Paychex has positioned itself to capitalize on the opportunities arising from the shift to SaaS solutions. The company will continue to increase its investment in SaaS product development and technology.