What is the future of payroll? by IRIS Elements image

What is the future of payroll? by IRIS Elements

People won't work for free! As such, payroll is a vital part of your business, crucial for survival.

onWednesday, 1 May 2024

There’s a distinct level of pressure on payroll professionals to get payday right every time without fail.

After all, studies have found that just two payroll errors can cause 49% of workers to start job hunting.

With immense pressure and great importance, it's crucial payroll professionals continually seek to optimise and improve their processes, but what’s next for payroll and how can you take advantage of it?

1) AI in payroll

The hype of Artificial Intelligence (AI) is being felt across all industries, and payroll is no exception; don’t be disillusioned – AI is more than a buzzword.

In payroll, process reigns supreme, with the industry being defined by its meticulous calculation, gargantuan amounts of data and never-ending compliance requirements.

As such, there's been numerous advances, with automation and integration, all of which help optimise payroll and reduce errors.

AI is progressing this innovation further through intelligent automation.

With AI, payroll professionals can use Robotic Process Automation (RPA) – which uses rule-based processes – to accurately automate repetitive work that used to be a drain on time and resources.

It’s also expected that there will be a greater uptake in businesses using AI chatbots to answer simple payroll questions, safeguarding payroll professionals from time-consuming exchanges while also freeing them up to focus on more critical work.

Another huge benefit of AI is its ability to quickly analyse large quantities of data, providing real-time insights, highlighting business trends and offering tangible actions. 

AI's role is not to replace humans but to enhance ways of working.

We predict a future where AI transforms the payroll department, offering greater innovation and strategic planning, free from the monotony of repetitive admin. 

2) Pay frequencies

With the cost of living continuing to rapidly rise, it’s no surprise financial security remains a top priority for workers.

Studies have found that over 90% of payrolls are still managed monthly, but moving to a real-time payroll solution can benefit employers and employees alike.

Cashflow has been a challenge for numerous businesses across the country, but changing your pay frequency to something more regular can assist with this issue.

As for staff, in-work poverty remains a pertinent issue.

Switching to a more frequent pay model enables workers greater control over their finances, allowing for financial management to be more strategic.

While our recent survey found that the majority of workers still prefer monthly pay, almost half would prefer something more frequent, highlighting the importance of speaking with your people to determine what works best for them.

3) Evolving responsibilities

As we see technology, like AI, support the more transactional, administrative parts of running a payroll, the responsibilities of payroll professionals will likely see a shift.

Of course, a human touch will be required, but where payroll professionals invest their time will change.

Automation and system integration will produce greater amounts of in-depth data, creating a need for payroll professionals to become more analytical.

Examining rich data will provide insights into workplace trends, like financial wellbeing, motivation and absences.

The increased access to data also enables payroll professionals to take on a more strategic role within the business.

For example, using data, payroll can support areas such as hiring and forecasting the cost of increasing headcount in terms of expenditures such as salary, tax, national insurance (NI), etc.

Additionally, while we discussed in a previous section that AI chatbots could support payroll by answering basic questions, this in turn frees up professionals to take on a more advisory role, handling complex queries.

Perhaps the wider business has questions about a legislative change, or there is a query regarding the implications of setting up a new subsidiary abroad – in these scenarios, payroll has enough capacity to support these more complex topics.

The future is now (kinda)

While no one can truly predict the future, we can look at current trends and industry shifts to predict the direction.

If there was one key point we'd like you to take away from this blog, it is that human expertise will remain the top priority, despite changing processes and technology.

The future of payroll is a collaborative journey, with AI and human capabilities working together to forge a more efficient, adaptable and responsive system.

For those looking to evolve their payroll process, backed by brilliant software, look no further! Check out our handy guide which covers the benefits of cloud payroll software and how you can make an informed choice that suits your organisation. 

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