Transformation in Payroll Sector: Artificial Intelligence on the Horizon, but Traditional Data Processing Persists as Seven out of Ten Professionals Anticipate Adjustments

In celebration of National Payroll Week (1-5 September), MHR, a leading provider of HR, payroll, and finance software, has released a new report titled 'The Future is Payroll'. The report, unveiled as part of MHR's PayFest '25 event, sheds light on the current state of the payroll function and its potential evolution.

The report reveals a concerning trend: despite the desire to see the payroll function evolve, manual, admin-heavy processes are on the rise. According to the findings, 50% of payroll processes involve manual data input, and this number has jumped from 35% in previous years. Moreover, 63% of payroll processing is done using spreadsheets, with their usage more than doubling year-on-year.

The report also highlights the growing optimism about artificial intelligence (AI) among payroll professionals. An impressive 73% expect AI to have the most significant impact on the payroll function in the next 12 months. This optimism is backed by over half (52%) of professionals who believe AI has already had a significant impact on their work over the last year.

However, there are concerns. 38% of payroll professionals have expressed worries about a lack of skills or training when it comes to adopting AI. Meanwhile, 48% of professionals express concerns over data security. Despite these concerns, 46% of payroll professionals believe AI could most benefit the function in reducing errors.

Anton Roe, CEO at MHR, emphasises the need for business leaders to act now. He urges them to provide solutions to admin-heavy processes and champion payroll professionals. Roe states, "The payroll function is crucial, and it's time we invest in its modernisation. By addressing the current challenges, we can unlock its full potential and ensure accurate, efficient, and secure payroll processes for all."

In response to these challenges, several German companies have announced investments to improve their payroll processes by leveraging payroll technology fully. These investments range from a 3-year investment model with an initial €2.5 million investment followed by €1.8 million and €1.2 million in subsequent years, aiming for break-even in 16-18 months and net present values between €8-15 million depending on industry and implementation quality.

MHR's PayFest '25 event, held during National Payroll Week 2025, features webinars and the release of the 'The Future is Payroll' report. The event aims to foster discussions about the future of payroll and encourage businesses to take action towards modernising their payroll processes.

Transformation in Payroll Sector: Artificial Intelligence on the Horizon, but Traditional Data Processing Persists as Seven out of Ten Professionals Anticipate Adjustments