Payroll software buying checklist for small Asian firms

This payroll software buying checklist helps a small firm test a tool before signing. Payroll errors hurt staff first and your own time second. A demo will always look smooth, so bring real cases and watch what the software does with them.

Start with one rule. Buy for the country you pay people in, not for the longest feature list. Then run the five tests below, in order, with your own sample data.

1. Test the local statutory rules first

Ask the vendor to run a sample pay run for your real staff mix. Do not accept a slide that says the software is compliant.

Take Singapore as an example. Employers must pay Central Provident Fund (CPF) contributions for employees who are Singapore citizens or permanent residents and earn more than $50 a month. Your tool should know who is covered and who is not. It should also handle age bands, because rates change with the employee's age group.

Ask how the vendor updates rates. A good answer names who watches rule changes and how fast an update reaches your account. Ask for the update history if they have one.

Check the calendar too. CPF is due on the last day of each month. If payment has not arrived by the 14th of the following month, the CPF Board can begin enforcement. Late interest is 1.5 percent a month, with a minimum of $5. Your software should show these dates and warn you early.

Sources: Central Provident Fund Board, pages for employers on how much CPF to pay, and on paying CPF contributions on time.

2. Check that payslips meet the law

Singapore requires itemised payslips for employees covered by the Employment Act. The rule has applied since April 2016. Open a sample payslip and check the fields one by one.

It should show the employer and employee names, the payment date, the salary period and the basic salary. It should show allowances, bonuses and other extra payments, plus fixed and one-off deductions. If an employee does overtime, it should show the overtime hours and pay. It should end with the net salary. For hourly, daily or piece-rate staff, it should show the rate and the hours, days or pieces.

Timing matters as well. Give the payslip with the salary payment. If that is not possible, issue it within three working days. Ask whether the tool can email payslips to staff on pay day, and whether it keeps a copy of every payslip you issue.

Sources: Ministry of Manpower, itemised payslips guidance for employers.

3. Look at who can see and change what

Pay data is private. In a small firm, one person often runs payroll, and a second person should still be able to approve it. Ask for roles. At a minimum you want one role that prepares pay, one that approves it, and one that can only read reports.

Ask for a log that shows who changed a salary, a bank detail or a deduction, and when. Ask whether the tool supports two-step sign-in. Ask where the data is stored and what happens to it if you cancel.

Try one trap during the demo. Ask the vendor to change an employee's bank account as a preparer, then see whether anyone else must approve it.

Sources: vendor product pages and demo accounts, which differ by vendor and should be checked directly.

4. Make sure you can get your data out

You may change tools one day, or hand records to an accountant. Ask for sample exports before you buy. You want pay run summaries, payslip copies and year to date totals in a file you can open in a spreadsheet.

Check the bank file as well. Ask which banks the tool supports and whether it produces the file format your bank accepts. Ask for a test file and send it to your bank contact before the first real pay run.

Also ask how the tool connects to your accounting software. A manual copy and paste step every month is a place for errors.

Sources: vendor product pages and demo accounts.

5. Judge support and total cost

Payroll fails on pay day, not on a quiet Tuesday. Ask what hours support runs, which languages it covers and how fast it answers a pay day problem. Ask who answers: a local team or a call centre in another time zone.

Get the full price in writing. Ask about per employee fees, setup fees, charges for extra pay runs, year end filing, and any cost for exports or extra users. Ask what happens to the price when you go from 8 staff to 20.

Finally, ask for two customers in your country with a similar size and call them. Ask what went wrong in the first three months.

Sources: vendor pricing and support pages, which are published by each vendor.

A short scorecard to take to the demo

Give each test a score from 0 to 2: 0 for fails, 1 for partly, 2 for passes. Any 0 on the statutory rules or payslip test should end the talks. A total of 8 or more out of 10 is a reasonable bar for a small firm. Run one full test pay run before you move your real payroll.

This page offers general information only. For current payroll rules, ask the Ministry of Manpower, the CPF Board, or an accountant.

Sources: the editors' own checklist, built on the official guidance above.