How do I review a payroll provider’s error and correction log before buying?

Any payroll operation makes mistakes, so the question is how it learns from them. Ask whether the firm keeps a log at all. If it does, read the entries rather than the summary. Look at the type of error: wrong pay rates, missed deductions, late submissions, duplicated payments. A cluster of the same kind points to a process gap rather than bad luck.

Check the speed and manner of fixes. How soon was each client told? Who paid for any penalties or interest the client incurred, the firm or the client? Ask whether any dispute reached a lawyer or insurer, and whether any matter is still open. Your own lawyer should review those files before you rely on anything the seller says about them.

Then ask what changed after each major error: a new checklist, a second reviewer, a software setting. Compare the log with client departures, since a client lost after a mistake tells you what the mistake cost. Ask who handles corrections today, and whether that person is staying. Ask also whether the firm carries insurance for errors and what claims history exists.

Key takeaways

• Ask for the log itself, with causes, dates and outcomes.
• Look for clusters of the same kind of mistake, since they point to a gap in the process.
• Check who absorbed the cost of past errors, the firm, its insurer or the client.
• Find out what changed in the process after each one.