Payroll Software Gives Your a Headache? It’s Time to Switch Providers


Payroll softwarePayroll is one of those back-end administrative tasks that no one really enjoys. However it has to be done, and it has to be done right. To that end, many businesses outsource their payroll administration or use some type of payroll software.

The software route is a great way to automate the most tedious parts of the process (tax reporting, benefits, quarterly filings), and yet maintain overall control. But how do you know if you’re using the best payroll software for your needs? Do you have a general sense of unease about your current solution, but aren’t sure if making a change is worth it?

In this post, we’ll highlight five symptoms that indicate it’s time to switch payroll software providers.

Frequent Payroll Errors

Payroll errors are probably some of the most obvious signs to watch for:

Paychecks aren’t going out on time.
Pay amounts are incorrect.
Deductions and withholdings are incorrect.

Payroll mistakes aren’t just an inconvenience to employees; they cost HR managers valuable time and money. In 2013, inaccurate tax reporting cost U.S. businesses over $7 billion in IRS penalties. According to another estimate, about one-third of small businesses get fined for payroll mistakes.

You can chalk up a certain element of payroll mistakes to human error. But a good payroll solution will help HR managers catch mistakes before they affect the business. For example, some systems will send an alert when amounts entered are inconsistent with previous checks, or schedule ACH (automated clearing house) deposits to appear on a specific day.

You’re Working Too Hard

If you have a smaller HR team, you may not want to spend hours per week entering payroll Payroll software and managing taxes, benefits, insurance, and so on. This is a fairly common sentiment. According to a 2013 study by the National Small Business Association, about 40 percent use a third-party service or software to manage their payroll.

But how much work is your payroll software actually doing? If it’s a paid service, are you getting your money’s worth? If you’re still toiling over tax calculations, manual data entry, and printing your own checks, it may be time to look for a better solution — one that relieves more of the payroll burden for your small business.

You Don’t Have Enough Control

On the other hand, not every business wants to outsource payroll. If you have a dedicated accountant and enough resources, you may want to maintain control over some of the finer details. If your current payroll solution is designed to handle the whole process from data import to tax reporting, to direct deposit, you might consider scaling back. Find a payroll software provider that offers basic check printing and ACH deposit services, and take care of the rest in-house.

It’s becoming increasingly common for companies to pick and choose which payroll functions to outsource. “Hybrid” software models, for example, allow you to process payroll through a web app and have an outside service print and deliver checks (or manage electronic direct deposits).

Your Data Has Been Compromised with Payroll Software

Processing payroll means having access to sensitive employee data like social security numbers and bank account information. A breach of your payroll system could mean identity theft and thousands of dollars in financial loss. In February, for example, the data breach of BeneCard’s payroll system racked up damages in excess of $5 million.

business checksEvery payroll software provider should offer enterprise-grade security, including 256-bit SSL encryption, regular server backups, multi-factor authentication, and the ability to govern access controls for employees and administrators. If yours doesn’t, it’s time to look at alternatives.

Payroll Doesn’t Integrate with Other Systems

This is perhaps one of the most important features in a modern accounting solution: it should be able to connect with other back-end systems that house employee and financial data (accounting software, human resource software, time tracking, etc.). The ability to sync data in both directions — either through an API, webhooks, or file importing — can save you from hours of tedious data re-entry and reduce the likelihood of clerical mistakes.

If you’re tracking time, taxes, and benefits in one system and creating paychecks from scratch in another, you’re doing twice the work. If your current software doesn’t offer built-in payroll, try to find a provider that can easily import employee and financial data from your HR and accounting applications.

Whether you manage payroll internally, outsource some of it using payroll software, or outsource all of it, it’s important to have the right solution for your needs. If you’re dissatisfied with your current software, set a purchase budget and decide what features you’re looking for in a new solution. A modern payroll software service should help you reduce clerical errors and minimize administrative work. Pay your employees accurately and on time — without the headaches.

Article was written by Aleksandr Peterson who is a technology analyst at TechnologyAdvice. He covers marketing automation, CRMs, project management, payroll software, human resources, and other emerging business technology. Connect with him on LinkedIn.