5 Mistakes to Avoid When Switching Payroll Services

Payroll Mistakes

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Millions of businesses outsource their payroll processing to a third party. Never have there been so many vendors to choose from each with a different “value proposition”. Choices range from Software as a Service companies for the Do-it-Yourselfer crowd to payroll service bureaus who will do it for you. Each year tens of thousands of companies decide to change their payroll vendor. Each year thousands of them regret their decision. These are the 5 mistakes to avoid when switching payroll services and what you can do to avoid them.

Mistake Number 1: Buying on Price

“How much is it per check?” is a common question that buyers will ask. And Salespeople are often eager to compete on price. Now I’m not saying you should pay more that you need to (no one likes a deal more than me!). What I am saying is that the per check cost is the least relevant metric for you to consider. The result of this mistake is the buyer ends up feeling “nickel and dimed”. Worse, they realize that they eliminated something that they really needed once they go to run their first payroll on the new system.

To avoid this dilemma buyers must pay close attention to the features that are (and are not) included in the quote. One company will give you a very low cost per check and then charge you extras for things that the other company is probably throwing in for free.

Mistake Number 2: Buying a “Brand”

Payroll is not a handbag. There’s no cache’ in using “big red” or “big blue” but, for some reason people will pay a premium to use one of the big two. What’s worse, they won’t even look at smaller, regional or local providers. Bigger is not necessarily better.

Give local or regional providers a second look. There are also some lesser known national providers that have excellent systems and reputations. Many use the same tax platforms and ACH providers as the big guys. They are SOX compliant and insured against fraud to give you peace of mind while providing a first rate system and exceptional customer service.

 Mistake Number 3: Not Taking Implementation Time into Account

“We’ll make the change in January.” Too often companies don’t give themselves (or their new provider) enough time to do a really good implementation. The result is late nights, weekend overtime, dissatisfaction with the new program and even more time spent fixing critical errors after the first run.

When you are scheduling an implementation, remember to take holidays, vacations, benefits open enrollment, annual reviews, etc. into account. You will also want to remember that you are not the only one making the switch so vendor resources will be stretched as well. Oh! don’t forget your “day job” those responsibilities don’t just go away so plan accordingly.

Mistake Number 4: Being Married to “How we do it Today”

Let’s face it, change can be difficult. And changing payroll systems is enough to keep you up at night. So, it makes sense to want to minimize the change by trying to make the new system work just like the old one. Wait a minute. . . no it doesn’t!

The new HCM technology on the market today is much more flexible that the systems of even 4 or 5 years ago. Take this opportunity to leverage that technology to improve internal workflows, offload processes to employees through self-service and over all create efficiencies that may not have been possible before.

Mistake Number 5: Biting Off More than You Can Chew

Yes. The new technologies and features are great. So great, in fact, that many people end up signing up for more than they need or can reasonably handle. A new time an attendance platform, for example, could really add efficiencies to the payroll process and aid many HR functions. But is the company ready to make that switch right now?

You don’t have to do everything all at once. You don’t even have to do everything at all. Start with what you know you can handle and work with your sales consultant to create a plan to add features and functionality incrementally over time. This method makes your new technology much easier to digest and you will end up using more of the system that you ever imagined.

Those are the top 5 mistakes to avoid when switching payroll services. Think of your payroll system as a tool and think of Puzzle as the”licensed contractors” with the expertise to use the tools. We are “Payroll Agnostic” here at PuzzleHR. We support clients on almost every system imaginable helping them leverage the HR aspects of HCM technology to drive business growth. If you’d like information on how we can help your company get the most out of your technology investments, get in touch. We’d love to hear from you and help you put the pieces of the puzzle together.



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