Peter Limone, CPA, CGMA – President and CFO
Choosing a payrolling service provider is much like finding a business partner, someone who will provide expertise, is aligned with your goals, enhances your reputation, is well respected in the business community, and will help grow your business. Ultimately you want to ask the question “will they have your back when something goes wrong?” There are many aspects to consider during your due diligence process. This is by no means a comprehensive list, but it will be a good start to your journey:
Financial stability raises to the top.
If you are a recruiter, a staffing company, or a company that wants to payroll its contingent workforce, wouldn’t you want to know that your payrolling company can fund the payroll and pay for all expenses related to employment? A good first step is to run a credit report from a reputable credit reporting agency such as Dun & Bradstreet. The payrolling company should have a good history of paying its bills on time and show scores pointing to financial stability. These credit reports typically include if the company is subject to any lawsuits. Having a lawsuit on record is not the end of the world, as a matter of fact knowing about any lawsuits can be a good conversation starter to learn more about how the payrolling company manages risk.
Experience in the industry is paramount.
How long has this company been in business? What is the background of the leadership team? What is the longevity of the staff? Is there high turnover? If so, why? Some of these questions are difficult to answer, but some information may be public. For example you may ask for a certificate of good standing. The company should be able to produce this document from essentially any state in which they do business. LinkedIn profiles are a good start for learning about the leadership team and other staff members.
Reputation can make or break a company.
You can search the web for any awards the company may have earned, what type of articles are written about the company, and whether sites like glassdoor.com have any information posted on them. One good source to always check is the Better Business Bureau, just the fact that they are registered with the BBB is good, however a high rating is definitely a plus. Be careful to gain your information from reputable sources. Another good source of reputation information is whether the payrolling service supports community outreach.
Supplier diversity is important to some organizations.
If you are looking for some supplier diversity, there are organizations that will certify diversity of a supplier. As an example, the Women’s Business Enterprise National Council imposes a rigorous process to ensure the supplier is a woman owned business. More information can be found at http://www.wbenc.org/
A high level of compliance is a must for payrolling company.
At the very least a supplier must be an expert in managing risk around payroll, benefits, risk & safety, hiring, employee relations, and termination. Ask for evidence to show that they have managed all these risks for clients. Demand a review of their enterprise risk management program, review their OSHA logs and related procedures and do a walkthrough of their procedures for each compliance area. Ultimately you have to decide whether the level of compliance the payrolling company offers matches your expectations and goals. A mismatch in this area can cause headaches for both the payrolling provider and you as a client.
Think about the employee experience too.
Be sure to review the level of benefits available to the employees. Each payrolling service is different in terms of what they can offer. What type of health care plans do they offer? Are they compliant with the Affordable Care Act? What level of contribution are you as a client willing to fund? Do they have dental, vision, life, or perhaps offer voluntary benefits? This review is a must in order to keep your contingent workforce engaged and satisfied. Another benefit to review is whether they have a 401K plan. If so, it is imperative to find out how the plan is managed and whether the payrolling company offers a match, if they do, is the match a certain percentage or is it discretionary. How is the match funded? You can always ask to see form 5500 in order to get details about the plan.
The above list is by no means comprehensive, however it should help you get started to find a good, reputable payrolling service that you can partner with for the long run.
An experienced employer of record can help you avoid expensive issues that may arise with your contract or contingent workers. Reach out to the friendly experts at Innovative Employee Solutions for further assistance today! – See more at: Innovative Employee Solution
