The Importance of Parallel Run Testing When Changing Payroll Providers

Picture this: You’ve just spent months researching payroll software and then days moving over all of your data. You have eventing set up, but payroll isn’t running the way it should be and employees aren’t receiving the correct pay—yikes.

Unfortunately, this administrative nightmare is one that a lot of small business owners experience after switching payroll providers because they neglect to carry out parallel run testing. Though parallel runs can feel tedious, this teasing stage can help to save you from bigger headaches down the line.

To make sure this payroll snafu doesn’t happen to you, we’ll cover everything you need to know about parallel run testing, including what it means, how to do it, and why it’s so important.

Need more information? Check Out: “Setting Up Payroll: The Ultimate Guide”

What does parallel run testing mean?

If you’re new to the world of payroll, the term “parallel run testing” can sound intimidating. However, carrying out parallel runs simply means running your old payroll software parallel to your new software and then comparing the results—hence the name.

The payroll cycles you choose for this kind of test should reflect normal payroll cycles in order to provide an accurate representation of how the new system will perform during regular payrolls. If you choose to test irregular payroll cycles that involve unusual changes, such as numerous salary increases or new hires, this may increase the likelihood of error. Therefore, it’s important to keep things simple.

How do you carry out parallel run testing?

Though it requires close attention to detail, carrying out parallel run testing isn’t technically difficult. To run a parallel test, you need to complete the following steps:

• All the relevant information for a selected payroll cycle should be exported from the old provider. This includes information such as taxes and benefits.
• The exported information should then be input into the new payroll system.
• Payroll should be run using the new system.
• The results from using the new system can then be compared to the old system in order to catch and address any inconsistencies. 

Who should carry out parallel run testing?

Since the new payroll system is the one that will be used to run payroll from that point on, the parallel runs are usually carried out by the company’s dedicated payroll administrator. If your payroll is run by an accountant or bookkeeper, they should be the one carrying out the parallel runs. This not only provides an opportunity for hands-on training, but it also helps to catch any errors before the new system goes live.

However, carrying out parallel runs does add to the workload of the payroll administrator. Therefore, additional support from others within the organization, or from the new provider’s support team, may be helpful during this transitional stage. Payroll companies have carried out thousands of implementations, so don’t be afraid to ask for their advice when it comes to parallel run testing.

How many payrolls should be tested?

Generally, two payroll cycles are used for parallel testing. It’s best to run these two payroll cycles consecutively to ensure that any errors are caught, addressed, and then re-run.

Of course, every organization is different, so the optimal time and method of parallel testing may vary from business to business.

How should you handle discrepancies?

After running a parallel test for one payroll cycle, it’s time to compare the results from the new and old systems line by line. If you notice a discrepancy, it should be noted, highlighted, and then categorized based on the cause of the error. Some of the common causes of discrepancies can include:

• Entry errors
• Errors from the old system
• Explainable differences (ie. rounding errors)
• Errors attributed to rule creations
• Unexplainable errors

After identifying any discrepancies, these issues should be addressed as quickly as possible. Once corrected, further parallel run testing should be carried out to produce more accurate results. If unexplainable errors continue to persist, you should continue to run parallel tests until these issues are resolved.

Remember, your new payroll system should not go live until you are certain that your payroll is running correctly and accurately. Even if your new provider thinks everything is looking good, both parties should be satisfied with the results before moving forward.