Study: 85% of Companies Have Payroll Technology Issues: Would an Upgrade Help?

It’s easy to take your company’s payroll technology for granted, that is, until something goes wrong. As your business grows and the expectations of employees change, relying on outdated payroll systems can hinder your progress and expose your organization to unnecessary risk.

Today’s payroll technology systems are no longer just for a back-office process. It’s a system that provides financial insights, aids in compliance efforts, and helps ensure employee satisfaction. But many companies depend on legacy systems that were not designed for the speed, complexity, and expectations of the modern workforce.

The Push to Modernization Payroll Technology

About 80% of companies are now using automated payroll software, while 70% have moved to cloud-based platforms, according to a Payroll Trends report from SaaSworthy. These tools allow payroll teams to work from anywhere, integrate with other HR systems, and scale as the organization grows.

Despite these developing trends, many businesses are still facing payroll-related setbacks: 85% of the companies surveyed report limitations in their payroll technology. These range anywhere from a lack of features to an inability to generate well-rounded insights.

These issues don’t just create inefficiencies for businesses. They also limit the ability to adapt without long timelines, comply with new regulations, and make informed decisions.

Disruption-Proof Payroll

What happens if disaster strikes? Hurricane, wildfire, thunderstorm or other unexpected events can devastate businesses that still use outdated, on-premise payroll systems, as they could easily be knocked offline. Only 54% of businesses are using a cloud-based platform, which means nearly half may be vulnerable to payroll disruptions.

Lisa Weckman, VP of Product Management at Ceridian, pointed out that modern payroll providers have addressed many of the concerns around cloud security. Today’s platforms offer third-party testing, active monitoring, and role-based access controls to protect sensitive data and reduce the risk of data breaches.

Employees Want On-Demand Pay

One of the most notable issues with some current payroll technology systems is the lack of support for on-demand pay. This feature allows employees to access a fraction of their wages before payday. Though 78% of workers surveyed claimed they would be more likely to stay with employers that offer on-demand pay, Ceridian’s research shows that just over 70% of companies have no current plans to implement it.

This hesitation often comes from a technical standpoint. Legacy payroll systems may not be capable of calculating taxes, deductions, and retirement contributions in real time. But modern systems can handle these continuous calculations and provide employees with compliant, real-time earnings summaries.

Modern Payroll Capabilities

Next-generation payroll systems provide data-rich insights that support better decision-making. Here are just a few features that set today’s systems apart:

• Unified time and pay engines that calculate wages in real-time.
• Customizable rules engines for handling tax jurisdiction changes as employees work across multiple states or countries.
• Self-service portals that empower employees to manage their pay information and reduce the burden on HR teams.
• Predictive analytics and alerts that identify potential compliance issues before they become liabilities.

AI is also making changes to the payroll landscape. According to a recent report from Deloitte, businesses using AI-powered payroll tools reported a 30% reduction in payroll processing time. These tools can also update tax codes, detect anomalies, and guide compliance strategies automatically.

Choosing the Right Payroll Technology Solution

Payroll isn’t one-size-fits-all. Small businesses may benefit from tools like Gusto or QuickBooks, while mid-sized companies often turn to Paychex or Rippling. Enterprises with global needs might consider solutions like Deel, ADP GlobalView, or Ceridian Dayforce. Be sure to examine each platform based on features, scalability, integrations, and industry-specific supportive services.

If your payroll system hasn’t evolved in the last five years, chances are it’s already falling behind. As payroll becomes more strategic and integrated with finance, HR, and compliance functions, your payroll technology must keep pace. Investing in a modern, cloud-based solution can help your organization improve efficiency, reduce risk, attract talent, and uncover strategic insights.