As your business continues to grow or your needs change, it may be necessary to implement new payroll services if your current provider does not fit your needs. Maybe you’re looking to support a growing number of employees, or you want a more comprehensive payroll system that you can tailor to your company’s shifting requirements.
Before jumping headfirst into the transition, it’s vital to take a step back and assess the motivation behind it. It will be easier to choose a payroll solution that meets your company’s needs if you know exactly what to look for in a payroll provider. This article breaks down the most important factors when considering a payroll service provider and offers a step-by-step guide to help you make the best decision.
Outlining the challenges of switching payroll providers
Since payroll is a time-sensitive area of human resources, one concern might be that changing vendors will delay the handling of employee salaries and thus lead to payroll errors. Because HR’s time is stretched so thin, even one payroll cycle that falls behind schedule could significantly affect a company’s cash flow. Other challenges of transitioning to a new payroll solution include:
- Using payroll services that are useful for your company’s unique needs
- Migrating data without errors and duplications
- Ensuring that HR and other relevant employees are trained to use the new software
- Maintaining uptime during the payroll transition period
- Developing a productive working relationship with the new payroll company
- Ensuring that the new payroll system will work with existing HR applications such as the applicant tracking and recruitment system
The overall complexity of payroll systems means that transitioning to a new payroll services provider is likely to be a significant undertaking for any company. Knowing the potential roadblocks can help you develop a robust strategy for the transition and ensure a successful working relationship with your new payroll company.
Identifying your needs
Are you a small business looking to ensure your taxes are filed accurately, a medium-sized employer searching for ways to control costs, or a large corporation that needs help administering employee health plans? It’s vital to realise that every business has different payroll needs.
There is no one-size-fits-all solution, especially considering the wide range of payroll services available. Your payroll system depends entirely on your business needs, industry practices, employee demographics and payroll requirements.
A good starting point is to evaluate your current payroll process and identify what specific services you need from a new payroll provider. How do you currently process payroll and which features of the current system do you like or dislike? Are there any issues with how your company processes payroll that could affect your legal compliance and lead to fines or lawsuits?
Making a list of issues with your current payroll company, surveying your finance team for feedback and solidifying your budget can make for a better partnership with your new provider.
Find a new payroll services provider
Once you have outlined the challenges of switching payroll providers and identified your company’s needs- it’s time to find a new solution. You may end up with a long list of payroll service providers, but narrowing it down is easy when you have defined what you’re looking for in advance.
Here are a few helpful tips you can use to pick the right payroll services provider from your shortlisted options:
- Compare the provider’s list of features with your payroll needs
- Check the credentials and certification of the payroll service provider
- Use online search tools to evaluate their response time, customer support and client reviews
- Check for a verifiable portfolio of clients
- Consider the costs and find out what their pricing strategy is
- Read the detailed service breakdown and check if it mentions all terms, conditions and specific rates
Your requirements may vary from a simple accounting of salaries and wages to including taxes, insurance benefits and more. Therefore it is essential to find a payroll company with the ability and experience to meet your specific requirements.
Important tip: Talk to your current payroll provider
It’s vital to contact your current payroll company and inform them that you are considering changing payroll providers. You should learn about the requirements for terminating your service, but don’t do it just yet. Ask about the cancellation notice period, whether the cancellation instruction must be in writing and whether there are any fees or other conditions that will apply to your cancellation.
Test the solution
The goal of the previous step is to narrow down your search to at least three payroll providers you can approach for a demo, trial or some form of a hands-on test drive of their services. This step will allow you and your team to make a more informed decision about the payroll solution that will work best for your business.
During the demo stage, you and your team can ask relevant questions and understand what the implementation phase will look like for your company. The demo stage is also an opportune time to meet the people who will drive your new payroll solution and determine if your team could foster a positive working relationship with theirs.
Make the switch
At this stage your new payroll provider is ready and waiting. This means your company is almost prepared to make the switch. Ensure to not just begin the transition process with your payroll provider but also work in tandem with them to transition your data.
Whether your company is taking on a full payroll service or is hiring a payroll company to handle a specific part of the process, it is vital that your company representative must have input in the implementation process. Make sure to outline the start date of the transition, how long it will take and what the new payroll company will require for the procedure.
You might be able to download the majority of what you require from your account with your current payroll provider. Further necessary info may include company CIPC records, tax statements, employee IDs, bank account information and all the payroll data from previous periods.
Closing your old account is the final step before switching to a new provider. Make sure you revoke any power of attorney or similar permissions used by your previous service provider. Before processing your first payroll with the new provider, compare the new data to what you already have to ensure you have entered everything correctly.
Important tip: Manage the performance of your new payroll company
The first few months with your new payroll services provider are significant to set the standard of the quality of the service that you want to receive. It is advisable to terminate your service after three months if you are not satisfied with the performance rather than waiting for a year to pass and discovering that your needs are not being met.
Monthly reports is a great way to measure any service provider’s key performance indicators and you can do an employee survey to ensure your employees’ satisfaction with the new service.
The power of payroll is in your hands
Ultimately, determining whether your current payroll services provider is getting the job done, starts with an internal analysis of your company’s changing needs. Each step in the process of finding and taking on a new payroll company requires attention to detail and a hands-on, analytical, and results-based approach..
From our experience, every client is unique. We take the time to understand your company’s specific needs, how these will change over time and how best to help you manage the payroll process efficiently. You can head to our website to learn more about MASA’s payroll services in South Africa or contact us today if you would like to consult with an expert in the field and build a tailored solution to handle your company’s payroll.