Global Payroll Payroll Services

Reasons for Switching Payroll Service Provider

Client Advisor Team Leader
March 24, 2024

However, if your provider fails to meet your expectations incessantly, it is time to switch to a new payroll service provider.

Switching a payroll service provider may appear to be a challenge; however, with a good plan and the right payroll service provider to help you make the transition, you can easily make the switch.

Why Switch to a New Payroll Service Provider?

There may be various reasons to why you may have to change to a new payroll provider. Some of the reasons are listed as below:

  • Outdated payroll system
  • Poor customer support
  • Erroneous salary disbursals or tax statements
  • Hidden Costs

Outdated Payroll System

If your payroll service provider continues to use an outdated software to process payroll for your business, then without a doubt, there are going to be endless problems and errors. Updates and security patches are required for even the  latest software system to run smoothly.

It is almost impossible to fix vulnerabilities in an ageing software even if they are identified giving hackers an opportunity to use the loopholes to access your business and employee data.

Data breaches are not uncommon, 71% of them are financially motivated. Every year organizations or companies pay up to $1 billion each year to ransomware scammers.

Using legacy payroll software can also lead to errors in processing payroll data. Mistakes in salary disbursement or tax calculations can become a common issue. Underpaying or erroneously paying employees can cause unrest in the business. On the other hand, errors in calculating taxes is something that cannot be overlooked.

Poor Customer Support

There are several payroll providers that have a strong customer support in place and provide excellent services to their customers. However, if your payroll provider doesn’t offer good customer support when needed, it may get difficult for you.

There are payroll providers that use a call centre to provide customer support to their customers. There is a long queue with endless Interactive Voice Response (IVR) options that usually don’t get you a satisfactory answer for your query. You may have to wait up to 30 to 40 minutes before you can get through a customer support officer.

When it comes to payroll and tasks revolving around it, it is usually considered a priority. A good payroll service provider should be able to assign a dedicated officer available at all times (especially during office hours) to solve your query whenever required.

Erroneous Salary Disbursals or Tax Statements

None of the payroll systems used by companies are 100% accurate. Since there is human involvement in entering the details, it is evident that, at times, there may be some error. However, with care and re-checking, the errors can be corrected. It is significant that the payroll service provider actively takes quick steps to correct the issues.

It is the frequency of errors that is important. Excessive errors in every payroll, errors in deductions, wrongly calculated taxes, etc., can be hectic. It is impossible for any business to work seamlessly with frequent errors in the payroll. Businesses should take this as a warning and look for a new payroll service provider.

Hidden Costs

There are several instances when businesses have complained about their payroll providers not being quite forthcoming with their fee structure at the time of their initial consultation. They include some fine prints in the contract about which they haven’t informed you upfront.

Being charged for every little thing, such as delivery charges for paper checks or extra charges for processing salary just a day ahead of the actual salary day, etc., adds up to a long bill at the end of the month. Seeing an invoice with a long list of additional fees may be a good reason to switch your payroll service provider.

How to Switch Payroll Service Provider?

Having worked with a payroll provider offers immense benefits. With time, one tends to become comfortable and tries to put off the change. However, if you have already decided to change your payroll provider, then you must do it in the right way. Here are the steps that you must follow to ensure a smooth transition:

Review Your Contract

Always remember to review and read your contract with the existing payroll service provider. Go through the cancellation policy, deadlines, etc., before officially intimating the payroll provider about you cancelling the contract with them.

Select a Good Time

Although a good time to make a switch would be at the end of a financial year so you can have a fresh start with the new payroll provider. However, if you are in a hurry to switch, then wait for the quarter to end. This makes the transition a bit easy and reduces the possibility of errors in calculations and, subsequently, the reports.

List Down Your Requirements

Listing down the services and features that you require or that you are not being provided by your current payroll service provider. Making a list ensures that you don’t miss out on important services when hiring a new service provider. Some of the services that should be on your list include:

  • Latest payroll software and systems
  • Cloud-based technology along with flexible reporting features and easy to use dashboards
  • Integration with other workforce management tools and other departments
  • Employee self-service features for attendance, holidays, personal details, etc.
  • Personalized customer care service
  • Ensured Compliances
  • Other additional features such as direct deposit, check printing, etc. or any other services that is significant for your business


One of the reasons why you decided to switch your payroll service provider is probably because you thought you were billed excessively. Therefore, you must understand the pricing and the fee structure of the new payroll provider. Make sure to discuss everything in detail and read the fine prints too!

Prepare Company and Employee Data – The next step would be to prepare your company and employee data so your new payroll service provider can take over the payroll management system from your old provider. Usually, providers can easily transfer data from one software to the other, but at times, it may not be possible.

  • Employee personal details
  • Pay Rates and deductions
  • Overtime details
  • Employee benefit details
  • Compliance details, including tax returns
  • Any other forms and reports that are required by the new payroll service provider.

Notify Employees

You must inform your employees about the change that you are about to make. Set a time duration for the switch to happen so that the employees are aware of the changes happening, in case they are unable to access their details for a few days or till the switch is complete. All the new features and the usage of new employee self-service should be explained to them once the switch happens.

Check the New Payroll Records

Once you have completed the switch you must carefully check the new payroll records to ensure everything is in place. Conducting regular audits ensures that everything is accurate and effective.

The Benefits of Switching

Switching a payroll provider may sound like quite a task, but once done, there are immense benefits. The process may not be smooth, but once complete, the transition will allow your business and your employees to reap the benefits of a new payroll system. Some of the specific benefits you can look forward to include:

Efficient Work

Outsourcing is all about unburdening yourself from additional work that can be executed better than you. When you have a good payroll service provider, it is likely that your payroll management will be efficient. Good services and easy-to-use features will also make the employees happy.

Less Errors

Automation always poses a lesser risk of errors. With advanced systems and good software, your payroll will be free of errors.

Accurate Reports and Tax Filings

A well-managed payroll system generates error-free reports. Also, your compliances are met on time and taxes are filed on time with the right numbers.

Ease of Access

Switching to a payroll service provider that offers a cloud-based system will allow you to access reports and records from any device, anywhere in the world.

Where to Get the Best Payroll Service Provider?

Having served more than 900 clients across Europe, Asia, Australia and North America, TopSource Worldwide is a leader in providing payroll and global employer of record services to businesses. We have worked with a variety of industries, including manufacturing, pharma, BFSI, engineering, shipping and IT companies. With over 250 experts in the field of IT and payroll, we ensure that we provide timely services to our clients as required by them. With modern infrastructure and highly-advanced security systems, your data is safe with us. To learn more about our services, you can contact us on our details mentioned below.


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Nena Petrovic
Client Advisor Team Leader
Nena Petrovic is the Client Advisor Team Leader at TopSource Worldwide, a leading Global Expansion services provider. She oversees and guides a team of client advisors, who communicate and collaborate with clients effectively. She is responsible for ensuring the accurate and timely processing of client invoices and payroll, as well as developing strategies and maintaining a client-centric approach.

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