Business Resources

5 Tips To Efficiently Test Your Payroll Software

Implementing payroll software undoubtedly helps to drive operational efficiency. If your organisation has finally decided to jump on the bandwagon, that is great!


However, before you can enjoy the new time and cost savings, you will first need to ensure a smooth deployment and transition process. As with any new software deployment, you will definitely run into certain challenges and hiccups. While each organisation will have its own set of issues, there are several hurdles that are common across organisations. However, most organisations fail to see that the main theme that underpins the solution to each of these challenges is to have a thorough analysis of your existing payroll operations and processes.


Consider these helpful tips when running your payroll software testing to ensure smooth transition and deployment.

Have a schedule

A full payroll transformation typically means significant operational change. This is likely to disrupt operations and daily processes. Given that both software are not built to talk to each other, this means that you will likely need to build a number of temporary integrations between the new payroll software and the legacy payroll software in order to maintain employee data across both payroll software until you are ready for the complete software transition. This process will definitely take time.

To minimize disruption to your daily processes, you will need to assess the effort, cost and resource capacity that your payroll software deployment will require. With this information on hand, you can then plan out a payroll software deployment schedule so that affected parties are aware of system downtimes and outages.

Work with your payroll vendor and internal team to work out a flexible and realistic schedule for deployment. Aim to roll out your new payroll software at the start of a financial year so as to minimize the need to incorporate previous payroll data. It also provides your team with sufficient time to familiarize with any new processes.

Form a project team

Deploying a new payroll software is not a one-man show. It requires a lot of coordination with internal stakeholders as well as external vendors. Form a project team to champion the payroll software deployment and assign roles to facilitate the deployment process – such as internal communications, UAT testing, and vendor relations and management.

The payroll software deployment project team should also include some of your payroll staffs. Ideally, employees who handle the monthly processing of payroll as well as the payroll manager in-charge of approving payroll activities should be on the team. Not only will these employees be able to verify the accuracy of payroll data on the new payroll software, they can also take this opportunity to familiarize themselves with the new payroll software.

Outline the testing process

Before you go live with your payroll software, you will need to run multiple tests to ensure that your new payroll software is running smoothly. This means that employees data is accurately tracked, payroll calculations are computed correctly, and historical payroll data is being extracted. In short, there is a mountain of processes that needs to be tested to ensure accuracy with the legacy payroll software.

To streamline the testing processes, it would be good to work with your payroll vendor to have a checklist of items that needs to be tested. Payroll items that need to be tested in your payroll software includes new hires and termination payroll runs, salary changes due to promotions, and addition of variable payments such as sales commissions. It might also be helpful to perform bank file testing to ensure that the salary disbursement report file from your new payroll software is compatible with your corporate bank’s requirements.

Consider payroll parallel testing

Alternatively, if your team needs the new payroll software to be up and running as soon as possible, it might be helpful to run payroll parallel testing to reduce the test time. Parallel testing allows the payroll software vendor and the payroll team to run multiple tests simultaneously on the legacy software and new payroll software.

To test your payroll software, it is fairly straightforward. The payroll administrator will first need to export employee and payroll data of a selected payroll cycle from the legacy payroll system before uploading it into the same payroll cycle in the new payroll software. A test run will then be executed on the new payroll software to generate a set of payroll results. This new set of payroll results should then be compared against the payroll results generated from the legacy software payroll for any discrepancies.

Consolidate common issues and errors

When deploying a new payroll software, there will definitely be issues or discrepancies that crop up. In executing the parallel tests or simulation, any issues should be flagged out and consolidated. The list of issues should then be highlighted to the payroll software vendor for rectification.

To facilitate the rectification of errors, it might be helpful to classify the type of errors on the payroll software. For instance, incorrect calculations of certain salary items can be classified as “Incorrect formula”, or calculation rounding errors can be classified as “rounding issues”. This then allows the payroll software vendor to easily identify the root cause of the error and quickly rectify the issues.

Once your payroll software has passed all the necessary testing, it is time to go “live”. Ensure that this is well-communicated to your employees so that they are aware of the transition. Finally, it is crucial that you continually review how your new payroll system is performing with your payroll administrative, your payroll vendor, and any other relevant persons.

The move to a new payroll software is not without its challenges. However, the rewards outweigh the risks. By having a clear end goal in mind and identifying the likely bumps in the road beforehand, you can develop a payroll software roadmap that will enhance and drive internal efficiencies.