Why waiting until April to change payroll software is like queuing for petrol
As an accountant, when’s the best time to switch payroll software?
Congratulations - 100,000 imaginary points if you picked any month that wasn’t April or the end of January.
Half marks if you said January - because that’s tax return season.
If you answered “when I’m less busy” then realistically, you’ll probably never get round to that switch!
Switching payroll software in April is like queuing for petrol - there isn’t a fundamental shortage of payroll software in April, but if everyone wants it at the same time, there’s less support to go round and a lot more queuing.
April is not the best month to switch payroll software for 4 main reasons:
- You’ve probably forgotten how busy you actually are in March and April
- Payroll implementation teams are at their busiest in April
- Opening balances really aren’t a significant issue when switching payroll, and
- It’s October - why hamper yourself for another 6 months?
2 years ago we had a practice who needed to migrate a couple of hundred payroll clients in May (because their licence expired on their old software). It was a relative breeze, they didn’t have too much going on, and the KeyPay team wasn’t overwhelmed with April Tax Year End support requests. It’s always good to go against the herd.
Large businesses know this. Yes, large businesses generally only have 1 payroll to move - but it is usually complex and with hundreds or thousands of employees (and opening balances).
And when do large businesses think the best time is to switch payroll software?
Definitely, absolutely not April.
Often 1 January, July, September, October and November are popular months. Hardly ever April.
Why the difference in perspective between accountants and larger businesses? Probably, because larger businesses have the luxury of a project manager and plan for when their resources will/won’t be available.
And while a project manager might be a luxury, the process shouldn’t be any different - after all, you’d urge your clients to plan if you were advising them.
Cast your mind back 12 months... Were you fed up with working from home on a desktop payroll software?
Were you looking at cloud payroll software? Did you make a decision on who you’d switch to?
Did you then decide to wait until April because “it’s easier to switch at the beginning of the tax year”?
And did you actually switch?
Many who deferred until April still haven’t switched. Most who started the process last autumn successfully completed their switch on or before April.
With furlough finishing, there is a window for many practices to switch now. But even with the best of intentions, there is still the tendency to put change off until the next tax year. But, opening balances are no longer the complication they once were. For once, the HMRC has actually (inadvertently) helped the switchers.
These days, the basic model is that you pull off your Final Payment Submission (FPS) from your current software, put it into your new cloud software and add in a few extra data fields for each employee in bulk (normally start date, bank details and pension information, where applicable).
Done and dusted.
Do you have lots of very similar setups (director only, small salaried businesses)? Excellent, then you can set up the business quickly just by putting in the Company House Registration Number and using a template to set up the new business.
It’s fast, it’s efficient and the time you spend moving over the client will be paid back within 1 or 2 payroll cycles, due to the time saved on not manually managing pension uploads, payslips, client reports, tax payment reminders, journal entries etc.
But what if you use Sage 50?
Yup - Sage cunningly doesn't let the owners of the data access the FPS. That makes it harder to move right?
Nope - pull down 3 reports, upload them into KeyPay and you’re away (even easier than the FPS route to be honest).
Simple in theory; however in reality, practices don’t have a clear single period to migrate businesses. But there’s nothing to say that you need to move all of your clients before April.
Move the easy ones - move the directors, the small clients. Leave the really complex ones to April if you need to.
Remember, the best time to move is when you are less busy. That may be 2 or 3 periods over a number of months. It can be a consolidated period, but it doesn’t need to be.
Most of the practices that move successfully, will move in stages. Their last clients move in April, the rest move in batches over 2-3 months over the summer/autumn periods.
The key thing is to tackle it in the same way that you would advise a client to - in manageable stages, each of which confer an advantage/efficiency saving along the way.
Once practices have migrated, we regularly see them stabilise numbers for a couple of months and then watch their payroll numbers start to grow bit by bit each month.
Whereas, often the ones who say they will wait to move until April we have a further conversation within the subsequent autumn when they say “this time we really must move, we’ve wasted so much time this year on payroll”.
Find out more about how you can switch to KeyPay using an FPS (or the Sage reports) by trying KeyPay for free.
Get 60 days of KeyPay free as an AccountingWEB reader - all you have to do is sign up for a free trial, and enter code ACCOUNTINGWEB when adding your first business to the platform.
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