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Top 10 Considerations When Changing Payroll Software
Payroll is also known as :
HR Management System,
Human Resource Payroll System,
HR Payroll Management,
HR Management System,
General Ledger System,
Cost Accounting System,
Payroll Services ,
When choosing a payroll software vendor, there are numerous
considerations that must be taken into account when narrowing down
the choices. Obviously, you have to think about the features that are
important to your company, and decide on a software that meets your
needs within budget. However, it's just as important to consider other
factors that can make a huge impact on the overall success of your
payroll software selection. Here are the most important considerations
to keep in mind:
When planning the conversion to a new payroll software solution,
timing is important. Most companies find it easiest to make the
transition at certain times during the year, such as immediately after a
quarter-end, or more commonly, after year-end. Starting with a new
system at the beginning of a year is particularly convenient because it
allows you to simply import historical data from the previous year or two
via a link product, and start the new year with zero balances in the
system. Switching software at the beginning of a quarter is another
option. You'll start fresh with a new quarter, but will still have to convert
calendar year information pertaining to employee taxes, earnings, and
deductions. Converting this information incorrectly can cause problems -
it could affect W-2 reporting, earnings and deductions, and especially
employer tax liability data. It's also very important to make sure that all
quarter end dates are correct when implementing the new system, or
quarter end reporting could be inaccurate. To avoid these issues
altogether, and to help the implementation run as smoothly as possible,
it's usually recommended that companies switch at a quarter-end or
year-end. This isn't a necessity, however. If it makes sense for your
company to implement a new payroll solution at a different time, just
make sure to ask your vendor if there are any special considerations that
need to be kept in mind.
2. Data transfer and conversion
Consider how data from the existing system will be entered into the new
system. Will the data need to be manually entered, or can it be imported?
It's especially convenient if the vendor offers an easily-customizable link
to transfer data from one system to another. This often involves setting
up "translation tables" in the link template that equate fields in the old
system to fields in the new system. Once the data is transferred, it's
necessary to verify that all information is correct. This can be done by
running reports from both systems and comparing the results.
3. Side-by side processing
After the implementation of the new system is complete, most
companies check the accuracy of the new system by running both the
old and new payroll systems parallel for a period of time. This period is
up to the discretion of the company - it can be one payroll run, a
month, or three months. Again, accuracy of data can be determined by
running the appropriate reports. In particular, cross-referencing the
numbers on payroll history, check history, and earnings, deductions, and
tax reports is a good way to determine if everything is set up correctly in
the new system. Discrepancies can often be traced back to outdated tax
tables in the old system, inaccurate translation tables, or slightly different
Consider who will be performing the installation and setup of the new
payroll system. Does the vendor offer implementation and consulting
services? Will you need to choose a reseller? Or will you be required to
set the system up on your own?
It's important to keep in mind the amount of manpower typically
required during a software implementation. Don't underestimate the
amount of time and resources you'll need to ensure a quick and
accurate transition from one payroll system to another. You may need to
hire a temp to perform data entry, or require your employees to work
additional hours to analyze reports for accuracy while performing sideby-
side processing of your new and old payroll systems.
5. Payroll Tax Management
Payroll tax management is certainly a critical aspect of any payroll
software, and plays a big part in how successful the software will be at
meeting your ongoing needs. When evaluating software vendors, be
sure to inquire about the process for updating tax table information. It's
most convenient for customers to receive updated tax table information
on an automatic basis at regular intervals, such as once a quarter. Also
important to consider is the method for distributing tax updates. Are
they available on a downloadable basis, or are they sent via mail? Overall,
it's important that tax updates are regularly updated in a format that's
convenient for you. In addition to federal, state, and local tax table
updates, the software should also support supplemental tax tables, pretax
deductions, EFTPS (Electronic Federal Tax Payment System) support,
and electronic media reporting for all states.
6. Integration Capabilities
It's important to think about the ability of the payroll software to
integrate to the HR and general ledger software used by the company.
In particular, consider the benefits of choosing a payroll system that
includes integrated HR functions as a built-in or optional component.
Payroll, HR, and accounting functions have tremendous overlap and
sharing the data ensures that all systems are in sync and using the most
recent and accurate data. There are many benefits of having integrated
HR, payroll, and general ledger systems, including:
- No duplicate data entry - Changes made to the database are made
only once. This eliminates errors and the need for duplicate data entry
such as employee, benefits, and deductions into the HR system, and
debit and credit payroll journal entries into the accounting system.
- When payroll, HR, and accounting data are stored in the same
database, you can reduce unnecessary paperwork.
For example, if HR enters a new benefit for an employee, the payroll
deduction amount can be automatically established as part of the
benefit plan. There is no need to submit another paper document to the
- Integrated reporting - Consolidated reporting is valuable
to management, but is virtually impossible without an integrated
database and reporting tools.
7. Vendor Stability and Track Record
Payroll is your company's largest expenditure, and is certainly the most
visible business process to your employees. There is no room for error
when it comes to providing employees with their pay checks. When
choosing a payroll solution, it's important to select an established vendor
with a proven track record in offering excellent payroll products and
support. Consider the impact of choosing a solution from a company
that doesn't deliver comprehensive tax tables in a timely manner, or
offers technical support on a call-back basis. The resulting fines or late
paychecks could be disastrous to your company, as well as to your
When evaluating the reputation of a potential payroll software vendor,
it's important to note how long the company has been in business and
the number of clients that use the software. This is a good indicator of
the quality of the product and service offered by the vendor. Additionally,
consider the types of industries the company serves, and the size
businesses they serve to determine if the product will be a good fit with
8. Customer Support
Another factor that goes hand-in-hand with the stability of the payroll
software vendor is the quality of customer support offered. High-quality
support is essential to ensuring a successful relationship, so be sure to
determine if the company will meet your standards for support. Some
questions to ask the vendor include:
- What professional payroll certifications or awards do the support
- What technical support certifications or awards does the support
- How many technical support reps are available?
- Is unlimited telephone support available?
- Is 24/7 self-support via a Web site available?
- What is the average response time of a technical support call?
9. Local support
Local support for your payroll software is often an important
consideration. It can include sales support, installation of the software,
and implementation, as well as ongoing support. Travel expenses can be
reduced or eliminated if a local representative is nearby and available to
implement and support the software onsite when needed. By going
through a local representative, companies can usually set up the
software more quickly than going through the vendor, which may be
backlogged with other implementations. Having the support of a local
representative also allows you to develop a personal, one-on-one
business relationship that many companies prefer.
When selecting a payroll software vendor, it's a good idea to check the
references of other companies using the system. Most vendors will make
these references available to you, so be sure to take advantage of this by
calling several of them to discuss their experiences with the vendor and
the software. To get the most applicable information, ask your vendor
for the names of companies similar to yours. For example, talk to
references in the same or similar industry in your geographic area with a
similar company size. You can also request references with similar payroll
needs, such as specific options or features that you're considering.
When selecting and deploying a new payroll software solution, there are
many factors to take into consideration. One of the most important of
these is choosing a vendor known for experience in the payroll software
industry with a reputation for reliable business solutions and world-class
customer support. Sage Abra HRMS by Sage Software has been the
industry leader in mid-market Payroll and HRMS systems for 20 years.
Our software is supported by a nationwide network of Certified Business
Partners who are your local resource for implementation, training,
service, and support.
For more information,please call us as 800-424-9392
or visit our web site atwww.sageabra.com.