Name: Bill Scott
Age: 56
Position: former President and Chief Executive Officer, now Chairman of the Board of Directors of InterPay, the fourth largest payroll service company in the United States.
Background: Scott worked for AT&T for 20 years; bought licensing rights for New York, New Jersey and Philadelphia metro regions of Automatic Payroll Service and successfully ran company’s operations there before developing InterPay in 1990. In June of this year, Scott was honored at the Ernst & Young New England Entrepreneur of the Year Awards Dinner. He was recognized in the “Master Entrepreneur” category.
Education: Ohio State University (1965)
Residence: Foxboro
Family: Married, one son
BILL SCOTT: ‘There has been tremendous growth over the last 14 years.
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PBN: Explain the status of InterPay’s ownership – I understand that changes are in the offing?
SCOTT: Back in 1995, Shawmut Bank – which had been our lead bank for a number of years – became interested in buying InterPay. Shawmut had actually negotiated a deal to acquire InterPay. However, when Fleet and Shawmut merged, Fleet wasn’t so sure they wanted to get back into the payroll business. Instead of buying the entire company they bought a minority position. That was in September 1995. In February of 1997, Fleet took a majority position in InterPay. And as we speak today, they are buying a 100 percent stake. They will own the entire company. The Fleet/InterPay relationship has been a very good one. It has been pretty much hands off on Fleet’s part. They have members who sit on our board and help us direct the business. They have also been good to InterPay in terms of the number of clients they have referred. I think Fleet sees the value in the payroll industry. We basically provide payroll services to small businesses. But beyond that, you have a lot of financial services like 401k, Section 125 – almost anything that can be paid through payroll direction, we’re set up to do. Companies like Intuit, which just bought a company like us called CRI, saw the advantages to it. Fidelity has recently gotten into the payroll business. Certainly, with the successes of companies like ADP and Paychex, everybody sees the value in payroll. Fleet has decided to take 100 percent ownership and grow the business.
As a result of the anticipated Fleet takeover, you are going to be retiring. Are you looking forward to that step?
I am. I’ve been working since I was 10 years old. Running a business like Inter-Pay, which when I joined was doing about $3 million per year and this year will do more than $40 million. So there has been tremendous growth over the last 14 years. With that growth comes a lot of planning – a lot of long days.
How did Inter-Pay get its start and what is the company’s core business?
InterPay was started in 1971 by David Haynes, who had worked at a number of large payroll companies. David looked at the industry and saw companies like ADP and Ceridian who were catering to large companies. None of them at that point would do a payroll for a company with less than 25 employees or if they did, they would charge as if they had 25 employees. David opened in 1971 with the idea of providing payroll services to businesses with one to 100 employees. His minimum charge was $5 per week – about one fifth of what the players at the time were charging. Over the years, InterPay has never changed that model. We still target one to 100-employee companies. Only 1 percent of the companies in the United States employ over 100 people. Our average client today has 10 employees. We have 30,000 customers who rely on us every week to provide payroll.
So you have experienced first-hand that we are truly a country made up of small businesses.
Absolutely. If you look at the number of small businesses that have come about as a result of corporate downsizing – I truly believe that it is small businesses today that are fueling this extended economic success that the country has enjoyed.
Your customers are located all over the country?
Right. We have offices from Maine to Florida. We have a major processing center in Chicago. We just opened a new facility in San Diego.
How many employees do you have in total?
We have about 565 employees.
And these are your corporate headquarters here in Mansfield?
That’s correct.
With a tight labor market – are you finding the skilled labor you need?
Well, I say we have 565 employees today. But our business plan that we put together last year shows us with 605 employees at this point. I would say today that we are 35 to 40 people below where we should be. We have five full-time people that do nothing but recruiting. We hold job fairs, we go to outside employment agencies to find people. It is really difficult with the unemployment rates today at probably the lowest they have been in 30 years. Most people that want to work are working. One of the things we have had to do is move out of major areas. We’ve really increased the size of our West Springfield office because getting people is much easier out there. We just doubled the size of that office. I don’t think we are unique. When I talk to other business leaders, that is the number one problem facing business today. Not only finding people, but keeping people. We have spent a tremendous amount of money over the past two years enhancing our benefit programs – our educational programs.
Are prospective employees expecting more?
It’s not like it was years ago, when it was basically tied to pay. People are looking for more benefits, more flexible time and more free time.
To what do you attribute InterPay’s 246 percent growth over the past four years?
We have a good product, but the essence of InterPay – what it was founded upon – is delivering the highest level of customer service in the industry. Also, when you look at the industry, only about 35 percent of companies today outsource payroll – 65 percent are still doing it internally. With federal and state tax laws becoming more and more complex, there is tremendous growth potential. The other part of it is that we are offering the additional services – the 401ks, 125 Plans. To big companies, they may not sound like a lot. But to small companies that don’t want to be involved in administering those plans and finding the proper investment opportunities for their employees, we do all of that. With all of the services that you can add to payroll – it’s really a booming industry. There are more and more companies out there with people focused on a single idea and they don’t want to be tied down with doing payroll and all of these administrative things. We have a staff of 12 people that do nothing but monitor tax changes. To do that yourself is very time consuming. And if you make a mistake, the penalties are very significant.
You have plans to triple the size of the company over three years – how will you make that happen?
There is just huge potential with that number of companies that still do payroll manually. And although we do payroll for companies in all 50 states, we really only have a strong presence in 17. So we have a tremendous geographic expansion to go through. All of these ancillary services that we are adding, not only lock in existing customers, but are attractive to others that are doing these things manually. Our alliance with Fleet is an example where they have a tremendous client base of small business customers. There is no reason we can’t do that with other financial institutions in areas where Fleet does not have a footprint today. We have an alliance right now with Staples, where Staples is referring their customers to InterPay. We’ve seen tremendous growth in that area – and I see more of those co-branding relationships. The potential for Interplay is absolutely incredible.
What does Bill Scott do in retirement?
For a year, I’ll probably just clear my head, step back and look at things. If I don’t drive my wife crazy and I’m not bored, I’ll probably just retire. But having worked all these years at this pace, it’s really been a lot of fun. So I may start another company. It would be difficult for me, after 14 years at InterPay, to work for somebody else. There is a tremendous amount of opportunity.
How about recreation?
I am an avid golfer. I belong to Agawam Hunt in East Providence. I played three times last week. I used to be a boater. But work, golf and boating was too much. So I’ll probably buy a boat.
