Reducing Payroll Processing Fees - What's Your Best Experience Negotiating with ADP?

ADP had an innovative model about 15 years ago. Not saying it has declined. But people have caught up and there are now alternatives. My recommendation is to document your needs and issue a RFP to other payroll processing companies and ADP.

The process can't hurt and you will have one of three outcomes -

1) ADP will be concerned about loosing a customer and begin to negotiate.
2) You will realize that your current pricing is accurate, as it reflects what the market requires.
3) You will identify someone that can fill your needs better, faster, and for less expense than your current provider.

Just keep in mind that when you perform your analysis to find your optimal provider, if that company is not ADP, please factor into the equation the expense of de-coupling your relationship and the expense of starting a new relationship.

There is a plethora of regional payroll companies that can and are providing many of the services that ADP purports to provide at very competitive rates.

One of the aspects that I have found is that customer service is far better at these smaller shops then with the behemoths, and that in and of itself is worth a couple of basis points on the price differential.

Regis makes a good point about the cost of change, which again history shows a year-end move to be easiest.

My best negotiating tool with ADP happened after I switched to Paylocity. They made the transfer easy, didn't charge me for every request I put in, and I had as much or as little control of things as I wanted. A few months into my new relationship ADP offered to cover the costs of switching back plus a free year of service.

We stayed with Paylocity.

I would agree with Wayne, that there are now a lot of competitors who can match or exceed what ADP provides. Take the time to speak to some of them, and if you decide to transfer service providers, try to make your switch at year end.

Competition is always a great way to start a negotiation. I always outsource payroll processing and have made it a point to review the contract annually, usually beginning in September. At that time, I solicit bids from 3-4 different services, including ADP, and then do a comparison of services and cost. Sometimes you switch and sometimes it turns out you have the best deal. You need to view payroll processing in the same vein as any other service provider, an annual review and comparison ensures that you are receiving the best service, and newest enhancements at a competitive price.

It can be a bit of a process, but few things impact employee morale like problems with payroll.

Relationships are essential to effective negotiation.

My former employer had a five-year contract with ADP when a new initiative brought about a high-volume 1099 "payroll." We elected to leverage the existing platform but I was not satisfied with the initial quote. I had built a strong relationship with our National Accounts representative in which we viewed each other as business partners, and was able to negotiate about a 20% reduction - and a waiver of the implementation fee - that enabled us to process the payments much less expensively than we could have done in-house. The implementation methodology and support were outstanding and the rollout was relatively pain-free.