How AI Is Impacting the Future of Payroll

September 4, 2019      By Karina Schultheis

Ultimate Takeaway
  • Demand for sophisticated AI-powered payroll solutions has skyrocketed, which is unsurprising considering payroll's significant impact on the bottom line
  • AI payroll solutions significantly reduce the likelihood and severity of human errors while improving compliance performance
  • Predictive & prescriptive models forecast what might happen in the future based on current and historical data, predicting potential issues and suggesting solutions

Are you prepared for the future of payroll?

Payroll is perhaps the most ubiquitous business function—everyone needs to be paid! It is also one of the largest business expenses, with wages equating to an average of more than 60 percent of total business costs. In theory, the function of a payroll system is simple: You pay your people and distribute their contributions accurately and on time.

The reality, of course, is more complex. Payroll is subject to a myriad of ever-changing complexities, from tax codes and distributions to bonuses and personnel changes. Fortunately, payroll was one of the first HR functions to fully embrace automation. Thanks in large part to technologically advanced payroll systems, most payroll departments are operating more efficiently, accurately, and economically than ever before.

Artificial Intelligence

Like automation, and the internet before it, artificial intelligence (AI) is set to disrupt the future of payroll once again. Unlike automation, which relies upon cause-and-effect, true AI systems can interpret data and leverage it to make decisions, learn from previous mistakes, and strategically solve problems.

Demand in this space is exploding: in 2018, the cloud-based payroll software market was valued at roughly $7.88 billion, a figure that’s expected to balloon to $13.37 billion by 2026. And, considering payroll’s significant impact on the bottom line, it’s no surprise that business leaders are increasingly looking to invest in sophisticated AI-supported payroll systems.

With new technology comes new opportunities. Here are four ways AI and machine learning are primed to reinvent the future of payroll…again.

Reskilling Opportunities for Payroll Professionals

As AI continues to improve payroll system functionalities, payroll professionals can seek valuable upskilling opportunities. Considering their data protection and compliance skills, payrollers may be prime candidates to assist with other data and compliance challenges. Less time spent manually inputting figures could lead to strategic sessions with other business functions, such as finance, employment law, or human resources. By proactively seeking growth opportunities and stretch assignments, payroll professionals can reimagine how they interact with—and influence—other departments.  

Error Correction & Prevention

Payroll processing relies on coordinating and managing massive data sets, all of which are subject to complicated and constantly shifting compliance rules. Fortunately, this is exactly where AI and machine learning tools shine. By managing procedural data and automatically applying compliance regulations, AI significantly reduces both the likelihood and severity of human errors while improving compliance performance.

AI tools can also flag systematic issues by monitoring how data is collected and processed and offer strategies to improve efficiency.

Predictive & Prescriptive Analytics

Despite payroll’s significant financial impact on the organization, in the past, it was often seen as more as an administrative function than as a source of strategic insights. But most successful organizations now realize that analyzing payroll data is crucial to making meaningful, forward-thinking decisions.

Predictive and prescriptive analytics are prime examples of how AI technology can help organizations maximize efficiency and growth. Predictive analytics forecast what might happen in the future based on current and historical data. Predictive models are often used to assist with finances, such as helping to shape budgets, generate inventory, and cut down on unnecessary expenses. These tools could predict a retail establishment going over its payroll budget during the holiday season, for example, causing business leaders to seek creative solutions ahead of time.

Using the above example, prescriptive analytics take this one step further and actually suggest various ways to solve the problem—and show the potential implications of each option. Payroll professionals can manipulate their data to model countless payroll scenarios in a macro-, enterprise-level scenario modeling engine that produces different outcomes, learns from them, re-runs them, and ultimately helps guide informed decision-making.

Incredibly, AI is just one of several factors set to completely revolutionize the future of payroll. To learn more about the factors at play and how to prepare for the future of payroll, check out our upcoming “The Evolution of Payroll” webcast on Tuesday, September 10th.

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6 Comments

  1. Avatar Thanigaivelan on October 3, 2019 at 6:52 am

    This is revolutionary work dude

  2. Avatar Geek Squad Tech Support on November 28, 2019 at 3:43 am

    Very well explained. I totally agree with you that payroll is the most ubiquitous business function and one needs to understand the effect of AI on the payroll to kno2 the whole scenario. Keep sharing such useful content with us.

  3. Avatar Mindspace Outsourcing on December 26, 2019 at 12:36 am

    Great post! This is probably the best and most concise guide I’ve ever seen on how AI is impacting the future of payroll. Thanks for sharing a great post!

    • Karina Schultheis Karina Schultheis on December 27, 2019 at 12:20 pm

      Thank you very much for your comment! I’m so glad you enjoyed this guide, please keep coming back for more! 🙂

  4. Avatar John Wesley on January 19, 2020 at 12:11 pm

    Many unique points and nicely summarized. Great Article! Definitely subscribing for more such articles.

  5. Avatar Nina Johnson on February 14, 2020 at 2:13 am

    Very Informative Article! I had an idea about how AI would impact Payroll, but reading your blog, I got a detailed knowledge about the same! This was really helpful. Thanks for sharing such valuable content. Looking forward to more such content.

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