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Things to Consider When Switching Payroll Providers
By: Net at Work Team
From a presentation by Marisa Perez, HR Operations Manager for PuzzleHR
As part of our ongoing series for payroll decision makers, Marisa Perez from our Human Capital Management consulting partner, PuzzleHR, spoke about considerations when selecting a payroll provider. What follows are excerpts from the webinar.
Considering Changing Payroll Provider?
Here’s a fun fact: There are over 10m businesses in the US with over 30% of them evaluating their payroll choice annually.
Let’s talk about this for a few minutes. Why WOULD a business want to switch payroll providers? Well for starters, changing needs: Has business grown? Has employee count reduced? Is there a “need” for automation?
Or it could boil down to price. To adjust to the market, Payroll companies usually up service fees by 3% each year. So, if your employee count has reduced, sticking with the same vendor may not be the best option, especially if the pricing model is not a price per check model.
Then we get into- how HAS the service been?
Clients might leave to reverse what they deem a bad decision: Multiple payroll errors, unresponsiveness, maybe they can’t even reach their payroll specialist, or it could be that you don’t have one – the model is queue based, and when you call into the queue, service is inconsistent.
And what’s the payroll experience level even like for the person on the other end of the line?
Upcoming Live Webinar: Top Ten Payroll Blunders (And How to Avoid Them) Date: May 21
When we talk about Lack of Knowledge, this can REALLY go both ways-this is because Payroll Specialist positions are usually at entry level with employees going through a rigorous training process, but even through all that training, really understanding payroll can and will take years of experience. On the flip side, as a business owner or even an office manager, payroll is only a fraction of your tasks, and without the business owner being exposed to that same level of training, they won’t know what they don’t know. They just want their employees (and taxes) to get paid timely and accurately!
So, when it comes to payroll services for your small business, the question to ask yourself isn’t, What’s the best payroll service out there? Instead, it is, What’s the best payroll service out there for me?
There are many different options available to pick from that would best suit your needs, but when making this decision- let’s get into talking about the things to consider.
#1 Price Does Not Always Equal Value
“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”. Even 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.
#2 Don’t Just Buy the Name Brand
You can end up paying for that name when, in all actuality, you could get the same software through a reseller. More than that…you could experience superior service from a smaller regional, independent provider.
Earlier I told my joke about shopping and saving money, and so I’ve got to throw another shopping analogy in here because I just love shopping. When you buy a handbag with a fancy label, you get the label and the pretty handbag to show off, but what if you could find a similar handbag, just as cute, same amount of space, that serves the same purpose for like a thousand dollars less?
So, the label otherwise known as bigger payroll companies like “big red” or “big blue” is just that – a label. There are smaller, regional, or local providers that deserve that 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.
#3 Discounting the Implementation
Do you have a day job?
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.
If you would like to watch the full video and hear Marisa’s comments on “This is the Way We Have Always Done It” as well as some bonus tips, Click here to watch the on-demand recording.