Sometimes, a business must change payroll providers to scale with them as they grow. Periodic evaluation of your payroll provider supports your organization’s continuous evolution and improvement.
What is Payroll Migration?
Payroll migration refers to the process of transitioning from one payroll solution or provider to another. It involves:
- Selecting a new payroll company
- Reviewing current contract terms and notifying your old payroll provider that you’re discontinuing the service
- Creating a payroll migration checklist
- Customizing the new system to meet your needs
- Gathering and migrating your historical payroll data
- Notifying employees with a new payroll system announcement
- Running payroll in the new system
Common Reasons for Switching Payroll Providers
There are a number of reasons you might consider switching payroll companies:
- You aren’t satisfied with your current payroll provider
- Technology has advanced but your current solution hasn’t
- The needs of your organization have changed
- Your budget has increased or decreased
- You’ve adopted other new programs that don’t interface with your payroll software
- Merger and acquisition activity
- You’re running into common payroll errors with your current solution
When is the Best Time to Switch Payroll Providers?
The best time to switch payroll providers is either the end of the quarter or the end of the year.
Preparing to onboard a new payroll provider at the end of the year allows you a fresh start. It also means you won’t need to enter employee wages from the previous year, which is a huge time-saver, especially for smaller companies. When you switch providers at the end of the quarter, you’ll still have to transfer historical employee data—but you’ll have the added benefit of processing and filing taxes for the new quarter with your new provider.
While you can change payroll vendors at any point, it’s helpful to approach the switch strategically to make the transfer a smooth one.
Switching Payroll Companies Mid-Year
While an end-of-year switch is often the ideal time, sometimes, switching payroll companies mid-year is the best option for your organization. The challenge is that you’ll need to migrate data from your current payroll software to your new solution. Thankfully, today’s HR and payroll technology makes it easier than ever to transfer historical employee and payroll data. Many vendors, including Paylocity, provide concierge services and customizable support to ensure the transition is as seamless as possible. If you do need to switch mid-year, ensure your new payroll supplier offers data migration support to minimize errors and hiccups.
Questions to Ask When Changing Payroll Providers
Asking the right questions is critical, especially when it comes down to switching payroll providers. It can help you prevent misunderstandings and errors or omissions as a result. Here are 10 questions to ask when changing payroll companies:
- Which payroll features do you offer?
- What support can I expect during the build phase?
- Does your service meet requirements for privacy and security?
- What is your fee schedule?
- Is technical support included in our plan?
- What is the average ticket time with your technical support team?
- Does the software integrate with other software programs we use?
- Does your solution accommodate our needs (employees across multiple states, special pay rules, expense management, etc.)?
- What is your average customer retention?
- Will employees have access to employee self-service?
Take time prior to your demo to develop a list of questions. Tailored questions that are unique to your organization are recommended.
Special Considerations for Small Business Owners
Small business owners switching payroll providers may have more to consider. If you’re a small business, ask yourself these questions to make sure you’re choosing the right payroll vendor.
- What size company is the solution designed to serve? Some payroll solutions are designed specifically to serve small business needs. Be sure to ask how your employee count will impact the features and pricing structure available.
- Does the software offer the right modules and features? Juggling different solutions from different providers is a challenge. An all-inclusive solution is essential to minimize your tech stack and streamline your processes.
- Will this payroll solution grow with you? Consider the longevity of the provider’s payroll options. Ask if this payroll software is able to support more employees as your business grows, and if it has additional features or capabilities that you may not need now but will later.
- Does the payroll vendor offer comprehensive customer support? As a small business owner, you wear many hats, and may not be an expert in the intricacies of payroll. Smaller growing companies are less likely to use multiple solutions, so finding all-inclusive small businesses payroll software is essential. Be sure your provider will offer ongoing support and service, even after the initial onboarding period.