Evolution of Payroll Technology: Challenges and Solutions

The accounting world has undergone a significant tech revolution in the past decade. An industry that largely depended on paperwork and manual efforts saw a remarkable shift in approach with the advent of groundbreaking technologies such as cloud computing.

These modern technologies have substantially impacted the core accounting processes. Consequently, many originally cumbersome and time-intensive functions have been automated to save time, effort, and cost. Among these is one function traditionally viewed as a non-profit-making service – Payroll!

Every company has its own way of managing payroll. It depends on the firm’s employee strength, nature of pay, employee benefits, and compliance. For companies that have a globally spread workforce, payroll management is a lot more challenging. The payroll teams of these firms constantly need to stay abreast of the payroll legislation of multiple countries, making external help inevitable.

Accounting firms in the UK have been outsourcing payroll services for several years. But in the face of the growing challenges and the evolution of technology, this has become more necessary than ever.

How has payroll technology evolved?

Payroll is integral to the functioning of a firm and has been here since the advent of business. However, the way companies perceive it has changed significantly over time.

In the early 1940s, HR professionals manually recorded employee attendance, leaves, and absences in ledgers. This data would be compiled during payroll time, coupled with several calculations, to determine an employee’s final pay.

By the 1980s, companies were looking at the latest computer technology to manage payroll, further boosted by the introduction of payroll tools and software. However, the 2010s proved groundbreaking for the payroll industry with the advent of cloud technology. This has, in fact, completely changed the way firms manage payroll, especially in the post-pandemic world.

The future of payroll is tech

There’s no denying it – the future of payroll is centred around technology.

A recent study by KPMG, one of the Big Four accounting firms, has predicted that the trend of using cloud technology, Artificial Intelligence (AI), and Robotic Process Automation (RPA) will grow above and beyond in 2022. This boost is believed to be catalysed by the Covid-19 pandemic that also facilitated the digital transformation in accounting.

While this change has already begun, additional tech developments for payroll processing and fraud detection are still underway. Along with accounting firms, leading payroll outsourcing providers are also looking at upgrading their technical expertise to stay ahead in the industry.

Once implemented, the tech revolution will minimise human intervention in time- and resource-intensive processes, making payroll more efficient and hassle-free. It will minimise or even eliminate the risks in payroll, thus saving companies from hefty fines and unhappy employees.

The challenges of tech-driven payroll

While technology has more upsides than downsides in payroll management, it is not entirely a rosy bed. With the advent of new technology come fresh challenges for accounting firms, keeping accountants on their toes to adapt to the changes.

The most common challenge facing the accounting world is the lack of skilled talent. The industry is currently battling severe talent shortages. On the one hand, hiring and retaining their most competent staff is difficult for accounting firms, especially small and medium-sized practices. To add to it, many accountants are technically challenged as they barely find the time to upskill and grow professionally.

Another common issue small accountancy practices face is the lack of budget to upgrade to new technology. When you plan to introduce new software or technology, you need to upgrade your systems, reassess and probably change your processes, and train your employees for it. This can be highly cost-intensive, which is why most practices limit their technological development or rely on an external UK payroll service provider.

How to overcome the tech-fueled payroll challenges?

To battle the challenges driven by the ever-evolving technology, many UK accounting firms outsource payroll to professional outsourcing firms. Several studies have confirmed the numerous benefits of outsourcing for accounting firms, especially with respect to complex compliance tasks like payroll.

To begin with, global accounting outsourcing firms like QXAS open a vast pool of talent for accountants to hire for their firms from. Outsourced payroll specialists are well-versed with the latest legislation and stay abreast of its changes. These professionals are also skilled in the latest technology and can work on multiple tools and payroll software.

Another significant advantage of outsourcing is its financial benefit. Hiring and maintaining an in-house team is much more expensive than the overall payroll outsourcing cost. Plus, you do not have to worry about overhead costs, employee benefits, backups, leaves and absences, and more, thus making it a win-win for practices.

To outsource your payroll function to QXAS for a seamless, data-secure experience, dial +44 208-146-0808 or email us at [email protected]. To book a free consultation with one of our outsourcing experts, click here.