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Payroll Outsourcing – Payroll Implementation Process

So you’ve decided that payroll outsourcing is the right move for your business – but what can you do to ensure that the payroll implementation process runs smoothly?

It’s fair to say that the transition can be a little daunting in itself, without worrying about something going wrong. Before you hand over your payroll responsibilities to an outsourced payroll provider, here’s a quick guide to getting it right.


    Any reputable payroll outsourcing provider should be committed to supporting you throughout the process, setting up a robust payroll implementation project plan so that you and your team know exactly what to expect at every stage. It’s not just a case of ‘handing over the keys’ and leaving them to take over. It’s a two-way street: you’re about to embark on a change project involving new technology and new processes that will have a significant impact on your business, so communication is key.

    While you need to ensure things are managed well at your end, your provider should also be on hand to answer any questions and help calm your nerves if you have any concerns – no matter how small.

      Payroll implementation and your people

      Any business transformation project requires all affected parties to be involved in the journey if you want to be sure of success – and no nasty surprises down the line. Don’t just think of direct impacts either, you need to think in broader terms.

      For example, any employee who may need access to payroll data in order to fulfil even the smallest part of their role will have a vested interest in the outcome, so make sure nobody is overlooked.
      It’s important to ensure that all stakeholders are involved throughout in order to mitigate potential risks.

      If you’re not thorough, you could find information and data that someone in your business needs has gone missing – such as a crucial report being deleted in error, subsequently impacting a team member who relies on it to do their job.

        The payroll implementation process – 5 simple steps to success

        Every payroll outsourcing partner will have their own implementation project plan and go-live process, but all will have some things in common.

        Whoever you choose to work with, here are five standard stages of the payroll implementation process that you’ll face during the transition, along with some tips to help you get the best results as you navigate your way through them.

        Payroll outsourcing launch

        During the launch phase of the payroll implementation process a reputable payroll provider will assign you a personal project manager who’ll work with you to develop an implementation plan. The first step is to build an in-depth understanding of your current position, including:

        • Your internal payroll processes
        • Your existing technology
        • Third party software integrations
        • Current licenses and expiration dates
        • Any specific issues you’re experiencing
        • Any future considerations

        It’s crucial that you provide your project manager with as much information as possible, being clear about your expectations - including timescales - and outlining any specific requirements you may have, such as retaining in-house control over certain aspects of your payroll management.

        This initial planning phase is also essential in order to engage the right people to be part of the implementation team – successful projects are built on good relationships and communication after all. Your project manager will need to know any team members who will be key to the implementation and also those who may be impacted by the changes and therefore need to be kept in the loop.
        It’s important that the payroll implementation team is carefully selected, both from an internal position and your payroll outsourcing provider. A good cultural fit and team dynamic will help things run much more smoothly – remember that you’ll be working together for a long time.

        You also need to consider availability of those involved in order to create a realistic schedule that suits both parties. Once the key team has been selected, your project manager will need a good overview of their capacity over the coming weeks so that they can create a timeline for the implementation plan. Make sure that everyone has a copy of the implementation plan once it’s been approved so they can allocate the time required to play their part in-line with the activity schedule.

        Payroll discovery stage

        This stage of the outsourced payroll implementation process must take place before any new system can be put into place. Every business is different, so your chosen managed payroll provider will need to know the ins and outs in order to ensure the right solution and set-up for your organisation.

        They’ll need to know:

        • The make-up of your workforce
        • How they get paid
        • When they get paid
        • Any idiosyncrasies unique to your business model

        This is also a good time to ensure that all of your employee details/records are up-to-date and that there are no inconsistencies in your pay policies e.g. overtime calculations across different departments/shift patterns.

        At this stage, your project manager will also be looking for opportunities to streamline your payroll processes too. By developing standardised, repeatable and automated processes, they’ll be able to create a system that is as efficient and accurate as possible.

        Once they’ve created a plan of action, they’ll bring all the project members together to run through their recommendations in terms of the system, its functionality and set-up. This is usually done via a workshop, where everyone has the chance to ask questions and ensure they approve of the plan before moving on to the set-up stage.

        Your payroll outsourcing partner will talk you through the new system, detailing how it will work and the data they’ll need to be provided with in order to implement it effectively. After everything is clear, it’s time for your team to start collating any data required, so you can keep to the schedule of works and make sure that your outsourced payroll partner has everything they need in order to progress.

        Payroll system set-up

        The set-up process is a double-pronged approach – getting both systems and people up to speed. A good payroll implementation project plan will have these aspects running concurrently in order to save time and get things up and running as quickly as possible.

        With the payroll system agreed, your provider will go to work getting everything in place and set-up according to the agreed plan. This will involve implementing new equipment and payroll software, and integrating any other third-party systems.

        Every aspect of your payroll must be taken into account, including:

        • Pay
        • Pensions
        • Benefits
        • Tax and national insurance contributions
        • Shift allowances
        • Overtime calculations

        While the technology is being implemented, your payroll outsourcing partner will also be rolling out a training programme, ensuring that every employee within your business who may need to access payroll information is familiar with the new system. The training process should cover all the essentials, such as:

        • A full demonstration of the system
        • A chance to try the system firsthand
        • An explanation of the system’s functionality and capabilities
        • What’s changed from the previous system
        • A question and answer session to clarify understanding 

        System testing

        The importance of this stage can’t be underestimated – both from an internal and provider point of view. Nobody wants a system to go live before putting it through its paces and risk issues raising their heads a little further down the line.

        Once the system has been configured and all involved parties trained in its use, it needs to be rigorously tested to ensure it’s completely fit-for-purpose. Your team will have the opportunity to review the interface from their new position of understanding, and your provider will be able to evaluate user acceptance and iron out any potential problems that may be highlighted during the testing process.

        As soon as the system has passed this stage of testing, it’s time to migrate your payroll data from the old to the new. Once in place, the system can now be further tested and assessed as if it were live (undergoing a specific test called a ‘parallel run’) but your existing payroll system will also be kept active and functioning to prevent interruptions to processes, while also allowing for parallel testing to be conducted.

        With both systems accessible, your team and your provider’s team can compare systems and check that the new system is performing as required and expected. It’s worth bearing in mind that data anomalies often occur at this stage, as the migrated data isn’t live – but during this phase, the testing team can identify any inconsistencies and manage them accordingly before the new system is launched in entirety.

        Payroll system go live

        With the new system in place, your team fully trained, and everything tested, it’s time for the final stage of your payroll implementation plan – go live.

        This is the time to ensure that everyone knows what’s about to happen. Your payroll outsourcing partner should be encouraging you to communicate the changes business-wide, not just with the employees directly impacted – payroll is about every employee, so you need to keep everyone informed.

        You’ll also need to provide all necessary team members with instructions on the system, their unique login details and any information regarding changes they’ll come across in the new system compared to the previous one. Remember that the aim is to mitigate any hiccups or issues once things are running, so dedicate a little time to providing all the information needed to your team.
        As soon as the system goes live, you’ll probably feel a little anxious about your next payroll run – this is completely natural after such a big change within your business, so you’ll need the reassurance that your provider is there to offer their help and support during the initial transition.

        With this in mind, you should expect a period of ‘hyper care’ from your payroll outsourcing partner, with their team on hand to guide, advise and assure you any time you need it, as soon as you need it. Don’t be afraid to ask them anything at all, their job is to ensure that the roll-out goes smoothly and that you have all the information and knowledge you need to relax while they run the show.

          The secret to a successful payroll implementation plan

          While these key steps to successful implementation are the essential backbone of outsourcing to a new payroll service provider, the true secret to an effective roll-out really lies with the ongoing input and involvement of your people.

          By keeping communication open, ensuring everyone’s informed and by engaging those affected at every stage of the journey, these steps will all fall into place much more easily. Adopting new processes and technology can often be a distraction but by keeping your team onboard, you can manage this phased approach with both parties progressing at the same speed – while ensuring no unexpected surprises along the way.

          It also enables faster acceptance of the new system, minimal disruption and a smoother, hassle-free transition.

          Ready to transform your payroll & HR operations? Get in touch today to discover what savings you could make by switching to our outsourced/managed payroll service.