Do businesses change payroll providers every year?

Do businesses change payroll providers every year?

Switching payroll providers is more common than many businesses realise. Research shows that dissatisfaction with payroll services leads thousands of companies to make the change annually. Below, we highlight why businesses decide to switch providers, providing actionable insights for companies to make informed decisions.

How many businesses change payroll providers yearly?

Research indicates that approximately 1 in 4 businesses change their payroll providers every year. This equates to 25% of organisations globally seeking new solutions, driven by reasons such as inefficiencies, poor customer support, or the need for advanced technology. In the UK alone, an estimated 30,000 businesses make the transition annually, highlighting how payroll services often fail to meet expectations. This turnover suggests that payroll systems are critical to business success, and dissatisfaction can result in swift changes.

Reasons companies switch payroll providers

1. Inadequate customer support

Approximately 40% of businesses cite poor customer service as the primary reason for changing providers. Employers expect quick resolutions to payroll issues, as delays can result in unhappy employees and compliance risks. At PayEscape we have a three ring policy meaning we are there for all customers or enquiries throughout the working day providing excellent customer support.

2. Outdated technology

A survey revealed that 35% of businesses switch due to outdated or inefficient software. With advancements in cloud technology and integration, companies now seek modern systems that can streamline HR, payroll, and time management processes. The team at PayEscape are consistently working on improvements to our integrated software and ways to improve user experience. Book a demo and take a tour of our software today.

3. High costs

More than 30% of employers find their current payroll provider too expensive, especially when additional charges are incurred for services like reporting or setup. These unexpected costs often push businesses to search for more cost-effective alternatives.

4. Compliance failures

Non-compliance with payroll regulations is a significant concern, with 20% of companies switching providers due to errors in tax filings or late submissions. This not only risks fines but damages a company’s reputation.

The cost of ineffective payroll systems

Payroll errors have far-reaching consequences, studies show that:

• 49% of employees will start looking for another job after just two payroll errors.
• 23% of businesses report productivity losses when dealing with payroll mistakes.
• The average UK business spends £3,000 to £10,000 annually correcting payroll issues.

These figures underline the importance of choosing a reliable provider.

What companies look for in a new payroll provider

When businesses decide to switch, their priorities include:

• Accuracy and Compliance: 60% of employers value providers that ensure error-free payroll processing and adherence to UK regulations.
• Integration Capabilities: More than 50% of businesses want systems that integrate with existing HR and time management tools.
• Ease of Use: 47% of employers prioritise user-friendly platforms for both managers and employees.
• Scalability: Companies expanding their workforce need payroll systems that grow with them, a key factor for 30% of businesses switching providers.
• Transparent Pricing: 35% of businesses look for providers with no hidden costs.

Industries most likely to change payroll providers

Certain sectors experience higher rates of payroll provider turnover.

• Retail: With high staff turnover and varying hours, payroll accuracy is crucial. About 30% of retail businesses switch providers each year.
• Hospitality: Similar to retail, the complexity of shift work leads 25% of hospitality companies to seek better payroll solutions.
• Education: Schools and universities require compliance with government regulations, prompting 20% of institutions to change providers annually.

Challenges of switching payroll providers

While the benefits of switching are clear, the process isn’t without challenges, businesses report:

• Data Migration: Ensuring accurate transfer of employee records is critical.
• Implementation Costs: Upfront costs can deter smaller companies.
• Training Needs: Staff may require training to use the new system effectively.

Despite these challenges, 92% of businesses that switch report improved payroll accuracy and satisfaction within the first year.

Why businesses should regularly review payroll providers

Even if a company hasn’t experienced major payroll issues, regular reviews of payroll providers are essential. Industry standards evolve, and what worked five years ago might not be sufficient today.

Key benefits of regular reviews:

• Improved Efficiency: Updated systems can save time and reduce errors.
• Cost Savings: Companies often find more competitive pricing when exploring new providers.
• Employee Satisfaction: Accurate, on-time payroll improves morale and reduces turnover.

How PayEscape simplifies the transition

For businesses looking to switch payroll providers for the new financial year, PayEscape offers a seamless process that addresses common concerns:

• Data Migration Support: PayEscape’s team ensures accurate and secure transfer of employee data.
• Integration Ready: Our software integrates with HR and time management systems, making it easy to streamline operations.
• Scalable Solutions: Whether you have 10 employees or 1,000, PayEscape can adapt to your needs.
• Expert Compliance Assistance: We stay updated on UK regulations, ensuring your business remains compliant.
• Transparent Pricing: No hidden fees – just straightforward, reliable payroll services.

Make the switch this new financial year

The high percentage of businesses switching payroll providers annually highlights a clear trend: companies are demanding better, more reliable services. At PayEscape, we provide those. If your payroll system isn’t meeting expectations, now is the time to explore alternatives. Contact PayEscape today to learn how we can transform your payroll experience.