How’s your payroll provider working out these days?
It may have started out as a perfect match, but the vendor relationship can start to feel a little lopsided as your business grows and changes.
If you’ve outgrown the capabilities of your global payroll provider, you don’t have to keep suffering through limited services and cumbersome workarounds. Navigating a global payroll provider transition is complex—but that doesn’t mean it’s not the right move.
First, figure out if a change is warranted. Then follow a few key steps to ensure a smooth transition.
Why companies switch payroll providers
The most common reason multinational companies switch payroll providers is that they’ve just plain outgrown the vendor’s services.
You may find yourself patching together a series of solutions to plug holes when you should be building a new ship. Any time you find yourself looking at secondary providers to fill gaps, you should also be looking for providers with more comprehensive service offerings that can handle all your needs.
But, there are other reasons you might benefit from a new payroll partner.
1. No proactive guidance
The right payroll provider helps you to anticipate challenges and recommend solutions—before issues arise. If your company’s structure changes through a merger or acquisition, for example, you could find yourself adding employees from new countries to your payroll.
Payroll can get a little tricky when you’re diving into unchartered waters (or countries so to speak).
Your payroll partner should see this coming and help you to adjust accordingly to make sure all new employees are paid correctly and compliantly. If you’re not seeing this kind of guidance from your vendor, it may be time to transition to a new provider.
2. Limited local expertise
When you’re managing payroll in a multinational business, you’ve got a lot of local legislative regulations and cultural expectations to contend with. Your payroll provider should have in-depth, local expertise to help you mitigate risk across wildly varying political and regulatory climates.
If your partner lacks local chops, you may find yourself blindsided by external forces.
3. Siloed from your internal resources
The best global payroll providers understand that payroll must integrate with HR. It’s critical for the payroll function to provide efficient, intelligent payroll data to inform strategic HR decision making.
If you want to get to a place where you’re able to forecast talent and predict recruiting and training needs, you need a partner that collaborates with and bolsters your internal resources. It might be time to consider transitioning to a new provider if yours operates separately from internal resources—and only according to clearly defined parameters.
4. They’re playing the blame game
Speaking of busting silos, performance outcomes should also be shared between your business and your payroll provider. Multinational payroll is complex. Sometimes audits or other reviews unearth issues neither party could have predicted. A global partner should share responsibility for both successes and failures, making course corrections as needed.
Does it feel like your payroll vendor likes to punt the blame back toward your team? If so, it may be time to move on.
5. You’ve got to fit in a box
Your payroll needs are apt to change as you grow. The right global partner knows their success is tied to yours and evolves with you to meet your changing needs.
But some vendors have a rigid view of your best interest—and will only serve you well if your needs fit into their box offerings.
How to transition to a new payroll provider
So, your vendor isn’t really stacking up, and it’s time to switch payroll companies. Get ready, because the transition is a big undertaking (but choose the right partner, and the hassle will be well worth it).
Follow these tips to make your payroll provider transition smooth and seamless.
1. Clearly articulate your needs
Start by assessing and articulating your needs. Outline your current provider’s services and identify the gaps that are holding you back.
- What are your favorite features from your current vendor, and why?
- What is or is not working?
- Why are you considering changing providers?
Understanding your needs and why or how your provider is not meeting them is the first step in making an informed decision.
2. Understand your options for global payroll services—in depth
Use the information that you’ve compiled to revisit your partner options. Make sure you’ve got a thorough understanding of each provider’s:
Breadth of services:
- Does the provider’s service description cover everything that you need right now?
- Will it cover potential growth in the future?
- Will you need service add-ons, and how much will those additional services cost?
- Is their software compatible with your current software?
- Could you integrate it with other current or future tech solutions?
- How secure is the software?
Customer service experience:
- What should you expect in terms of turnaround times?
- Which channels can you use to contact support?
- Which representatives would you speak with?
- What would happen if a payroll mistake was made?
Approach to the transition:
- How would the company handle the transition?
- What would your responsibilities be during the transition and afterward?
Keep in mind that anyone can look good on paper. Meet with the candidates and discuss your needs in practical terms. Check reviews with a discerning eye (G2, anyone?) and get referrals. Above all else, trust your gut.
3. Mobilize a transition team
Once you’ve chosen a new partner, you’ll want to identify a dedicated transition team to take care of all the details. This team will need to manage everything from data readiness to stakeholder preparation and continual communication about the transition.
Get all the deets on what this team will need to cover off on here: 4 steps to payroll and HCM change.
4. Time the transition right
Transitioning to a new payroll provider takes some time. You can’t flip a switch and expect everything to fall in place.
Your new partner will be able to advise on appropriate lead times (based on your needs and their processes). With those lead times in mind, you’ll need to tell your current provider you’re parting ways.
While it’s never a fun conversation, ghosting them isn’t really an option, so provide clear and ample notice. Thirty days is generally acceptable unless your contract calls for more time.
If you can avoid it, don’t switch payroll companies midyear. While it’s possible, it adds new layers of complexity to the transition. If you do have to switch midyear, confirm with both providers who will be responsible for which year-end tax activities. This will prevent duplicate filings.
5. Get the documentation correct—and tie up loose ends
Your transition team can generally authorize your current provider to turn their documentation over to your new payroll partner. Hint: this makes the whole process quite a bit easier for you.
But if integration isn’t an option, here’s what you need to get together.
Federal tax information:
- Business names
- Past returns
- Tax account numbers
- Payroll registration numbers
Payroll and tax account details
Payroll program information:
- Employee data
- Payroll records
- Terminated employee information (same calendar year)
Forms and providers authorized to access your payroll information
Don’t forget to close out your business with the old provider by reconciling all pending transactions, obtaining copies of records and formalizing cancellation for services and payments.
Transitioning global payroll providers
Change can be scary, but if it moves you in the right direction, you’ve got to make it happen.
If your current payroll provider is struggling to deliver on their promises or your partnership feels stretched to its limits, it may be time for a change. The best way to approach a global payroll provider transition is with plenty of information and upfront planning.
After all, you don’t want to end up in the same boat again any time soon.
If you’re considering switching payroll companies, don’t miss this post: What you need to succeed with global payroll implementation.