How to Choose the Right Payroll Provider in 8 Questions

How to Choose the Right Payroll Provider in 8 Questions

Payroll plays one of the most crucial functions in your business.

This department is in charge of calculating the salary, hours worked and additional costs accrued based on the relevant state or national regulations. They are a make or break factor for employees. An American study found that 49% of employees start job hunting after just two payroll errors.

Therefore, due diligence and research must be undertaken when choosing your payroll provider.

Why Outsource Your Payroll?

Payroll is a meticulous and crucial part of your organisation. With payroll you are at the mercy of confusing and dense government regulation and watch dogs. Breaking these rules, whether intentional or not, is a very serious thing.

The ramifications of a mistake don’t just reverberate within the company, such as losing staff – this can lead to legal action and fines that could bankrupt your business. While payroll outsourcing costs may seem initially high, the potential penalties incurred from making a mistake, eclipses that.

Peace of mind is not something you can put a price on.

However, it can be hard to choose a payroll provider, and entering into multi-year contract can find your organisation in a long-term commitment. Without being in-the-know, you might be making rookie mistakes. To save you the headache, we’ve compiled 8 questions to ask yourself when choosing a payroll provider.

Don’t let yourself get blindsided; take the time to consider these questions, to do the research, and you’ll find yourself making the most informed and best choice for your company.

8 Questions To Ask Yourself

1. What service and features do I actually need?

Don’t let yourself get distracted by the bells and whistles. Before going to a payroll provider, you should consider what you actually need. Payroll is not just one thing, and many providers offer holistic services or packages. Some of those you might not need, so be sure to identify what your organisation requires and be clear on that when speaking to potential payroll partners.

2. Is the technology used by the provider compatible with my own?

Integration streamlines processes. There is nothing more frustrating than having technologies be incompatible with one another. That’s why you need to consider what technologies you use at your company and whether they can integrate or complement the payroll provider’s system. For example, the HR program you use for employees to log annual leave and time-sheets should preferably integrate with your payroll provider’s systems.

Having the integration will remove the hassle for you as the company to pass on that information to the provider. Having the information accessible by the provider saves you time as they receive the information instantaneously and can feed and update your payroll accordingly. So, make sure to take note of what technologies you use and what your potential payroll provider uses. Integration is the most preferable situation; payroll is complicated enough; keeping it streamlined will save you the trouble.

3. Are they reachable?

There is no point having a provider if you can’t reach them. Payroll, while analytical, is human at its core. If you have questions, queries, concerns or need an issue to be remedied, who are you going to talk to? If you correspond exclusively via email or messenger, that is a red flag. You don’t know who you are talking to and you cannot be sure if this is the same person you spoke to last time, to continue the conversation.

In addition, you should have one point-of-contact. Knowing who you are dealing with is important, and it helps you build a relationship with them, and also minimise delays. It also helps when needing to reach someone urgently – you don’t want to be waiting for an email or message back, which is why you need someone who you can call and speak to.

4. Do I have access with the local team?

If you are considering a multi-country payroll provider, you should know what the process is when contacting them. For example, some providers have a manager who acts as a middle-person between you and the payroll team. Sometimes managers could be in charge of multiple countries and they themselves could be located abroad.

So, in that case you have a time-zone to contend with, and given the sheer number of countries they could be managing, they will most likely be unaware of local regulations and laws pertaining to your country. Having someone acting as a messenger between you and your payroll team could lead to significant delays. That’s why you need to be aware of those processes. You should also be sure to confirm that your team is local, has local expertise, and they are up-to-date on the country’s specific payroll requirements.

5. What measures do they have in place regarding data protection and breaches?

Privacy is essential. When working with highly sensitive data like payroll which includes your employee’s full name, bank details, tax numbers, and the like, security is of the utmost importance. When considering a payroll provider, you should ask about their processes in place and what they do in the event of a breach.

They should have recovery plans, a business continuity plan and have regular audits to ensure compliance and the highest level of protection. The last thing you want are massive security breaches and disruptions. Which is why a payroll provider should be enlisting not only responsive plans in the case of a breach, but also preventative ones.

6. What is the provider’s reputation like?

Reputation is an important factor. You want to be able to consider their past behaviour and conduct. Which is why you should feel comfortable asking for client references. There’s a lot of reputational factors you want to consider; predominantly, you’d want to know more about their customer service. For example, do they respond in a timely manner? Do issues get resolved quickly?

As mentioned earlier, accessibility is crucial – what’s the point in having a provider if you can’t reach them, or if they aren’t able to meet your needs? References will save you time in the long-run. They give you a good indication as to whether that provider is a suitable partner for your company.

7. Do they know what my business is and understand it?

Wages are dictated by many different awards. These awards set the standards, such as pay and overtime rates and special conditions like leave arrangements, allowances and hours of work. These awards differ between industry, occupation, and identify employment conditions over and above the minimum required by legislation. This means that your payroll provider must be well across on what your business does.

Having this knowledge ensures they apply the correct award rates. It’s also crucial for the provider in keeping up on top of changes to awards that occur over time. If they aren’t aware of what your business does, costly mistakes could occur.

8. What is the cost-breakdown?

Cost is important. You must do due-diligence, especially when comparing providers. Be sure to compare apples with apples. For example, when it comes to pricing, you should be aware of the different charges and a fee breakdown. Some companies have holistic services; they may have a price per payslip, whereas others may charge separate fees like joiner and leaver fees, as an example.

So, while at the out-set it may seem like one is significantly cheaper than the other, the add-on fees could well exceed the other provider’s offering, when taking into account and adding up all these small one-off fees. You should look over the terms carefully. For instance, if you are in a business that regularly has staff turnover, say in a national retail or department store chain, those leaver and joiner fees could add up significantly.


When it comes to choosing a payroll provider, you need to remember that you are entering into a long-term partnership with them. You should be well aware of what your company needs. Asking yourself the above questions and doing the research can save you and your business in the long run. Alignment is crucial, both technologically and personally.

We hope these questions help you in choosing the right partner for your organisation. Remember, payroll is crucial to your business; it can make or break it. An informed decision will save you the headache later. Be sure to choose wisely.

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