The ultimate guide to switching payroll providers


Payroll is often the largest expense for any organisation, as well as the highest risk for compliance and financial burden. With this in mind, you want to be confident in your payroll provider.

If you have concerns about your payroll provider, you may be considering switching to another managed payroll service, but aren’t sure where to start. Switching payroll providers can be daunting, but it can also be crucial in terms of efficiency, cost saving, and ensuring your business is receiving the best possible service.

Here we discuss the reasons that you might consider switching to a new managed payroll provider, how to decide which new payroll provider to switch to, and some tips you should consider before you make the move.

Why switch to a new managed payroll provider?

Often, businesses decide to switch to a new managed payroll provider or payroll outsourcing service because they have had a bad experience with their current provider. Issues such as mistakes in payslips, poor customer service, or high costs are common reasons for wanting to switch. However, other businesses may simply want to switch to a new managed payroll provider because their workforce has grown.

Before you start looking for a new payroll provider, it’s a good idea to make a list of what you like and dislike about your current provider. This should give you an idea of where the problems and gaps are – these are the things you’ll need to ensure your new payroll service can provide.

Discover which payroll provider is best for your business in our downloadable guide. 

What to look for

Some key factors and features to look out for in a new payroll provider include:


If you are using a managed payroll service or payroll outsourcing, then costs usually depend on the size of your team- the bigger your team, the higher the cost of the service. Costs also depend on whether you will be using a fully-managed payroll service or a part-managed service.

Have a chat with your preferred payroll providers and ask them for a ballpark figure on costs based on the size of your team: this should give you a good idea of which providers are value for money, and will help you budget for when you switch. You can ask the payroll provider to give you a rough cost per payslip, or average monthly cost to cover the whole team.


Payroll is such an important part of your business- it’s vital that your new payroll provider is professional and experienced in what they do. Look for payroll outsourcing services which are delivered by a team of expert consultants who are CIPP accredited and experienced in the full end-to-end process. A good managed payroll provider will do more than just ‘handling your payroll’. Instead, they will take the time to understand your business, what you do and what you need now and in the future.


As a business owner, you already have enough plates to spin without having to get to grips with an unnecessarily complex payroll process. If you’re considering a new payroll provider but their processes seem complex, it’s probably a red flag.

Choosing a provider who offers an easy-to-use payroll system will make setup time much shorter, so you can get started quickly and adapt to using the system easily.

Customer Service

One of the primary blockers to businesses switching their payroll provider is that it feels like a daunting task to undertake without support. This is why when you’re looking for a new payroll provider, customer service and support should be at the top of your list.

Only consider switching to a new provider who can help you make the switch, and ensure a smooth transition. Your new managed payroll provider should be able to help you with initial setup, training, data entry, onboarding, and general support.


Look for a managed payroll provider who can fit the unique needs of your company. No one solution fits every business, which is why it’s good to look for a provider who can take on as much, or as little, of your payroll as suits you. Perhaps you require support for your in-house team with month-end processes, or maybe you need a fully managed payroll service. Look for a flexible payroll provider who can accommodate your needs.

Understanding your existing software

When switching payroll providers, it is pertinent to choose a new payroll service who understands integration with existing software. Using a payroll provider who can ensure that your new payroll process complements your existing accounting software will save you time and money.

Tax compliance

Payroll tax compliance rules are constantly changing- for example, all tax records and returns now need to be ‘Making Tax Digital’-compliant.

It’s now more important than ever to choose a provider who is tax compliant.
Because payroll impacts taxes and workplace benefits, choosing a supplier who isn’t tax compliant or who makes filing errors can result in fines from HMRC.

Learn the key factors to consider in a new payroll provider in our downloadable guide. 

Tips for switching payroll providers

1. Consider the best time to switch

Whilst there is no ‘perfect’ date to switch payroll companies, it’s a good idea
to make the switch at the end of the tax year (around 5th April). If you can delay switching until then, this can be the ideal time to do it, as it means you won’t have to designate year-end tasks to your new payroll company.

Don’t worry too much if you can’t wait until the end of the tax year though- you can switch at any time. In this instance, the best time to switch is at the beginning of a new quarter. If even this isn’t possible, then wait until your employees have been paid and make the switch after that to avoid delays with payroll that month.

2. Be clear on how the migration will work

Speak to your new provider about how the migration will work. Make sure you’re clear about who will handle the migration and admin- will it be them, or you? Some payroll providers will manage the whole transition for you whereas others won’t, so if this is important to you, make sure to look for a payroll provider who can handle the migration and implementation to a new system.

3. Leave enough time to plan

If you’re considering moving to a new payroll outsourcing provider, then make sure you leave yourself enough time to gather all your historical data including employee details, payroll records, and business information.

You should also let key stakeholders (such as your staff) know that you will be
switching. This will ensure a smooth transition and avoid any confusion.

Save a copy of these handy tips by downloading our payroll guide. 

How Phase 3 can help with your payroll

Phase 3 is an experienced provider of managed payroll services. From support with month end processes through to fully managed payroll services, Phase 3 can help.

Phase 3’s award-winning team has been named as Payroll Provider of the Year
2021 by CIPP and achieved the Payroll assurance scheme accreditation. On top of that, Phase 3 holds accreditations for Cyber Essentials, ISO27001 for Information Security and ISO9001 for Quality Management.

When you work with Phase 3, you can be assured that your payroll outsourcing services are delivered by a team of expert consultants who are CIPP accredited and experienced in the full end-to-end process.

If you are thinking of switching payroll providers and have any questions about
costs, migration, or what you need to do to switch, please get in touch today.

Free payroll guide – download it now!

Do you need more advice?

Contact us today to speak to our award-winning team who can talk you through your options.

We can help with your end-to-end payroll software implementation.

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This guide was written by James Proctor, Director of Consulting and Services at Phase 3, an independent HR and payroll consulting and services provider that helps organisations implement and master HR and payroll software.

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Written by : Laura Lee

Laura’s role as Head of Marketing sees her continually looking for new opportunities to tell the world how great Phase 3 is.

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