September 14, 2020Payroll

9 signs it’s time to switch payroll providers

Change is hard. Nowhere is this more true than when you need to decide to switch payroll providers. How do you know when your current system isn’t working for you? And what kind of functionality should you look for in other options? Start by discussing the needs, challenges and preferences with your payroll admin or team and look for these signs you need to make a payroll change.   

Signs it’s time to switch payroll providers

1. It’s the end of the year

If your payroll provider is disrupting your business operations, switching should be a top priority—regardless of the time of year. However, many businesses consider end of year the best time to switch payroll providers. Many businesses implement compensation processes or adjustments at the start of the year, which aligns with implementing a new payroll solution. A new year also makes for a clean break from your original payroll provider. If you have a new payroll system ready to go on January 1st, you don’t have to migrate the year-to-date tax information or payroll activities.  

But switching payroll mid-year isn’t out of the question. If your current payroll provider is creating costly mistakes or taking too long to perform essential functions, you should make the switch sooner, and your new payroll provider should help with the transition. (If you’re feeling like you need to switch right away, we’re happy to help.) 

It’s up to you to decide how many runs of payroll you can endure with a provider that isn’t satisfactory. Be aware that switching outside of the end-of-year or end-of-quarter time frame comes with additional tax complications. If you decide to switch mid-quarter, your original provider will need to refund taxes not yet paid to the government. You will then have to have your new payroll provider collect and submit those taxes. It’s not impossible, but it will require coordination between multiple vendors and isn’t considered a best practice. 

2. Your payroll team has a poor user experience 

Payroll is critical to your business, so you can’t afford to have software your team can’t use. If your payroll team struggles to get what they need from your current provider, it can negatively impact employee morale and reduce overall productivity. While technological investments are often evaluated based on price, the end-user experience for payroll software shouldn’t be overlooked. 

Recent innovation in payroll and HR technologies mean your payroll team should be able to: 

  • Access and export payroll data in a few clicks 
  • Easily review and approve payroll
  • Find documents in one place 
  • Streamline the employee onboarding process
  • Automate time-consuming and manual processes

Payroll systems have historically not been known for simplicity, but growing disruption in the industry has led to new platforms with modern interfaces and streamlined applications. A legacy payroll system, while deeply embedded in an organization, should not be tolerated if the tool creates drag on payroll teams. If your team frequently reports payroll mistakes, issues with manual processes or difficulty managing multiple apps and tabs, that’s a signal you need to  switch payroll providers. 

3. You consistently have payroll errors  

Easy-to-use payroll software is key to avoiding payroll mistakes. The more straightforward a system is to use, the less likely errors will occur, which are costly for your business and the employee experience. The complexity of your payroll can contribute to errors if your current provider isn’t set up to properly support multiple payroll frequencies, different classifications for workers, multi-state workers and more. 

Employees have little tolerance of payroll errors (and understandably so). When payroll is late or payroll mistakes are made, it’s difficult to regain the trust of your team. Implementing a new payroll provider is one way to address the issues and build confidence in your business’s operations and culture. 

As your organization grows, your payroll provider’s ability to integrate with your other tools and transfer employee data will make the difference in reducing payroll mistakes. If your payroll provider doesn’t seamlessly integrate with your tools for time-clock, accounting, workforce management and other HR tools, you need to look at other options.  

4. You don’t have mobile payroll capabilities  

Practically every other industry has simplified their processes and improved their user experiences by introducing mobile experiences, but many payroll providers are still stuck in the past. Today, modern payroll providers are taking advantage of cloud and data capabilities that power mobile apps. If you’re not using one of them, your business is most likely missing out on reducing costs, saving time and boosting employee satisfaction, all at once.

Maybe your payroll system is OK to use on your desktop or laptop, but it’s not as efficient as it could be if you had mobile capabilities. If your team can’t make changes, submit updates or process payroll when they’re on the go, your payroll provider is probably responsible for unnecessary delays and deadline stress.

Flexible mobile options also contribute to employee satisfaction. With payroll being a core business function, employees want the ease of accessing information from anywhere. With everything we can accomplish today with mobile apps—buying a car, checking our health records, getting ice cream delivered to our house—running payroll or submitting hours should be accomplished from the device of your choice. 

5. Your payroll reporting doesn’t help your business 

Some payroll solutions come with complicated reporting processes that take a lot of time to master. Others lack any reporting at all. Come audit time, both complex reporting functionality and a lack of reporting features translate into added risk for growing businesses. 

If your team is looking for more robust reporting or they request custom reports that a provider doesn’t have the functionality to build, your payroll provider is leaving your team in the dark. Data should not be lost in a black hole of payroll software. Modern payroll providers make it easy to pull the numbers you need out of the mass of business information. New payroll providers often offer built-in reports that provide summary-level data and the ability to drill down the source data to be easily exported. 

Remember that reporting should be a strength of your payroll provider, not a challenge. In spite of the headaches payroll reporting sometimes causes, reports are actually one of the easiest processes to automate in payroll systems. In addition to automated reports, a payroll team should also have the ability to request and build ad-hoc reporting based on a business or industry’s specific needs. If reporting is leaving you wanting, a switch is in order. 

6. Your payroll provider doesn’t offer time tracking 

Many payroll providers put the burden on payroll admins to enter hours when it’s time to process payroll. Sound familiar? This old way of doing things leads to inefficiencies and scrambling as admins attempt to reconcile hours before running payroll. 

While time tracking policies can help provide guidelines to workers, payroll teams don’t want to waste time verifying hours and tracking down manager approvals. If there were a simple way to schedule, capture and approve hours in one place, employees would gain more time and ability to focus on the important stuff, which, in turn, would make employees and customers happy. 

Switching to a modern payroll platform should mean adopting an all-in-one solution where recording, approving and inputting hours is built into the app. And all team members—employees, their direct managers and payroll admins—should be able to view and input needed data. This way, when it’s time to process payroll, accurate hour data is already verified and ready to go. 

7. You’re paying too much for your current payroll provider

There is a vast landscape of payroll providers to fit the needs and budget of every business. When you begin to feel that your current payroll provider isn’t giving you the value you need, don’t be afraid to research other options (there are a lot!) 

Some common issues with payroll pricing: 

  • The monthly cost of your payroll provider is unclear, because your true price is tied up in fees for time tracking, off cycle payroll runs, quarterly and year-end tax filings and more
  • You may find you’re frequently charged fees for additional services your business doesn’t actually need 
  • You’re paying for a payroll system built for 5,000 employees when you only have 100
  • The price per employee calculation is too high 
  • Your locked into a service for a lengthy term that won’t scale 

Put simply: legacy payroll software is expensive. There are payroll companies that have been around for decades, but brand recognition doesn’t mean the payroll provider is right for you. Many new providers, especially those offering cloud-based services, offer payroll pricing that covers only what businesses need with per-employee, per-month options. Many also provide the ability to easily scale up or down given they don’t sign companies to lengthy contracts. 

The payroll purchasing experience should be no-hassle and transparent—meaning you know exactly what you’re paying for upfront. If this wasn’t how your most recent payroll buying experience happened, don’t let it stop you from making the switch to a better-priced provider for your business.  

8. Your current payroll provider isn’t ‘intelligent’ 

Sometimes employees forget to clock in or record a break they took. When errors happen, most solutions don’t surface them in a timely manner to the admin, causing inefficiencies when it’s time to run payroll. It’s an expensive issue: The American Payroll Association estimates time clock fraud annually costs businesses 1.5-5% of gross payroll

Today, many modern payroll providers offer smart features such as intelligent payroll notifications. This capability can help predict when something is wrong with payroll and sends alerts before they become problems, saving you time and hassle. If it’s not very easy to spot these types of errors in your current system, you may need a better approach.

9. Your current payroll processes hurts the employee experience 

Rigid, biweekly payroll cycles don’t meet workers’ needs. Getting paid more frequently can be a life-changing benefit for employees who are struggling from paycheck to paycheck. Due to the constraints of current payroll providers, many payroll teams find there’s not a lot they can do to help employees who want flexible pay options outside of a bi-wrrkly or monthly schedule. 

When evaluating new payroll providers, look for the capability to pay employees more frequently without adding to your workload or disrupting your cash flow. When employees can choose to get paid biweekly, weekly, or even daily, the reduction of financial stress can improve their employee experience, which, in turn, boosts productivity.