What are the factors that cause business owners to change payroll providers?
Talking with small business owners about what they like about one payroll company over another varies greatly depending on their individual philosophy, experience, and core values. Allow me to list just list a few reasons that cause organizations to switch their payroll software and talk about payroll business solutions business owners value. Let’s look at a few key factors that are a big deal to everyone:
Price – Paying a $120 payroll processing fee 26 times a year (bi-weekly payroll) when they could be paying $70 per payroll every 2 weeks. After a while, the dollar sign does add up to a significant number and people can be enticed and consider alternative options.
Hidden Fees – Sometimes companies are not so forthcoming with their fee structure during the initial consultation. Sometimes the fine print has some details that you didn’t notice. People become furious that they were being charged fees for processing quarterly state and/or federal tax returns. Being nickeled and dimed for delivery fees for tax returns and W-2’s does not help. I’ve even seen payroll providers charge significant fees for processing payroll the day before payday. One overlooked cost that makes one provider more expensive than another is the delivery costs for paper checks. Seeing additional fees on an invoice is a not-so-savory surprise and a good reason to change payroll providers.
Good Service determines Loyalty
Customer Service – Some payroll companies have excellent customer service and other companies may not be so great. If your payroll software company relies on a call center for customer support, be wary. Sometimes it takes 15,20, 30 and even 45 minutes (worst case) to get in contact with a customer services representative. That’s not good when you need something done immediately regarding payroll amid other priorities. Running a business is stressful and I’ve seen people change providers because they can’t afford to be on hold for extended periods of time. You expect excellent service when you need it the most. When you need help, you need a human on the phone right away.
Errors – I’ll say that every payroll company at some point will not have 100% fidelity. Considering the human element involved with payroll, the best of companies will make an error eventually somewhere in their client base. Payroll errors should be corrected within 24 hours or less to minimize inconvenience or interruption. Responsiveness is important. If you are not quick to solve a problem, likely people will go to someone who can. The frequency of errors is a big deal. If a company exhibits a pattern of mistakes and they occur often enough to irritate the accounting department, the door is wide open for a change.
Integrated Payroll & HR Software
Workers Comp Integration – The ability to pay your insurance through payroll software is a great perk. Insurance premiums are calculated from the total hours your employees worked per month. If your employees work more hours, your premium for insurance goes up. If your employee’s hours go down, then your premium goes down for that month. At the end of the year, you also don’t have to do any additional work for the insurance audit. You automatically have a report generated that satisfies an audit. Having this ability to save money is a great perk people gravitate toward. Not having to deal with a worker’s comp audit…. Priceless.
QuickBooks Interface – QuickBooks interface occurs uniquely in our software. Payroll data is automatically transmitted to QuickBooks without any additional work or time required. No need to export the data into QuickBooks, it’s already there! Being able to have this feature saves time and is an attractive element of our software. It’s something to consider when choosing a company or deciding to stay put where you are.
Handling Unemployment Claims – If the employee files a claim for unemployment benefits in your state, you must agree with the claim or disagree with the claim within a brief period once you are contacted by the state. This can be a pain in the rear, especially when you are not familiar with the employment law, state regulations, and HR protocols. Figuring out whether you should grant a claim or fight a claim can be a tough cookie, especially when you don’t have the experience or expertise. Considering the implications, your State unemployment tax rate becomes a bigger deal as the number of employees you have increased. To be able to hand off this task and not have to think about it is a blessing.
Lack of Integration – If you cannot pay your health/dental/vision insurance through your payroll software, you will have to do it on your own. People that value their ability to generate revenue/clients will appreciate the extra time to focus on what’s most important. If more integration means more free time, and more time means more money. When companies can save time and earn more money, people make changes.
Going Above & Beyond
Wage Garnishment Service – This is nearly identical to the lack of integration. If an employee owes child support, the business owner who employs him or her is responsible for withholding wages from their earning and remitting them to the appropriate state agency. Failing to garnish wages is the “Owners responsibility. The person who owns the business can receive a steep penalty for not properly remitting child support payments. Oh, by the way, wage garnishments can occur because of back taxes owed to the state or federal government. The business owner is still on the hook for that as well.
Dedicated Representative/Call Center – When you call your payroll provider, do you wait for the next available representative? Does a dedicated representative pick up the phone right away? With a call center model, you will likely always talk to a new person with every call and the person will not have a good working knowledge of your business. With a dedicated representative you have direct communication with someone who is familiar with you and your business. l. Most people prefer a dedicated rep over a call center. Especially because they are likely to not make a mistake on your payroll account since they know your business very well
Check Printing/Direct Deposit – Remember how I talked about errors as a pain point earlier? Well when errors occur, how fast can they be corrected? Not every company can fix an error on the spot like that. Business owners have had problems come up on a Friday and the solution was not available until Monday. Not good! If you can print a check onsite and do same-day payroll, that’s great for the business owner. Reimbursement on the spot with a paper check is a great perk to have. For a full list of our payroll features. Visit our homepage.
Request A Consultation From Next Generation Payroll
When considering a list of payroll processing companies make sure you conduct a thorough investigation into all of the above-mentioned available features since every company is created equal. For more helpful information check out our article titled “9 Reasons Why Payroll Outsourcing Costs Businesses Money” for more insight to help you choose the right payroll provider. Before you make the transition to a new payroll services provider, be sure to consider working with a company that has the ability to scale and grow with you as opposed to creating barriers for your companies success.
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Thank you, Bryon, for sharing this informative article. To scale with them as they grow, a firm may occasionally need to switch payroll suppliers. The ongoing development and improvement of your company is supported by the regular evaluation of your payroll provider. You can start over by being ready to onboard a new payroll provider at the end of the year. Additionally, it eliminates the need to enter staff wages from the prior year, which saves a tonne of time, especially for smaller businesses. Although you’ll still need to transfer historical employee data when you change providers at the end of the quarter, your new supplier will also prepare and file your taxes for the upcoming quarter.