Ten things to consider when picking your software provider:
Over the years, I have had the pleasure (and in some cases, the displeasure) of using a wide variety of payroll and HRIS software platforms. Some are pretty to look at but the lack of user-friendliness, others are functional but don’t have the ability to meet reporting needs, and may require a degree in software engineering just to complete an employee pay rate change. Let’s also not forget the importance of support from the chosen provider. Is your provider responsive to your questions? Does your provider notify you when important changes are on the horizon and offer advice on how best to accommodate those changes? Whether you already have a provider or are currently shopping for one, here are some points to consider:
1. Ease of system use: It’s important to understand how long would it take to train a new employee to become proficient? Training costs money and as a business owner, you should be factoring this expense into your budget.
2. Software support: How often does the provider update the software. Is the provider rolling out new features that enhance the product? Is there a way for a user to make suggestions, and does the provider respond to them?
3. Pricing: Business owners will see a lot of variety in pricing structures and actual costs. Be sure you understand how the billing works, ask for a full cost breakdown and know when and how the provider expects payment.
4. Compliance: A system that doesn’t meet state and federal regulatory compliance can put you at risk for an IRS audit. Payroll tax tables must be kept current and appropriate taxes must be withheld and paid to the IRS.
5. Payroll auditing tools: A good payroll system will have built-in auditing that will catch errors in batch data. It’s up to the employer to ensure overtime is paid in accordance with local, state and federal law and without a way to catch this, a business owner could be faced with an expensive wage and hour claim.
6. Paycheck stubs: Many states have adopted specific data requirements for the information that must be printed on check stubs. Be sure the provider is compliant with these specific requirements and it’s usually easiest to adopt the requirements from the state the has the most stringent.
7. PTO/vacation and leave accruals: While no state requires an employer to offer paid PTO or Vacation time off, many are moving towards requiring employers of a certain size to offer paid sick and family leave. Some providers don’t have the flexibility in accrual programming to accommodate unusual programs so it’s important to ask these questions upfront if you really want to keep that unique plan. Many providers utilize a trigger (sometimes referred to as ‘class code’) to assign employees to specific groups which can cause confusion for the person entering the new hire data. An easy to use and train system is beneficial when selecting the right platform.
8. Payroll deductions: Payroll deductions fall into two groups – taxable and non-taxable. Most providers reserve a group of pre-selected codes that cannot be changed so it’s critical the provider makes available a group of codes that can be set up for specific purposes.
9. Options for paying employees: Most payroll providers offer a variety of options for paying employees which include direct deposit, live check and pay cards. While most push towards full adoption of direct deposit there are times when employees may be ‘unbanked’ which then requires issuing a live check or pay card. Ensure the provider has these common payment methods and be sure to understand any associated costs. Not all payment cards are ‘free’. There are also timing considerations for direct deposit. Providers are not all the same and some take longer than others to complete the deposit of funds into bank accounts.
10. Garnishments: Processing and responding to garnishments, wage orders and tax liens is a critical function of payroll processing and requires key data entry steps to ensure timely and accurate payroll deductions from affected employees and issuing payments to the demanding agency. When comparing platforms and providers, business owners should take steps to ensure this critical function is easy to administer and track so that you don’t miss a payment and inadvertently become responsible for the amount.
If you are a business owner or otherwise responsible for payroll administration and you are struggling with your current provider’s service and abilities, please contact me! I’d love to learn more about these challenges and will be more than happy to evaluate the process and provide recommendations to alleviate these issues.
Thanks for reading and be sure to check back soon for another blog entry!