10 thing to consider when choosing a payroll provider

Ten things to consider when choosing a payroll provider

Posted: 13th November 2020

Sorting out your company’s payroll is a real pain!

You’re calculating employees’ salaries and tax deductions, making sure they get paid on time, while also trying to keep on the right side of HMRC...

Not to mention trying to keep on top of the increasing and seemingly ever-changing regulations!

Payroll should be a very simple process; you employ staff, you pay them accurately and on time. How hard can that be?

Quite hard as it turns out.

For example, are you a small company or a big company? Are you located on a single site or multiple sites? Are all your employees full-time or do you also have part-time employees, freelancers, contractors, or some other form of flexible working arrangement?

And all of the above will almost certainly need to be treated differently for HMRC purposes.

Fortunately, there are a plethora of payroll providers out there, so you don’t have to deal with most of these things yourself.

But just how do you choose between providers? What are the things you need to look out for, and questions you need to ask when considering a provider?

Well, I’m glad you asked, ‘cos I’m about to give you the answers to both those questions in the lazily titled ‘10 things you should consider when choosing a payroll provider’.

Thing One: What exactly do you need a payroll system to do?

This is one of the first things you need to consider when thinking about a payroll system.

Questions like:

  • How many employees do we have?
  • What type of employees do we have (full-time, part-time, contractors, a mix of these or others)?
  • How complex is our business structure and how complex is it likely to become?
  • Do we plan to expand in the near future and how quickly?
  • Do I have an in-house payroll expert to process payroll?

The answers to these questions will help you determine the type of payroll model that will best fit your business. Which leads on to…

Thing Two: Outsource or in-house, that is the question?

If you operate a small UK-based business that has mainly full-time employees and is looking for minimal growth, then you may just need to employ someone in-house. Or at best adopt a very simple outsourced payroll system.

However, if you’re looking to grow significantly, operate in overseas jurisdictions, have a mix of employee contracts, or your business model is likely to become more complex, then having an external payroll provider may be best for you. Because the right outsourced provider will give you the ability to scale your business without any major headaches.

Thing Three: Regulation and compliance

OK, this is a big one.

Whether you operate a small slow-growing local business or a multi-site, fast-growing operation, there’s no escaping regulation and compliance.

And the one certainty is that both will continue to change... Particularly after Brexit when the pace and complexity of change may increase.

You really don’t want to be sorting this stuff out yourself. You also don’t want to be trying to keep up to date with any future regulation or compliance changes.

What you need is the peace of mind you’ll get from a system and provider that can do all this for you, ensuring you remain fully compliant and up to speed with any new regulations at all times.

Thing Four: Integration with existing systems

To state the bleeding obvious, there’s simply no point using a payroll provider that requires you to change your existing systems and processes in any significant way.

Instead, find a provider whose system can seamlessly integrate with your own HR and accounting systems. This will save you a ton of time, stress and frustration...and ultimately money in the long run.

Thing Five: Ease of use

At first look, it may seem like some of the systems you come across require you to have a degree in computer science to use. Don’t get me wrong, it’s great to have massive amounts of functionality...if you need it and are actually going to use it.

But if it just makes the system difficult to understand and impractical to use, it’s a complete waste of time.

As we said in Thing One, you need to determine upfront what you need a system to do for you now, AND what you may want a system to be able to do for you in the future as you scale your business.

Thing Six: Reporting

You’ll want to be able to interrogate any system for reporting purposes, so it’s important to understand what level of reporting comes as standard with your chosen system.

The best systems have pretty much real-time reporting functionality, which means at any given moment you can see the complete payroll landscape of your business. This level of functionality is proving to be non-negotiable in these current times and is unlikely to change in the future.

Thing Seven: Customer support

Having good customer support is still a key requirement for all businesses. Sometimes things just won’t work as they should. So, you’ll need someone at the end of the line, email, computer, that can confidently and competently help you.

You need to investigate and be sure of the customer support you’re getting. You’ll need to know what support is provided as standard and what will incur additional costs. 

It’s also useful, but not critical, to note if the provider has any experience in your particular industry or sector. This will help them to quickly identify issues that are specific to your industry or pre-empt issues they know may arise.

Thing Eight: Costs

For many costs would be further up the list. But actually, once you’ve considered the other points most systems should have eliminated themselves from your research.

Key things you’ll need to know are, how you’re billed? When you’re billed? And what you’re billed for?

Is there a base cost with separate cost per employee, cost per contractors, etc.? Additional costs for international vs domestic? Are there any additional maintenance and service costs? Is there a set-up fee?

The better providers tend to have simplified easy to understand pricing structures. Anything that requires a scientific calculator to work out should probably be a red flag!

Thing Nine: Timing of conversion

Now is probably the best time to investigate and integrate a new payroll service. As well as going into a new year, we’re also about to experience a hard Brexit, which will likely see regulation and compliance changes... If not in the new year then certainly not long thereafter.

This is a good time to get ahead of the game and get your new systems and process in place and running smoothly with any teething problems ironed out.

If the new year isn’t right for you, then this is also a great time to investigate systems and providers in preparation for the new financial year in Q2. Giving you the opportunity to source and integrate any new system in a relatively relaxed manner.

Thing Ten: Added services

While not absolute dealbreakers, there may be additional functionality included that make a provider more attractive to you. Particularly if you have a shortlist of 2-3 equally capable providers.

A White label option, for example, allows you to effectively reskin the third-party system with your own company’s logo and branding. Meaning that anyone using it will think it’s your system. 

A provider that also provides additional funding solutions may also be something that’s of particular benefit to your business. 

Whatever additional service you’re drawn to, we’ve deliberately put this consideration as last on the list. It really should be the last thing you consider after looking at the other areas above. Don’t get blinded by all the whiz-bang extras at the expense of the basic functionality you need for your business.

So, what next?

Hopefully, you’ve found the above a useful guide to choosing a payroll provider. However, if you’d like more information on what to look for when choosing a provider, or you want to know more about Calverton Pay & Bill, our own leading payroll solution, please feel free to drop me a line on 01908 268882.