Switching Payroll Provider: When is the Best Time?

Historically many companies have reaped the benefits of switching ahead of the busy April period. This is due to several reasons including less Year-To-Date historic data, especially in years when the tax codes change at the end of the fiscal year. But what’s right for one company may not be right for yours. Let’s explore this further.

Year-to-Date Pay Information and Switching Payroll Provider

Switching your outsourced payroll provider always means an exchange of data. How good that data is has a big effect on how smoothly the payroll switch will be.

1. Switching in April to Reduce Data Admin

If you switch at the end of the tax year then this reduces the need for Year-To-Date data, including how much employees have earnt to date, their National Insurance Contributions (NIC), P45’s and pension contributions amongst many more.

Switching in April allows you to start afresh at the beginning of the year and can make the process less admin heavy.

2. Talking to New Providers Early

It is worth noting, if you want to switch in April then you need to be in talks with your new payroll provider towards the start of the year. This way you can get to know them, discuss any queries and get set up for a smooth transition. If you wait till mid-March then you’re unlikely to have a successfully smooth switch at the start of April, unless your new provider offers a payroll switch guarantee of 14 days or less.

3. Mid-Year Data Comparisons

On the flip side, some companies prefer to switch mid-way through the year and often due to the ability to directly compare payroll month-to-month. It’s a matter opinion, however we find that this gives us the ability to directly compare months and avoid the challenges that come with new tax codes issued at the start of the tax year. It’s not impossible, however, any variances can quickly be resolved during testing and before a live pay run.

Pitfalls to avoid when moving payroll provider

Many companies stay with a poor payroll provider to avoid ‘switch pain,’ Next let’s explore what can go wrong with a payroll switch and how to vastly reduce the chances of a badly executed payroll switch.

1. Avoiding Data compatibility issues

One of the main ways a payroll switch can be slowed down considerably is data compatibility. That’s why sending payroll across in the best format possible, ideally digitally, makes a big difference.

Ask your new provider what format works best for them and if there is a potential problem work with them to spot this early and mitigate any additional admin.

Human error can play a role here so it’s important to pick a payroll provider you trust and with a team that will take the time to do this properly. Loading payroll data into a system in a way that corrupts the data can cause you more pain down the line. Approval processes should also shield you from errors so make sure you’ve agreed these with your new payroll provider.

2. Project clashes

Unlike some projects you don’t need to wait for a quiet period in your year to switch… not that you’re likely to have quiet times in this day and age!

However, there may be times of year when things are very busy and you’re less likely to be able to liaise with the new payroll provider effectively. So it’s worth planning ahead and avoid picking a time when you know that you’ll be swamped with work.

You’ll be just as much involved in payroll as the the new provider and paying attention to the smallest detail now will save you time in the long term.

3. Contract renewal periods

Many companies come unstuck by forgetting about costly auto-renewals. Renewals can occur with both your payroll provider, and separately, your payroll software.

Payroll software can renew for up to 5 years; a costly mistake to make if you don’t truly want or need it!

If you’re looking to move to an outsourced payroll provider from an in-house payroll team, or switching payroll provider, you need to be aware of these dates ahead of time. Make sure that you don’t fall into an autorenewal trap and not giving them adequate notice. Read the terms and conditions carefully.

Talk Staff’s Payroll Switch Guarantee

With years of experience, Talk Staff recognises the importance of a smooth transition and has carefully crafted a Payroll Switch Guarantee that gives employers peace of mind. By following a strict process, we’re able to support you quickly in getting your payroll online and trust that you’re in good hands. We don’t hide behind emails and are easily accessible on the phone when needed.