The history of Paychex’s success is an awesome case study of achieving entrepreneurial success in America. The company was founded in 1971 by B. Thomas Golisano with just one employee and $3,000. Over the next 33 years, the company grew to become one of the premier payroll and HR service providers in the country with nearly $1.3 billion in service revenues in 2004 and over 100 service locations across the country. Paychex acquired two major payroll service providers in the past two years; Advantage Payroll Services, Inc. and InterPay, Inc.
The bottom line here is that you can be completely secure in the fact that Paychex will be there for you in the long run, and you can rely on the fact that they will get it right from the perspective of payroll compliance simply because of their reach in the marketplace.
The Paychex Online Payroll system is a completely web-based solution that offers the flexibility of anytime, anywhere access and alleviates the issues associated with maintaining your in-house payroll services IT infrastructure. Unfortunately, it is not offered as an accountant-centric model.
Average biweekly/semi-monthly payroll processing costs per pay period for Paychex payroll services, including Paychex Online Payroll, are as follows: $33.30 for five employees, $53.05 for 15 employees, $101.55 for 50 employees, and $136.55 for 100 employees. Ancillary services such as direct deposit, human resource services and Taxpay are also available for an additional cost.
LEARNING CURVE – 5 Stars
Paychex Online Payroll has a very intuitive interface that uses folder views for menu selection. Windows display in classic mode with file tabs to move from screen to screen. Its complete payroll processing data-entry screen allows you to adjust current payroll information for all employees from a single screen.
BREADTH & DEPTH OF FEATURES & SERVICES – 5 Stars
The Paychex system is deep in features and functions and offers the following and more:
Message board serves as communication link with Paychex.
PIN number has been added as additional security measure.
Ability to grant access to the accountant.
Only one person is allowed in the system at a time to prevent someone from accessing sensitive payroll data.
A single screen listing of pay period employees allows you to quickly and easily select/de-select employees to be included in a payroll run.
Net to gross paycheck calculation.
Option to pay one employee at a time.
After-the-fact check reporting to record checks you prepared off-line.
Third-party sick pay feature to record and track payments made by third parties.
Employee pay period payroll processing screen provides access to all aspects of the employee’s payroll information from a single screen. It also includes an option to preview check calculation.
Handles independent contractors through the payroll system.
Estimate a check feature to see how a raise in pay will impact an employee’s payroll, etc.
REPORTING CAPABILITIES – 5 Stars
Paychex provides the payroll reports through an integrated service called Internet Report Service. This system allows you to select a list of reports, processed by Paychex, which are then available for viewing or printing. All of this is done over the Internet with anytime, anywhere access. You can choose from a list of standard payroll report bundles, or you can create a customized bundle of reports to meet your specific reporting needs.
This was previously a fee-based service. However, as of April 23, 2004, Paychex has removed all charges from this service. There are two categories of reports: standard reports are usually available for the day after your payroll is processed, and ‘On Demand’ reports are available online within a few minutes of your request.
INTEGRATION / IMPORT & EXPORT – 5 Stars
In addition to a feature-rich payroll system, Paychex offers a wide range of other payroll and HR services including the following:
Restaurant-specific payroll processing service.
Taxpay, which takes care of all tax calculations, payments and compliance reporting. Additionally, they offer the Business Tax Service for non-payroll services.
Garnishment Payment Service handles all aspects of calculating, reporting and paying agency garnishments.
Optional online GL Reporting Service allows you to create and export payroll data files for import into your GL system to record payroll-related journal entries.
Internet Time Sheet to report timesheet information via the Internet for payroll processing by the local Paychex service center.
Human Resource Services include everything from retirement plan administration, worker’s compensation admin-istration, employee handbooks and more.
CUSTOMER SERVICE & SUPPORT – 4.5 Stars
The vendor offers a complete range of support services including the option to take payroll information over the phone in the event of an emergency. The system has an easy-to-follow online tutorial and screen level help database. A particularly noteworthy support feature is that Paychex provides you with the option to have them review payroll for you with a response within two to four hours.
SUMMARY
Similar to ADP, Paychex’s program is one of the most well-established and feature-rich payroll solutions on the market. The primary weakness is that it is not offered in an accountant-centric model and is positioned where the accountant may find himself com-peting directly with Paychex.
2004 OVERALL RATING: 5
Review Attributes
In order to maintain as much consistency
in our reviews as practical, the
payroll software solutions were
rated on the following five areas:
Learning Curve; Breadth & Depth of Features & Services; Reporting Capabilities; Integration/Import & Export; and Customer Service & Support.
We also looked at the vendor’s
history and vision in terms of the
company’s experience, resources
(personnel and financial) and reputation
in the profession and the extent
to which they are focused on payroll
services. We also considered how
the vendor approaches the accountant’s
role in the payroll service delivery
model.
The user interface is the primary
attribute evaluated to rate the
system’s Learning Curve. If
the software has an easy-to-follow
and intuitive interface, it received
the highest rating. On the other
hand, if it is not readily apparent
how and where to find features and
functions in the system, even though
the feature set may be complete,
we assessed a lower rating. This
is a key factor to evaluate because
of the intensive interaction of
the system that is required by your
staff and, in some cases, your clients.
The functionality of a payroll system
is a key characteristic to evaluate
because it will directly influence
the range of clients to which you
will be able to provide payroll
services, as well as the scope of
the services you will be able to
offer. Functionality is measured
in large part by the Depth &
Breadth of Features & Services.
How many options does the package
offer? Does it provide features
that meet the needs of a growing
company such as EFTPS (Electronic
Federal Tax Payment System)? MICR
(Magnetic Character Ink Recording)
and Direct Deposit? An extended
set of these types of features resulted
in a very high ranking in this category.
The following questions all relate
to the rating of the software’s
Reporting capability. What types
of reports does the system produce?
What is the content? How are they
designed? What flexibility is offered
in the sorting, selection and design
of the report contents?
Integration/Import & Export
assesses the packages ability to
integrate with other software applications,
such as client write-up, the client’s
accounting system, HRIS (Human Resource
Information Systems) and other applications
to minimize data entry and optimize
the potential to leverage the information
flow into and out of the payroll
system.
The true measure of a software’s
value is not limited to the program
itself, it is heavily influenced
by the vendor’s ability to
help you use and apply it. All it
takes is one frustrating afternoon
of system problems on a day when
multiple client payrolls need to
get out the door and you can’t
get the help you need from the vendor
to leave you with a long-lasting
distaste for the entire system.
We have done our best to rate the
vendor’s ability to deliver
Customer Service & Support,
but at the end of the day you need
to conduct your own due diligence
on this attribute and talk to a
few client references about their
experience with the vendor in this
area. It is one thing for a vendor
to say what kind of support they
offer, it is quite another to deliver
it. We have included the vendor’s
direct support of the accountant
in terms of marketing and practice
aids to help establish a payroll
service bureau style offering in
this category.
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