Company: CSC Paymaster Inc., 37 Jefferson Blvd., Warwick, R.I. 02888
Type of business: Payroll service
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Owner/President: George R. Truesdale
Number of employees: 28
Year founded: 1964
Annual Sales: WND
In the 1960s, when CSC Paymaster Inc., was founded it was too expensive for most companies to buy a computer to handle administrative tasks such as bookkeeping and payroll. This led some entrepreneurial-types to invest in a computer, then lease time to other companies.
That’s how CSC got its start. But with the advent of the personal computer and much lower prices, CSC had to develop a new niche, according to George R. Truesdale.
Truesdale started as a computer operator with CSC 27 years ago and bought the company from its original owner, Gordon Wilmot, about three years ago for an undisclosed sum.
“At that time we processed payrolls, accounts receivable, wholesale dairies, retail dairies, oil companies,” he said.
The company even processed the state census once and also did data processing work for a former Warwick company, which sold products like Ginsu Knives and Miracle Painter through television advertising.
But in the 1980s “the cost of owning a computer came down and we decided to concentrate on payroll,” he said. Though CSC still handles some accounts receivable work for long-time customers, it dedicates most of its resources to producing paychecks, processing tax payments, W-2 forms and other related payroll services.
“We could see a future in payroll; people didn’t want to do their own payroll,” Truesdale said.
There were several reasons for this, he added, chief among them the complexities of state and federal tax laws.
For instance, starting Jan. 1, 1999, almost all companies will be expected to file payroll tax deductions directly to the federal government through a computer system. No more using coupons and vouchers to make payments at the local bank. Large companies were required to begin making computerized payments starting in 1995.
That particular rule change came about, believe it or not, because of the North American Free Trade Agreement (NAFTA), according to Jim Medlock, director of training and development for the American Payroll Association. NAFTA eliminated various revenues generated by the federal government and it had to find a way to replace that money.
By filing payroll taxes electronically, the government is getting its money one day earlier, Medlock said. Another federal law change, which payroll service companies facilitate, took effect in October and mandates that employers report new hires to state officials, he added. It was part of the 1996 welfare reform package and is aimed at helping states track so-called deadbeat parents, who fail to pay child support.
Most payroll service company clients “don’t have time to learn the new rules that are constantly changing,” Medlock said. Truesdale said that CSC can handle payrolls for companies with anywhere from one to 1,000 workers.
The APA’s most recently completed national survey indicates that most large companies tend to handle payroll in-house, instead of outsourcing to payroll service companies.
About half of the companies surveyed with less than 500 employees reported using a payroll company, and 15 percent of companies with more than 10,000 workers use payroll service companies, according to Medlock.
And it is a highly competitive industry, with a number of small regional companies, such as CSC, and a handful of large national companies, such as ADP-Automatic Data Processing and Paychex Inc. to choose from. Despite the stiff competition, Truesdale said he has visions of growing the company and perhaps even moving into Boston’s South Shore by acquiring payroll service companies there.
“It’s too tough to just jump into a market,” he explained.
This past August, CSC acquired the payroll business of Process Automation Corp. in East Providence for an undisclosed fee.
Since taking over CSC, Truesdale has made several changes, including expanding the sales department of one person to three, attending trade shows to get name recognition, and he purchased the second floor of the building CSC occupies and moved the data processing department. This is all with expansion in mind, he explained.
One standard he is committed to continuing: no voice mail. A staff member answers the phone during business hours, he said.
“There is no voicemail, there will be no voicemail. You’ve got to talk to people when you’re in a service organization like this,” he said.
