4 Important Tips on how to choose a Good Payroll System.
Every smart business will understand the importance of adopting a good payroll system. Payroll automation systems have demonstrated their superiority over manual accounting in almost every aspect, which are not only much faster but also minimizes costly errors, frees up manpower, reduces overhead costs, as well as being able to scale with a business as it grows and/or changes.
However, the suitability of a payroll system also depends on the nature of your company’s business. To help you pick the best system for your needs we’ve come up with five important criterion that you should consider when choosing a payroll system for your business:
1. Understand the direction of your business.
No single type of payroll system fits every need, and it’s important that you pick one that does. Is your company an SME looking to lower initial costs and/or planning to build its mobile workforce capability?
Cloud computing solution providers (a.k.a. Software-as-a-Service, SaaS) are tools that run off a service provider’s servers over the internet, making it unnecessary for users to install the entire software onto their own hardware/servers, which itself will incur a heavy cost. However, SaaS systems are easy to use, come with automatic updates, and do not require a high initial cost as they are paid for on a subscription basis.
Or does your business require better security or more flexibility in redesigning the tool’s capabilities? On-premise solutions (e.g. AutoCount) allow its users to install the entire software on-site, giving them full control of their data and better security.
In addition, the full ownership of the system software, both physically and legally, means that users have the freedom to modify and customize the tool to suit the needs – an important feature that is an asset for businesses with requirements that are likely to differ from the standard mould.
Some payroll systems also feature self-service portals which allows employees to review their payslips and put in requests for leave. This will free up administrative and HR staff to be allocated to other tasks.
2. How will it scale with your business?
It’s not enough for the system to meet a business’s immediate needs, but should also be scalable or adaptable to changes that will eventually happen as a business grows and/or the economic landscape changes.
To be on the safe side, a business should implement a payroll system that it plans to use for at least 4-5 years. Many SMEs opt for SaaS system solutions, which allow the new companies to take advantage of these high-end productivity tools while minimizing their short-term liabilities, as they are paid for on a small subscription basis rather than a one-time purchase.
One of the biggest advantages for SMEs in using SaaS solutions are its optional modules and updates provided by the service providers, typically inclusive in the subscription fee. These updates and modules allow businesses to acquire new features as they need them at little or no additional cost. However, SaaS providers and their products are designed to cater to the mainstream needs to ensure their profitability and may not have what your business needs.
3. How much is the system’s total cost of ownership?
Aside from the initial cost of purchasing the license and installation fees, there are other factors that contribute to the total cost. Knowing about these costs will help you plan your budget better and avoid spending more than you can afford. These include:
- Cost of future system upgrades (or cost of each periodic update).
- Direct manpower cost (salaries and benefits of staff needed to keep the system running; more relevant to on-premise payroll systems).
- Direct non-labour costs (consultancy services, vendor fees, facilities and other operating costs).
- Indirect labour costs (services incurred outside of company payroll; i.e. employees that support the payroll system – distributing paychecks, handling employee questions, etc.)
- Maintenance costs (incurred outside of company payroll; e.g. repair services, replacement parts, etc.)
4. Good, Long-term product support.
Keeping your payroll system running smoothly is essential to a business, and it is important that the product continues to receive support in the form of updates and troubleshooting from the provider and/or community. In addition to the channels of support, such as via email, telephone or website, find out the time schedule it is provided. Is support provided 24/7? Or is it not available on weekends?
Your chosen payroll systems partner should ideally also have a good understanding of local tax laws, government policies, as well as a clear understanding of what your business needs.
Also, find out if the product provider provides training for your employees using the software and services, including refresher courses that address and re-educate said employees on major changes and updates made to the system.
Continued product support is an essential factor to consider as a discontinuation of support services can severely disrupt business operations. A good indicator of the availability of a product’s services in the long-term is its popularity with users and the profitability of the service/product provider.