Smart Payroll Procurement: Ensuring Compliance, Security and Value

Smart Payroll Procurement: Ensuring Compliance, Security and Value

Choosing a payroll supplier is a critical decision for any public sector organisation. Payroll is more than just an administrative task, it is a core function that directly affects employee satisfaction, compliance with legislation and financial stability. Proper scrutiny before partnering with a payroll supplier is essential to ensuring that their software and service is reliable, secure, and capable of meeting your needs. Below are some key considerations to help your organisation conduct effective due diligence when procuring a payroll supplier.

Define Clear Requirements

Begin by developing a detailed specification of requirements, with input from all relevant stakeholders, including HR, finance, IT and legal teams. Clearly distinguish between essential (“must have”) and desirable (“nice to have”) features. During supplier demonstrations, ensure each critical requirement is addressed and supported with tangible evidence. If a particular functionality is vital to your organisation, ensure the supplier demonstrates compliance, not just in principle but in practice.

Check Compliance and Certifications

Compliance with all relevant legislation is non-negotiable. Verify any claims made by the supplier, such as the HMRC PAYE Recognition Scheme for RTI compliant software. Look for internationally recognised accreditations like ISO 9001, which indicates quality management standards are in place and audited by an external body. Do not hesitate to request copies of certificates and ensure they are current.

Recognition within the profession also signals a supplier’s commitment to excellence. When Frontier Software achieved the Payroll Assurance Scheme (PAS) accreditation, Jason Davenport, CEO of the Chartered Institute of Payroll Professionals (CIPP), commented:

“… I congratulate Frontier Software on achieving the Payroll Assurance Scheme (PAS) accreditation. The drive to raise recognition of the payroll profession, and the value of the profession to organisations and public life, is our core purpose at the Chartered Institute. In addition to our congratulations for operating at the high standards sufficient for the Payroll Assurance Scheme accreditation, we also thank you for helping raise the compliance standards through payroll procedures in the profession.”

This type of accreditation and professional endorsement offers reassurance that a supplier not only meets statutory requirements but contributes to enhancing industry wide standards.

Industry Experience and Reputation

Choose a supplier with demonstrable experience in delivering payroll software and/or outsourced services to similar public sector organisations. Industry specific expertise enables suppliers to better navigate unique regulatory or operational complexities. Seek out testimonials or references that address the accuracy of payroll processing, timeliness, problem resolution and overall client satisfaction. A strong reputation and consistent delivery record are good indicators of reliability and trustworthiness.

Ensure Robust Data Security Measures

Payroll data contains highly sensitive personal and financial information. It is essential to confirm that the supplier employs robust security practices, including data encryption, secure data centres and strong access controls. Investigate backup procedures and disaster recovery plans to ensure business continuity in the event of a cyber incident or system failure. Confirm compliance with data protection legislation such as GDPR and ask for evidence of certifications like ISO 27001, which demonstrates high standards of data security.

Evaluate Technological Capability

Modern payroll systems should offer efficient, scalable, and user-friendly. Evaluate whether the supplier provides cloud-based platforms, seamless integration with HR and finance systems, employee self-service portals and comprehensive reporting. The system must be flexible enough to adapt to organisational growth and future legislative changes while remaining intuitive for users and administrators.

Review Financial Stability

Payroll is a recurring and long-term service, making financial stability a key consideration. A financially secure supplier is more likely to provide consistent, uninterrupted service over time. Request recent financial statements to assess long-term viability and ensure they have the capacity to manage large transaction volumes and ongoing system development.

Scrutinise Customer Support and Service Levels

Reliable customer support is essential to resolving payroll issues quickly and efficiently. Assess the supplier’s service structure, including response times, helpdesk availability and escalation procedures. Ensure they offer support during core business hours and consider whether a dedicated account manager will be provided for personalised service and continuity.

To conclude; thorough due diligence in payroll procurement protects your organisation from risks such as financial loss, HMRC penalties and employee dissatisfaction. By assessing suppliers across key areas of compliance, reputation, security, technology, financial stability and support, you can confidently select a dependable partner to support your payroll operations.

Frontier Software has been delivering Payroll and HR solutions across the public sector for over 40 years. Proven, compliant software is used for recording, managing and reporting on people and pay data with a choice of deployment options, including outsourced. Contact us to find out more.

Article originally published on Public Sector Focus December 2025.