Embracing Payroll Technology: What To Consider When Choosing a New Provider

By Christian Valiulis

Change can be a scary thing, no matter what the situation is. There are a lot of potential unknowns that come with something new, but the payoff can be great for those willing to take the plunge. If you’re thinking about switching payroll providers but you’re concerned about missed pay periods or data errors during the transition, you are not alone. However, there is much more to be lost from using ineffective payroll solutions than in the conversion process itself. The key to a successful payroll conversion is a streamlined process that meets the unique needs of your company while minimizing the amount of work required to get started.

There are many reasons why businesses are reluctant to embrace a new payroll solution, but there are ways to overcome apprehension from your top-level management, peers, and employees. When you’re ready to make the switch, it’s important for your company to not only consider the six factors below but also have the discussion around your company embracing this change.

Six Things to Consider in Your Search

An automated payroll system should help solve challenges you’re currently facing. Remember, the solution is supposed to be a company asset, not an unnecessary expense. Once you’ve decided to change providers, consider these six factors when you are searching for an automated payroll solution:

#1. Payroll Conversion Timing

Switching payroll providers can be an overwhelming process, but you don’t have to wait until the beginning of the year to make a change. You can make the switch to a new provider anytime.

If you are considering a mid-year conversion, typically anytime between April and June is a great time to start the process. Converting at the start of any quarter provides a seamless transition of data, decreasing the risk of missed or lost information in the handoff during the middle of the quarter. If you aren’t ready for a switch so soon, another option is to convert towards the end of the year.

The ideal time to begin a year-end conversion is October so it doesn’t conflict with any year-end processing you need to handle. No matter which time of year you choose to make a switch, an implementation process completed electronically will ensure a smooth transition and eliminate the need for manual data entry. A large part of the success of this process is ensuring you are working with experienced, knowledgeable sales and implementation teams who understand your pain points and are involved every step of the way.

#2. Data Conversion

One of the most important steps of the conversion process is migrating company data out of your old system and into the new system electronically to improve accuracy. Electronically migrating data improves accuracy because you are eliminating manual data entry and decreasing data entry errors. To assure your information will be correct, make sure the following tasks are performed:

• Data Conversion: Year-to-date history is entered into the new payroll solution.
• Payroll Assessment: A payroll compliance assessment is performed to reconcile data history.
• Accuracy Validation: Parallel, or side-by-side payrolls, are run prior to the first live payroll submission to confirm data and tax settings are correct.

Look for providers who assign you an implementation project manager to handle your data conversion process. They should perform the above tasks in addition to importing payroll and employee data from previous years.

#3. Data Integration Capabilities

Many companies have existing systems in place, such as accounting software, point-of-sale (POS) systems, and benefits administration software. The ability to integrate these existing systems with an online payroll system is a huge benefit from the systems syncing data to eliminate manual processes and data entry.

Consider providers who have an established portfolio of integrations with the most popular business applications and vendors. Providers who own and develop their own technology have the flexibility to develop their own data integrations so you have a tailored solution.

#4. Payroll Tax Compliance Management

With payroll tax compliance rules constantly changing, it’s crucial to utilize a payroll provider with a tax compliance department that will help manage these updates. Once the conversion is complete, a tax compliance team should update your payroll tax tables, handle tax filings and payments, and provide resources for year-end processing.

A good payroll provider should have a tax compliance team that consists of experts who will review your existing data to check for any potential payroll tax errors. Concerning payroll and tax compliance management, always ask these important questions:

• What is the provider’s most recent tax error rate? A low tax error rate shows consistency and accuracy in payroll processing, to reduce penalties.
• What does the provider offer in terms of Affordable Care Act (ACA) compliance and reporting? Take a look at the features and benefits their solutions offer and how they will work with your compliance strategy, particularly ACA reporting.
• What type of security protocols does the provider follow to protect client data? An experienced provider will have controls in place to protect your data such as SSL encryption and two-factor authentication.

#5. Customer Support

Another equally important factor to consider during a payroll conversion is the level of customer support and training provided. Your trainer should create a training plan to meet any unique deployment needs. You should feel confident in knowing your support team is readily available and highly responsive for issue resolution for an excellent experience. When determining the level of support offered by a payroll provider, some questions to ask include:

• What professional payroll certifications do the support staff hold?
• Will I receive a dedicated account manager and team?
• Is the support staff available via phone, chat, or email?
• What are the support staff’s response times?
• Are there specialists available to help with more complex questions related to benefits and ACA compliance?

#6. Customer Reviews

Before you choose your payroll provider, you must conduct a thorough evaluation of each provider on your radar. Check peer review sites for intimate product knowledge by real users who have experience using the software. When reviewing software review sites, consider the following:

• Is the payroll solution highly usable and easy to adopt?
• Did the solution solve the reviewers’ payroll needs?
• Are the same issues or dislikes being brought up with a feature, customer support, or the technology itself?

The Net Promoter Score (NPS) is another objective way to gain insight that measures customer satisfaction and experience. Ask for the company to provide their most recent NPS or find the information and other customer feedback on a third party site such as G2 Crowd.

How to Get Your Company On Board

While these six things to consider during your search for a provider are extremely important, remember to communicate across the company from executives to employees by showing them how the change will benefit them. Explain to executives how implementing an automated solution can provide real-time data reports to gain insight into payroll related labor costs and liabilities.

The purpose of these automated systems is to take the burden out of manual tasks that nine out of 10 employees feel on a daily basis; they are designed to help them perform their duties, not replace them entirely. To reinforce this message, demonstrate how the implemented solution is an asset to the employee such as electronic employee files for instant access to pay stubs, PTO balances, and employee benefits. They’ll see an automated system as a tool for growth, helping them be more productive. As long as you maintain open communication with your employees about how the system will benefit them, you can anticipate streamlined, rapid adoption.

Select and Implement Your New Payroll Solution

When selecting and implementing new payroll software, there are several factors to consider for a successful conversion. You don’t want to invest a major amount of money and time to implement a payroll solution that misses the mark in helping solve your business goals and payroll needs. Make sure you choose a provider who is knowledgeable in payroll processing and tax compliance, and has a reputable track record for customer retention. Implementing a new payroll solution can be overwhelming, but if you complete your research on different providers, communicate with your employees, and show them how they’ll benefit from the switch, expect to see major growth in your company’s future.