Your Essential Guide for Switching Payroll Providers

11 Aug


If you’re reading this, chances are, you’re thinking about switching payroll providers. In fact, you may have been considering it for some time, but delayed taking action because it’s rather a daunting prospect.

The good news is: it doesn’t have to be. If you’re unhappy with your current payroll provider, it’s probably for good reason. You owe it to your business—and your employees—to find a better solution. And when you have a solid game plan, that’s easier than you think.

When It Comes to Payroll, You Can’t Afford to Settle

It’s hard to overstate the importance of getting payroll right. Even a single payday error or holdup can send employees fleeing—and it’s a morale-crusher, too.

Plus, maintaining payroll tax compliance is tricky. Every year, 40% of small to medium-sized businesses are fined for making payroll-related errors, according to the IRS. 

If your current payroll provider can no longer meet your needs…if you believe you’re paying too much…or if you’re unhappy with the service you’re receiving, these are all valid reasons for taking your payroll elsewhere.  

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Choosing Wisely: How to Evaluate Payroll Providers

When it comes to payroll providers, you have many choices. To narrow the field, start by focusing on providers that are well-known in your industry—and that serve groups similar to yours in terms of size and makeup.

In addition, you’ll want to consider these factors:

  • Overall track record, including customer reviews and retention rates  
  • The ability to meet all of your current payroll needs
  • Compliance expertise—i.e., knowledge of federal, state, and local tax law 
  • Security safeguards, such as SOC certification
  • Scalability and flexibility, with future growth in mind
  • Customer service capabilities and standards (i.e., service availability hours etc.)       
  • User-friendly technology: reporting features, employee self-service portals, etc.
  • Cost and value; price structure transparency  

And of course, you’ll need to know how prospective providers will handle the migration of data between old and new systems—as well as software integration with your existing technology.  

For more specifics, read our companion blog, 10 Questions to Ask When Evaluating Payroll Systems.

The Best Time to Switch Payroll Providers

According to conventional wisdom, the best time to switch payroll providers is at the end of your fiscal year. The reason: theoretically, it’s easier for your tax accountant to deal with one set of payroll data from one provider versus two.

But that’s not necessarily the case anymore. While it is admittedly cleaner to make the change at the end of a fiscal quarter (which is very doable, since payroll transitions are planned in advance), a solid payroll provider will be able to handle the transition seamlessly.

In other words, when you choose well, the best time to switch payroll providers is when it makes good business sense to do so.

How to Switch Payroll Providers Smoothly     

If you’ve delayed switching payroll providers, chances are, it’s because you dread the actual transition. That’s understandable. It’s also why—once you’ve found a payroll provider that meets all your basic criteria—it’s time to drill down on exactly how it plans to minimize disruption to your business.

For example, a payroll provider that is committed to ensuring a smooth transition will provide you with:

  • A detailed implementation plan, describing each step of the process, plus target dates
  • Names and contact information for your implementation team
  • A training plan for your employees
  • A live test, or parallel payroll run, where both old and new providers process payroll. Your new provider will then compare the results and make any needed corrections—ensuring everything run smoothly once you truly flip the switch.

If you’re ready to learn more about payroll provider options, we invite you to meet VensureHR. We offer industry-leading payroll and HR technology, as well as complete payroll processing services. We currently process more than $18.6 billion in payroll. If you’re thinking of switching payroll providers, we’d love to talk to you!

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