Payroll processing is a critical function of any business, and it involves calculating employee wages, benefits, and taxes. However, managing payroll can become increasingly complex and time-consuming as companies grow and expand.
Luckily, with technological advances, the payroll processing industry is undergoing significant changes.
According to a report by Business Wire, the global payroll and HR solutions market size was valued at $23.55 billion in 2021 and is anticipated to grow at a compound annual growth rate (CAGR) of 9.16% from 2021 to 2031 to reach $55.69 billion. This boost can be attributed to the increasing adoption of cloud-based payroll solutions and the need for accurate and timely payroll processing.
Despite the growing demand for payroll processing solutions, the industry faces a number of challenges, including errors, delays, and compliance issues.
To address these challenges, emerging technologies such as artificial intelligence (AI), machine learning, and blockchain are being utilized to streamline payroll processes, reduce errors, and improve compliance. For instance, AI can be used to automate repetitive tasks, such as data entry, while machine learning algorithms can identify patterns in data and improve accuracy.
This article will discuss the impact of these emerging technologies and other trends on the payroll processing industry and what these trends mean for your business.
So without further ado, let’s get started.
5 Payroll Processing Trends of 2023
The following are the top payroll processing trends of 2023:
1. Reporting and Predictive Analytics
Payroll departments have long provided essential information to support decision-making in finance, HR, and management. However, with the integration of cloud technology and the rise of predictive analytics and modeling, many payroll departments are now moving beyond traditional reporting on compliance and statutory requirements.
They are leveraging payroll data to provide forward-looking business support, such as using historical absence data to predict future absence patterns and trends.
Moreover, payroll data can be used to manage resource costs and overtime more effectively, enabling businesses to drive significant value, particularly for organizations that employ large numbers of hourly paid staff.
But that’s not all – payroll departments now use agile, real-time reporting to model pay and gender equality scenarios. This means that payroll is no longer seen as a dusty, manual function but as a crucial contributor to determining high-profile issues such as the gender pay gap.
By leveraging payroll data in this way, businesses can gain valuable insights into employee behaviors and trends and use this information to inform critical business decisions.
2. Payroll Outsourcing Will Continue to Be a Norm
Outsourcing payroll is not a new trend, but it is becoming increasingly popular as businesses look for ways to streamline their operations, reduce costs, and focus on their core competencies.
According to a report by Allied Market Research, the global payroll solutions market was valued at $9.9 billion in 2021 and is expected to grow at a CAGR of 7.2% from 2022 to 2031.
There are several reasons why businesses are turning to payroll outsourcing. For one, it can be a cost-effective way to manage payroll, as outsourcing providers like IBN Tech offer economies of scale and greater efficiency than in-house payroll teams.
Additionally, outsourcing can help businesses to reduce the administrative burden of payroll processing and compliances, allowing them to focus on more strategic initiatives.
In addition, outsourcing payroll can also provide businesses with access to the latest payroll technology and expertise. Top payroll outsourcing providers like us offer advanced payroll systems and reporting capabilities, as well as a team of experts who can handle any payroll-related issues that arise.
3. Payroll is Going Cloud-First
Payroll processing is rapidly shifting to the cloud, and for a good reason. The benefits of cloud-based payroll are numerous, including increased security, improved efficiency, and streamlined collaboration between departments.
But why is there a need to shift to the cloud?
It is because traditional payroll processing methods can be time-consuming and inefficient. For example, payroll administrators often have to collect and process employee time cards manually, calculate payroll taxes and deductions, and create and distribute paychecks.
Traditional payroll processing can also be difficult to manage remotely, as it often requires physical access to paper records and documents.
Cloud-based payroll solutions, on the other hand, offer several advantages that make them an attractive option for businesses. Cloud-based payroll software enables payroll administrators to access payroll data from anywhere, as long as they have an internet connection.
This makes it easier to manage payroll in a remote work environment. Additionally, cloud-based software can offer real-time updates and reporting, enabling payroll administrators to stay on top of payroll tasks and deadlines.
Cloud-based payroll software are typically more secure than traditional payroll processing methods, as they offer features like two-factor authentication, encryption, and regular backups.
Cloud-based payroll software also makes it easier for different departments to collaborate and share information, which can improve overall organizational efficiency.
4. Payroll Automation
Payroll automation has been a trend for several years and is expected to continue to be a trend in 2023. Payroll automation involves using software and technology to automate payroll processes, such as calculating employee pay, deducting taxes and other benefits, and issuing payments to employees.
The trend toward payroll automation is driven by the need for organizations to increase efficiency, save time and cost, ensure compliance, and improve accuracy.
Automation eliminates the necessity for manual data entry, calculation, and payment issuance, thereby reducing the risk of errors and improving the accuracy of payroll processing. By automating payroll, organizations can also ensure compliance with labor laws and regulations, which is becoming increasingly complex and time-consuming.
5. All-in-One HR Solutions
Another trend in payroll processing is the adoption of all-in-one HR solutions by businesses. This trend involves businesses investing in software that provides integrated HR functionalities, including payroll processing, administration, time and attendance management, and compliance management. The trend towards all-in-one HR solutions is driven by the need for organizations to streamline HR processes and increase efficiency.
By investing in all-in-one HR solutions, businesses can achieve several benefits, including:
For starters, businesses can use off-the-shelf HR software such as Gusto, Zenefits, and BambooHR. However, for mid-large scale corporations, it’s advisable to go for a custom-built HR solution.
On-Demand Pay is the Near Future of Payroll Processing
Although on-demand is not the trend at this moment, the near future holds a great scope.
On-demand pay allows employees to access their earned wages on-demand instead of waiting for their scheduled payday. This can be particularly beneficial for employees who may have unexpected expenses or need quick access to funds.
One of the main drivers of the on-demand pay trend is the growing demand for flexible payment options among employees. Many workers, particularly those in the gig economy, may have irregular or unpredictable incomes, making it difficult to manage their finances on a traditional bi-weekly or monthly payroll schedule. On-demand pay gives these workers more control over their finances and greater flexibility in accessing their earnings.
To implement on-demand pay, businesses will need to partner with a third-party payroll provider like IBN Tech, which specializes in payroll processing and technology. For instance, businesses can build a mobile app that employees can use to access their earned wages at any time for a fee. These apps can also be coupled with additional features, such as budgeting tools and financial education resources.
While on-demand pay is a promising trend in payroll processing, it does present some challenges, particularly around compliance with wage and hour laws. Employers will need to ensure that their on-demand pay policies comply with state and federal regulations and that they are accurately tracking employee hours and wages.
Bottom Line: Get Acquainted with These Payroll Trends
Payroll processing is an ever-evolving aspect of business operations. Staying up-to-date on the latest trends is crucial for companies looking to streamline their payroll processes, reduce costs, and increase efficiency. By proactively preparing payroll processing trends, businesses can transform how they handle their payroll functions and stay ahead of the curve.
From the increasing popularity of payroll outsourcing to the rise of payroll automation, businesses have an array of options for improving their payroll processes.
In addition, the adoption of cloud-based payroll solutions and advanced analytics also provides significant benefits such as real-time reporting, predictive modeling, and improved compliance with regulatory requirements.
If your company is struggling to keep up with the ever-evolving space of payroll processing and facing challenges in terms of efficiency and accuracy, it’s time for you to hand it over to experts.
We at IBN Tech have been helping organizations with payroll processing for a very long time. We have a team of payroll experts in-house that can assure you of the best outcomes.
