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Top 5 Fears of Switching Outsourced Payroll Providers

March 8th, 2024 | 4 min. read

By Kelli Lewis

Switching outsourced payroll providers is a significant step for business owners. It's one marked by the anticipation of growth and improvement but overshadowed by understandable fears. From the daunting task of data migration to payroll mishaps that leave employees with incorrect paychecks, the transition period is hard and scary, particularly because it can impact the livelihood of your team. 

At Whirks, we understand these fears because we've helped countless businesses navigate through them. It's not just about making a change; it's about making the right switch with the right guidance. Addressing these fears head-on is the first step towards a seamless transition. 

Fear #1: What if my employees don't get paid?

Importance of Uninterrupted Paydays

As you switch to a new payroll provider, there's always a small risk of a pay date being missed if the transition isn't managed carefully. This could happen if you cancel on your previous provider too quickly or fail to get your new provider the access they need to keep on schedule with your transition. 

Getting paid on time is a critical part of financial stability for many employees. A study by CNBC revealed that a significant number of Americans—over 60%—are living from paycheck to paycheck. A delay in receiving a paycheck can create stress and financial hardship, making the assurance of uninterrupted paydays a top priority during any payroll provider switch.

The Right Approach to On-Time Pay

A good payroll provider will coach you through their implementation timeline. They should be clear from the beginning about what your first pay date will be with them. 

In your conversation with them, be sure to ask for guidance about when to cancel services with your previous provider if they aren't proactive about doing so. Having clear expectations and detailed communication with your new provider are the keys to a seamless transition. 

Fear #2: What if something gets missed in the data conversion?

Dotting Your I’s & Crossing Your T’s Before the Transition

Unfortunately, this is the most likely mistake to happen in your conversion process. Think of it like packing up and moving to a new home — sometimes there are a few items that don't make the trip. A LOT of information is being moved, and it's common that something like a missing digit, an incorrect bank account number, or a misspelled name can get overlooked. So if something gets missed, what do you do?

First, it's important to double-check your own records. This means ensuring all your employees' tax forms — like their W-4s and I-9s — are filled out correctly. Also, confirm that you've reported all the states where your employees work. It's about making sure all your paperwork is in good shape before you switch.

Communicate with Your New Payroll Provider

Second, communicate early and often with your new support team. For this reason, it's crucial to look for a payroll provider that has great customer service and is easy to reach. 

Choose a provider that is accessible and responsive to your needs. Let's say an employee notices an error with their personal information after the switch; your payroll provider should be quick to resolve the issue, minimizing any disruption to the employee's experience.

Fear #3: How do I know the new payroll system is secure and my employee data won't get hacked?

Verifying System Security

Similar to other financial operations, payroll software is subject to strict security measures. Things like firewalls, antivirus software, intrusion detection systems, and SOC 2 audits all help to ensure your employee data is backed up and secure from external threats. When selecting a new payroll service, it’s critical to choose one that can provide comprehensive security measures to keep your data safe.

Layered Security Measures for Your Peace of Mind

A trustworthy payroll provider will be transparent about their security measures. They should be open and ready to share the details of the protective measures they've put in place. This includes providing documents that explain how they secure their software and the proactive steps their team takes to keep your data safe.

For instance, if a widespread vulnerability is identified in software that's used across the payroll industry, your provider shouldn't be silent. They should be ahead of the curve, informing you of potential risks and detailing their actions to protect your data. 

Fear #4: What if I switch payroll providers at the wrong time and overpay my payroll taxes?

Flexibility in Your Payroll Transition Timeline

Timing is everything, right? Well, there's a bit of a misconception when it comes to the timing of a payroll transition. While some business owners may prefer to switch at the beginning of the quarter, a good payroll provider should be able to support your transition at any time during the year. 

This means they will proactively tell you which taxes they will take care of and which your previous provider needs to complete. This will sometimes require you to communicate with your old provider about these details, but it's best to wait for guidance from your new provider to do so. 

Responsibilities During the Transition Period

If a miscommunication does happen and both providers pay the same quarterly taxes, your old provider should have a process in place to refund you the funds. In general, guidance from your new provider should help you to avoid this inconvenience. 

Fear #5: What if my integrations don't work with their new tech?

Syncing Your Tech Stack Effectively

"Integrations" has become a bit of a buzzword recently; getting ALL your techs to talk to each other. In actuality, integrating your tech stack is quite complicated. If integration is important to you, you must ask potential new payroll providers about their experience with integrating your specific software with their own platform. 

A good payroll provider will have a clear understanding of the technologies that work well together and an explanation for why they don't advise connecting certain platforms.

Smooth Transition with Expert Support

A transition to a new payroll system involves not just new software but also a partnership with a provider that offers expert support throughout the process. 

They should be accessible to address any questions or concerns during this integration phase, providing training or resources to ensure your team can adapt to the new system seamlessly. This level of detailed support and planning allows for a successful transition to your new payroll system.

Find a Solution That Whirks

Choosing Whirks as your payroll provider is more than just selecting a service; it's about partnering with a team that deeply understands the challenges and concerns you face. At Whirks, we recognize the significance of these concerns and are here to guide you through each step, ensuring your switch is as smooth and stress-free as possible. We don't just offer services; we provide peace of mind, knowing that every aspect of your payroll—from timely employee payments to secure data handling and accurate tax compliance—is managed with expert care. 

We're committed to equipping you with all the necessary information and helping you make informed decisions that align with your business's needs. If any potential pitfalls we've discussed cause worry, this article gives you a list of questions you should be asking if you're considering switching payroll providers.