Preface: Each payroll provider should be able to articulate how their company has developed a niche in the payroll industry, and this can help you understand how well each company will be able to serve you.
How to Choose the Right Payroll Provider
Credit: Matthew P. Glick
Payroll processing is one of those crucial back-office operations that every business needs, but few people fully understand. HR laws are complex, and are continually evolving. Processing payroll can easily feel like a process that is just beyond your control, where you press buttons, and employees get paid. In this article, we will be breaking down what it is that you should look for in a payroll provider by classifying three phases (Evaluating what you need, Searching the market for available solutions, and RE-searching the list of available solutions by comparing each contender with the competition).
- Evaluating
In this phase, you will mainly be concerned with evaluating your current needs. A good starting point would be understanding why you are looking into switching providers. By identifying the “pain points” with your current provider, you should be able to more easily identify a solution that will satisfy your needs much better. For instance, if customer service regularly fails to deliver on expectations, consider locating a provider that has a dedicated team or account manager to handle customer service, instead of a call center.
Some other points to consider would be the complexity of your payroll situation. What kind of benefits do you offer employees? Always be sure they are prepared to handle anything unique you bring to the table. The more complex your situation, the less willing you sould be to compromise on having a knowledgeable onboarding team that will be able to configure your solution just the way you need it. Some companies with a higher employee turnover may find it beneficial to invest in an integrated HCM module, which would allow them to process onboarding paperwork online, eliminating the need for paper forms.
Remember to look into what kind of integrations you will need. Making sure that your payroll provider integrates with your accounting software can save valuable time. Another integration that may save time depending on the size of your company would be timesheets automatically importing into your payroll system.
Don’t forget to evaluate you company’s future growth plans as well. Identifying a solution that has room to grow with your company will save you much time and hassle, and will allow you to focus on those growth plans rather than medicating the growing pains in HR.
Note: If your company has relatively few needs with minimal complexity, an option to consider would be Quickbooks Payroll (especially if you already use them for accounting). Their pricing structures are pretty transparent, and their online version even offers an automatic payroll option for salaried employees, or hourly employees who regularly work the same number of hours.
- Searching
In this phase of the journey to finding the perfect payroll provider you will want to focus on searching the market for what is available. Use the list of needs that you came up with in the previous phase to quickly “weed out” any obvious misfits. Use that list to keep focused as you browse each company’s carefully curated public image. It’s easy to get taken in by all the bells and whistles that a solution offers, but keep in mind that a great solution that may not have all the bells and whistles is far better than one that looks shiny but repeatedly fails to deliver. Staying objective is the key here.
Tip: Avoid filling out forms that ask for contact information at this stage. You’re just trying to get a high-level overview of each company, and once you get on their marketing lists, it can be very difficult to get off. In order to get pricing data, you will most likely need to contact the company, but avoid doing so until you have identified a few clear front-runners.
- RE-searching
By the time you get to the end of this phase, you should have a clear idea of which direction you are headed. This is the part where you will want to meticulously compare each company with the competition. Remember, this company will be handling sensitive payroll information, and will be the conduit through which your largest expense sources flow. No pressure, but don’t mess this one up!
Develop a list of questions to ask each company. A few examples would be: “What sets your company apart from the competition?” or “How has your company fared during the COVID-19 pandemic?” Each company should be able to articulate how their company has developed a niche in the payroll industry, and this can help you understand how well each company will be able to serve you. As of the date of this publication, the pandemic is nearly two years old, but the second question should serve you well in identifying a company that is able to adapt to change quickly, which is crucial for any payroll company.
You will also want to scour reviews. Websites like G2 and Capterra are great for this. They will even find the most helpful critical reviews for you, so you can get a balanced perspective on the best and worst parts about a company.
In the end, the company that is perfect for you may not be perfect for the next person, which can make this search a little more complex than we would like, but keeping your company’s goals in mind can go a long way in finding the right solution for you.
This article is general in nature, and it does not contain legal advice. Contact your advisors to discuss your specific situation.