5 Signs that you Should Change Payroll Providers in 2025

A new year signifies new beginnings. Everyone is refreshed and ready to tackle new opportunities. With financial year-ends just around the corner, this is an opportunity to evaluate costs and whether your service providers meet your needs. But are you applying the same scrutiny to your payroll provider?

“Many companies take a live and let live approach to payroll systems and providers,” says Heinrich Swanepoel, Head of Growth at PaySpace by Deel. “Once they have something in place, they assume it will keep functioning optimally. But in reality, they are spending more time and money keeping less effective systems going, and with that, they pick up more risks. For example, payroll staff often spend enormous amounts managing compliance issues, and they overwhelmingly use manual processes that increase calculation and administrative errors. Just changing that would recoup significant amounts of time, money, and focus.”

Such problems increase the risks of fines, unhappy customers, and disgruntled employees. As the situation worsens, the lack of transparency and integration bloats staff costs and can encourage payroll fraud.

Many of these problems result from payroll providers having outdated digital systems.

“Competitive companies use digital software in smart ways to create efficiencies for their staff and visibility of their operations. But some businesses still rely on old payroll software or something more rudimentary, such as spreadsheets, to manage one of their biggest costs and most crucial employee management tools.”

5 Signs to Evaluate Payroll Performance

Outdated payroll software and payroll providers that use those systems can hold back competitive performance. Here are five ways to evaluate at a glance whether this is happening to your business:

Frequent payroll errors and inaccuracies: On average, 20% of payroll output is inaccurate (https://apo-opa.co/3P6Jbm5), requiring time and money to correct. The most common errors include calculating attendance costs, leave (vacation, paid time off, and sick time), benefits, schedule earnings, and tax. Cloud-native payroll platforms (www.PaySpace.com) reduce that error margin substantially by integrating payroll and employee data from other systems, and automating demanding calculations and workflows.

Constant compliance problems and risks of fines: More than half of companies have faced payroll-related penalties (https://apo-opa.co/3P2tw79), and that figure goes up when companies operate across different tax and employment jurisdictions. A key problem is how onerous it is to request and make legislative changes to a payroll system. Modern payroll systems can automatically update new legislation.

Lack of scalability, self-service, and custom reports: A majority of organisations struggle to scale their payroll footprint and features. 39% say they lack necessary payroll features to support growth (https://apo-opa.co/4gmJxRB), including self-service, personalised ad-hoc reports, and customised forms and fields. Traditional payroll systems struggle to scale and add new features, and doing so often incurs much higher costs.

High software license and management costs: Companies on average waste 50% of software license costs due to unused features (https://apo-opa.co/4gkBMLL). Additionally, many businesses maintain outdated payroll systems to keep their financial records, escalating license and maintenance costs. Factor in the costs of errors due to manual processing, and an old payroll system can become very expensive. More companies are switching to cloud-native payroll platforms for these reasons, as they can take advantage of scalable OPEX-based subscriptions and frequent no-cost software updates.

Poor integration, and fractured payroll and employee data: Over 42% of companies complain that they lack payroll and HR data insight (https://apo-opa.co/4gjdamL), the prime culprit being poor or no integration between payroll and other business systems. Integrating traditional payroll software with other business systems and data sources is expensive and convoluted. Cloud-native payroll platforms have native integration capabilities and create data standards to remove conflicting information and data silos.

Time for a Change?

Companies that use cloud-native payroll platforms (www.PaySpace.com) are reaping benefits such as lower costs, more flexibility, better control over data and legislation, and continual improvements and new features to the base software.

These problems are most often caused by inflexible traditional payroll systems. If your payroll system or provider produces one or more of these issues, it’s worth investigating if you should switch to a better option. One change can have a massive positive impact on your costs, efficiencies, and employee relations.