12 Questions You Must Ask Before You Sign

Most payroll RFPs ask the wrong questions. They ask about features, integrations, and implementation timelines. Those matter, but they do not reveal whether a provider will actually protect you when something goes wrong — and something always tests a payroll relationship eventually.

These twelve questions are designed to reveal operational reality, not sales positioning. A provider with genuine capability will answer every one of them clearly and in writing. A provider who hedges, deflects, or answers with marketing language is showing you something important.

Use this as a structured evaluation checklist. Score each answer: 2 = clear and specific, 1 = partial, 0 = vague or deflected.

Section 1: Compliance Depth

These questions separate providers who have built genuine Indian compliance infrastructure from those who manage India as a checkbox among many countries.

Q1  Which states are you actively registered in, and what statutory obligations do you manage per state?
Strong answer Names specific states with active registrations. Immediately identifies which ones are relevant to your headcount. Has a documented state-registration matrix.	Red flag “We cover all of India.” Vague geographic claims without specifics. Ask them to produce a state registration list — it will tell you everything about their actual depth.

Q2  How do you handle a mid-year statutory change — PT revision, ESI wage ceiling update, new Labour Code notification?
Strong answer Describes a compliance monitoring process: government gazette tracking, central compliance team, update-before-next-payroll-run protocol. Can give a recent example.	Red flag “We update the system as soon as changes come.” No process described. No timeline committed. Updates that happen after the next payroll run already ran create liability.

Q3  Walk me through how you resolved a PF or TDS dispute for a client in the past 12 months.
Strong answer Gives a specific, anonymised example: what the issue was, who owned resolution, what the timeline was. Shows they have a process beyond a helpdesk ticket.	Red flag Deflects. Claims it has never happened. Speaks in generalities. EPFO notices and TDS queries are routine — a provider without examples has either very few clients or a selective memory.

Section 2: Accountability and Support Structure

Payroll errors have a human cost — employees do not receive correct salaries, cannot file ITR, or wait weeks for F&F. Who answers the phone when that happens matters more than any feature list.

Q4  Who is my named day-to-day contact, and what is the escalation path above them?
Strong answer Names a specific person assigned to your account. Describes escalation: named senior + timeline. Provides the escalation chain in the contract, not just verbally.	Red flag “You’ll have a dedicated support team.” A team is not a person. Rotating support queues mean no one owns your account when errors happen.

Q5  What is your payroll cut-off date, what happens if I miss it, and what is your processing SLA from data receipt to payroll completion?
Strong answer Specific cut-off date (e.g., 22nd of month). Clear process for late inputs: what is held, what is processed, who approves. Processing SLA: 24–48 hours from data receipt to approval-ready output.	Red flag “Send data as early as possible.” No specific cut-off. No defined SLA. Vague timelines mean salary day becomes a moving target.

Q6  What are your written SLAs for payslip delivery, employee query resolution, and Form 16 issuance?
Strong answer Specific numbers: payslips within 24–48 hours of salary credit; queries resolved within 24 hours (payslip issues) and 48–72 hours (tax/statutory); Form 16 by 10 June. All in the contract.	Red flag “We always deliver on time.” No numbers, not in the contract. An SLA that is not contractual is a marketing claim, not a commitment.

Section 3: Data Security and Technology

Q7  What is your data security certification, and how is client data logically separated in your system?
Strong answer ISO 27001 certified (with date). Describes role-based access controls, logical data separation at database level, audit logging. Can provide the certificate.	Red flag “We take security seriously.” No certification cited. No technical description of data separation. Your payroll data contains PAN numbers, salary details, and bank account numbers for every employee.

Q8  What is your disaster recovery protocol, and what is your uptime commitment for payroll processing windows?
Strong answer Documented recovery point and recovery time objectives. Uptime SLA for the payroll processing window (typically 48–72 hours around cut-off). Backup payroll processing procedure if primary system fails.	Red flag “Our systems are reliable.” No RTO/RPO documented. No payroll window uptime commitment. A system failure on salary day is a crisis — ask what the backup plan is.

Section 4: Commercial Transparency

Q9  What is included in the per-employee fee, and what is billed separately or as a pass-through?
Strong answer An itemised list: exactly what the PEPM covers (payroll processing, compliance filings, ESS, Form 16 generation) and what is separate (onboarding, offboarding, advance query support, ad-hoc reports). No ambiguity on invoice three.	Red flag “Our fee is all-inclusive.” Ask for the itemised fee schedule in writing. If they cannot produce one within 24 hours, the answer is not all-inclusive.

Q10  What are your exit terms — notice period, data handover format, and transition support obligations?
Strong answer 30–60 day notice period. Commitment to provide complete data export in standard format: employee master, YTD salary history, ECR history, Form 16 archive, statutory filing records. Will support parallel run with new provider.	Red flag Notice periods of 90+ days. Data delivered only in proprietary formats. No stated obligation to support the incoming provider. A provider confident in their service does not build exit traps.

Section 5: Demonstrated Capability

The two most telling questions are the ones that ask a provider to show rather than tell. Document quality and process clarity reveal more than a hundred slides of product positioning.

Q11  Can you share a sample payslip, a sample F&F settlement calculation, and a sample Form 24Q output?
Strong answer Samples provided within 24 hours. Clean, structured, obviously produced by a team that processes payroll daily in India. F&F calculation shows leave encashment, notice period adjustment, gratuity, and TDS correctly computed.	Red flag Long delay, heavily redacted, or structurally thin samples. The quality of what you see is the quality your employees will receive.

Q12  Walk me through your onboarding process for a company our size — what do you need from us and by when to run our first payroll?
Strong answer A documented checklist: employee master data template, CTC structure confirmation, statutory registration verification, cut-off alignment, bank file format confirmation. A timeline with named milestones. First payroll in 7–14 business days for standard setup.	Red flag “We’ll figure it out as we go.” No documented process means the first payroll cycle will be chaotic — and employees will feel it.

Scoring Guide

Score 2 for a clear, specific, verifiable answer. Score 1 for a partial answer with some gaps. Score 0 for vague, deflected, or absent.

Score range	Out of 24	Interpretation
20–24	83–100%	Proceed to contract review. Verify commitments are in writing.
14–19	58–79%	Request clarification on low-scoring questions before proceeding. Do not sign without written answers.
Below 14	Below 58%	High risk. The operational gaps you are seeing in evaluation will be magnified in production.
Any 0 on Q1, Q4, Q6, or Q9	Disqualifier	These four questions are the minimum threshold for operational credibility. No score compensates for a zero here.

Want Paybooks to answer all 12 in writing before your next call? Request our structured RFP response document — we will fill in every question with specific, verifiable answers and supporting documentation. paybooks.in/outsourcing-services  |  info@paybooks.in  |  +91 80 4710 7171