The decision to outsource payroll for most businesses is a rather large commitment. It’s one of the most intimate tasks where the wrong choice can let down your staff and waste a significant investment of time and money.
Like most services payroll is not one-size-fits-all. Payroll companies have different technology, support and expertise that make some a better fit than others. By doing your research up front and asking these important questions, you can make sure you are choosing the right payroll partner:
Question 1: Can we meet our dedicated payroll professional?
This is perhaps the most critical and often overlooked question. Spend time to meet the payroll professional who will be your payroll officer once or twice to assess how knowledgeable they are. Also, look for cultural fit. It’s important that the person or organisation knows and understands your industry or sector so it can handle the challenges that may arise. Generally, the larger providers don’t offer you direct access to a payroll specialist. Instead, your account is managed by system specialist who helps you with technical & operational issues and more often redirects your payroll question to a third party.
Question 2: Are you using the most advanced payroll platform?
Ask what technology they use, when it was developed and what it can offer. Many of the most common payroll providers use software developed decades ago. This can make it difficult to customise, costly to implement and limit its ability to integrate with other platforms.
Take the time to evaluate their technology. Can they demonstrate functionality? Is it a stand-alone system or scalable? Does it have functionality that enables you to use it in your internal payroll system?
The most advanced payroll platforms are cloud based and offer an Application Programming Interface (API) which means they interface with other systems such as Xero, MYOB, and QuickBooks Online.
Question 3: Does your payroll system include General Ledger (GL) integration with your accounting software?
Unless your payroll system is already integrated with your accounting system you will either need to pay for integration, manipulate CSV files or manually data enter your payroll data for your accounts.
Question 4: What support can I expect?
Some low cost outsourced payroll services only help to calculate the wages, superannuation and PAYG tax then provide you with a bank file. Others collect time, apply pay rule conditions, calculate wages, taxes (including PAYG, FBT and State Payroll Tax) and superannuation then distribute all payments to the relevant agencies, authorities and clearing houses. Others just offer you their online system disguised an outsourced service. Ensure you ask exactly where your payroll provider’s services start and stop.
Question 5: Can you manage Award and / or pay rule interpretation?
One of the most difficult and time consuming parts of payroll is applying a set of complex pay conditions from relevant awards or enterprise agreements. Ask whether your payroll provider includes a full pay conditions engine to help keep you compliant and simplify the payroll process.
Question 6: How do you manage time and attendance?
Collecting time and attendance data is a critical component of payroll however not all payroll providers have a time and attendance system. Ask your payroll provider have they collect time and attendance data. Nowadays your payroll provider should be able to provide you with a fully integrated rostering and time and attendance system.
Question 7: What add-on services do you include?
Some payroll providers can integrate with a wide range of add-on services such as accounts, time and attendance and HR. If you look around and you might even find a single platform that provides a full HR, safety, performance and payroll solution. Your payroll provider should also provide your employees with a complete Employee Self Service (ESS) module and employee benefits.
Question 8: What other services do you offer in house?
The best payroll service providers will include a broad range of in-house employment management services including employment law, migration, human resources, recruitment and workplace health and safety experts.
Question 9: Do you offer transparent pricing?
Don’t get caught out by hidden costs. Many payroll services appear to be cost effective but contain a pile of additional costs for regularly occurring payroll activities. These hidden costs can significantly increase the cost of managed payroll. If possible get a live quote online.
Question 10: What are your Service levels?
Look for a clearly defined service level agreement, with turnaround times and implementation strategy. It should be flexible enough to adapt to your changing needs. A good provider will offer various choices and be able to provide support every working day. Assess how quickly they respond to calls and out how long it will take to correct an error.
Also, be careful about locking yourself into long term payroll service contract. Anything over 12 months is unnecessary. Your preference should be for month to month agreements that keep your payroll provider on their toes.
Question 11: What experiences and results have you achieved?
Ensure your payroll provider can provide you with a range of referees who are willing to promote their services just as much as they are.
Question 12 Do you have an Exit Strategy?
There could come a time when you decide to take payroll back in-house or change providers. In this instance its worth ensuring that your service provider has an exit strategy where they can either hand the keys over to your payroll officer so you can continue processing. Alternatively, they should be able to offer you your data in a database or CSV and of course, not with any extra cost.
