7 Essential Features to Look for When Upgrading Your Payroll Infrastructure
Replacing a legacy payroll system should be straightforward. Pick something modern, migrate your data, train your team. But most companies that go through this process find themselves six months later still running manual reconciliation in spreadsheets. The problem isn’t the upgrade itself – it’s that they didn’t know what to demand before signing the contract.
Here are seven features worth considering before you commit.
Automated Legislative Updates
Tax bands change. Statutory pay rates change. Student loan deduction rules change. Pension reporting requirements change. And you know that. What you might not know is just how quickly many payroll and HR systems can grow outdated and out of compliance when those changes do happen.
Look for legislative patching built directly into the software – meaning rate changes are applied automatically when they take effect, not when someone on your team notices the guidance has been updated. This single feature removes an entire category of compliance risk from your plate.
Deep Integration With HR and Time-Tracking
Payroll is not a separate entity. If your program cannot communicate with your HRIS and time-tracking systems via a proper API, you will need to manually copy data from one system to another. This is where mistakes happen.
Automating the payroll and time-tracking process can reduce payroll processing costs by up to 80%, as the most common reason for this is the manual input of errors and error identification (American Payroll Association). This figure is not surprising to those who have had to correct an error in salary checks that was caused by a spreadsheet copy error.
An integration layer is also important for accounting. If you have to enter payroll totals manually in your financial system every month, you will be exposed to the risk of double entry on both sides.
A Self-Service Portal That Employees Will Actually Use
The majority of payroll queries are mundane. “Can I get another copy of last March’s payslip?” “Where’s my P60?” Each of these queries costs you time – as well as the employee asking the question.
An effective employee self-service portal eliminates that friction altogether. People login, get what they want, and HR doesn’t come into it. Often, the ROI of this particular feature is unfelt because the savings are spread over hundreds of tiny interactions rather than one single high visible cost.
When you’re going through your portal options, pay special attention to the mobile use of it. If it’s really a desktop experience, you can depend on a low number of users no matter how good that back end really is.
A Shift Away From Manual Processing
The largest improvements come from moving from a spreadsheet-based payroll to a truly automated system. Modern Payroll software serves as the central repository for all employee financial data — gross-to-net calculations, application of the tax code, deductions, BACS payment files, etc.
All managed in a single system with complete audit trails indicating who made a change and when. And with audit trails: it’s more important than most teams assume. When something in the payroll goes wrong (and something always goes eventually), being able to track exactly what occurred and when is the difference between making a fast fix and experiencing a full compliance audit.
Security That Matches The Sensitivity of The Data
Payroll data remains among the most sensitive data that your company houses. Bank account details, salary numbers, personal identification: all of this must be protected at a level that all that warrants.
Data at rest is protected with AES-256 encryption as a minimum. You’ll also want to know how they manage access controls, how data protection laws and regulations cover data management, and what their breach notification process is. These are not conceptual risks. Payroll is a high-profile target.
Ask vendors directly: what happens to your data if they get hit by a ransom? If the answer is vague, run.
Reporting That Supports Decisions, Not Just Compliance
Many payroll systems can generate the reports you are mandated by law to produce. But far fewer can provide you with up-to-the-minute insights into your labor costs by department, or allow you to monitor key statistics such as gender pay gap data on a continual basis.
It matters if you want your HR team to be more strategic than administrative. A reporting layer that can expose this data to those that need it, without requiring bespoke exports, will put better information in front of those making resourcing and remuneration decisions.
Scalability and Disaster Recovery
A solution that may be functional for 50 employees but starts showing cracks when you hire 300 isn’t really infrastructure – it’s a stopgap. So, before making a decision, you should have a sense of how the system or platform will accommodate an increase in headcount. More importantly, if your needs do grow, does the cost become prohibitive?
Similarly, have you thought about what ensures that your payroll will run on time if there is a hardware failure or other local issue? Cloud-based payroll can guarantee service continuity because the architecture is built to include redundant systems. It’s not just an inconvenience when payroll is late – people count on getting paid. A single episode of not being able to meet that commitment puts you in a really precarious situation.
The hidden cost of a bad payroll system isn’t always visible in a single line item. It’s distributed across error correction, compliance exposure, HR time spent on admin, and the slow erosion of employee trust when things go wrong. A proper upgrade addresses all of that – but only if you know what to ask for going in.
