AI in Payroll Software: Present and Future

Artificial intelligence

Running payroll was once a laborious manual process with an abundance of paperwork required to store employee information. Nowadays, it’s a much more seamless task thanks to advanced software. As technology evolves, payroll software becomes optimised and updated to meet changing requirements.

Artificial Intelligence (AI), technology that attempts to replicate the capabilities of humans, is a way we can expect payroll to develop. This is already implemented in some solutions, with automation helping to save time and reduce errors. But what next?

In this article, we’ve examined how AI is being used in payroll software in 2021 and considered some possibilities for the future.


The now

Some systems are already utilising AI functionality, and it works well.

As technology can scan a lot of data in little time, it can be used to identify potential errors or flag any inconsistencies. For example, Codapay software will run through data in seconds and notify you of errors before committing payroll or importing key data. In effect, a task that would otherwise take hours takes just a few seconds.

AI-powered chatbots are also growing in popularity with software companies to reduce resource demands and improve efficiency. But, in 2019, Forbes reported that 86% of consumers prefer to speak with a human. Although machine learning aims to improve the ability to answer more complex answers, consumers simply trust a human more to solve an issue promptly. Improvements in Natural Language Processing (NLP) will likely increase their usage, however.

As it stands, payroll processing is still a manual human process – even with the added efficiency of payroll software. The use of AI simply helps to verify the inputted information, the same way you might run text through Grammarly after writing it yourself.


The future

More presence of AI in payroll software is something we can expect to see in the future.

It could begin to take on some HR duties by assessing employee data to make recommendations. For example, if there’s an increase in overtime, it could suggest there’s a need for recruitment.

There are also possibilities for predictive tasks based on historical data. For example, it may be able to suggest pay adjustments and even flag potential overpayments and incorrect deductions.

However, looking at the data doesn’t always tell the full story. Plus, if AI were to reduce the need for human intervention, there’s still the element of emotion. For example, if an employee’s tax code changes, it’s important this is appropriately discussed with the employee.


Person typing on laptop


AI may change the way the data is collected to run payroll. For example, time-tracking may take on an automated process as opposed to manual timesheets. That could even mean technology such as face scanning for clocking in and out to automatically prepare the hours for payroll.

A key advantage of AI is that it cuts out painstaking tasks that can easily be automated, improving accuracy by doing so. Compliance is of utmost importance when it comes to paying employees, and automation of legislation checks would help to ensure the correct amount of tax is being paid. Good payroll solutions will already offer features to ensure key industry legislation is accounted for, such as IR35.

As well as simplifying operations for the payroll team, AI could also be used to help employees ensure their pay is correct. It could be implemented on self-service portals to cross-compare payslips and highlight any anomalies in the data.

All the above possibilities would help to improve operations for businesses and increase the satisfaction of employees. With rapid technological advancements, there’s no guessing how soon such changes could come into effect.



Technology simply can’t replicate the human emotion and complex context of some requests relating to payroll. However, AI offers many benefits to both businesses and employees:

  • Prevents human error
  • Reduces costs and increases profit
  • Boosts efficiency
  • Allows employees to refocus efforts on higher-value work

Although AI is already being used successfully across some solutions, there’s a much wider scope for usage in the future. At Codapay, we’re continually reviewing the unique needs of our customers and the recruitment industry to maximise efficiency.

Codapay payroll software is continually evolving with pioneering technology and regular updates rolled out across the cloud. Find out more about our solutions.

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