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Expert Tips for Smooth Transition to Payroll Software

Introducing payroll software can significantly increase operational efficiency for organizations. If your company has decided to adopt payroll software, congratulations! However, before you can reap the benefits of time and cost savings, you must ensure a smooth deployment and transition process. Like any new software deployment, you will encounter challenges and obstacles. Although each organization will have its unique set of issues, several common hurdles exist. However, many companies fail to recognize that a thorough analysis of their existing payroll operations and processes is the underlying solution to each of these challenges.

To ensure a smooth transition and deployment when implementing payroll software, consider the following helpful tips during your software testing phase.

Schedule

A complete payroll transformation typically results in significant operational changes that can disrupt daily processes. As the new and legacy payroll software are not designed to communicate with each other, temporary integrations between the two may be necessary to maintain employee data until you’re ready for the complete transition. This process takes time, and to minimize disruption, you should assess the effort, cost, and resource capacity required for payroll software deployment. 

With this information, you can create a deployment schedule that informs affected parties of system downtimes and outages. Work with your payroll vendor and internal team to develop a flexible and realistic schedule for deployment. Ideally, aim to roll out your new payroll software at the beginning of a financial year to reduce the need to incorporate previous payroll data, giving your team sufficient time to familiarize themselves with any new processes.

Form a project team

Implementing new payroll software is not a one-person job; it requires coordination with internal stakeholders and external vendors. Create a project team to lead the payroll software deployment and assign roles to facilitate the deployment process, such as internal communications, user acceptance testing (UAT), and vendor relations and management. The payroll software deployment project team should include some of your payroll staff, ideally employees responsible for monthly processing and the payroll manager in charge of approving payroll activities. These employees can verify the accuracy of payroll data on the new payroll software and familiarize themselves with it.

Outline the testing process

Before going live with your payroll software, multiple tests are necessary to ensure it runs smoothly. These tests verify that employee data is accurately tracked, payroll calculations are computed correctly, and historical payroll data is extracted. It’s best to work with your payroll vendor to create a checklist of items that need to be tested, including new hires and termination payroll runs, salary changes due to promotions, and the addition of variable payments, such as sales commissions. Bank file testing can also ensure the salary disbursement report file from your new payroll software is compatible with your corporate bank’s requirements.

Consider payroll parallel testing

If your team needs the new payroll software up and running as soon as possible, consider payroll parallel testing to reduce testing time. Parallel testing allows the payroll software vendor and payroll team to run multiple tests simultaneously on the legacy software and new payroll software. The payroll administrator exports employee and payroll data of a selected payroll cycle from the legacy payroll system before uploading it into the same payroll cycle in the new payroll software. A test run is then executed on the new payroll software to generate payroll results, which are compared against the payroll results generated from the legacy software payroll for discrepancies.

Consolidate common issues and errors

When deploying new payroll software, discrepancies are expected. During parallel tests or simulations, any issues should be flagged and consolidated. The list of issues should then be highlighted to the payroll software vendor for rectification. To facilitate the rectification of errors, it may be helpful to classify the type of errors on the payroll software, such as “Incorrect formula” for incorrect calculations of certain salary items or “Rounding issues” for calculation rounding errors. This allows the payroll software vendor to quickly identify the root cause of the error and rectify it.

After completing all required testing, it’s time to launch your payroll software. Make sure your employees are informed of the transition. Additionally, it’s important to regularly evaluate the performance of your new payroll system with your payroll administrators, vendor, and other pertinent individuals. 

Adopting a new payroll software can present difficulties, but the benefits are greater than the potential risks. With a well-defined objective and a proactive approach to addressing anticipated challenges, you can create a payroll software plan that improves and optimizes internal processes.

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