Payroll paradox | Payroll professionals braced for sweeping AI changes, yet manual data processing on the rise

Payroll is on the brink of its biggest transformation in decades with nearly three-quarters (73%) of payroll professionals expecting artificial intelligence (AI) to shape the function the most in the next 12 months, according to new research from MHR, a specialist provider of HR, payroll and finance software.

MHR’s 2025 report, ‘The Future Is Payroll’, released to mark National Payroll Week (1-5 September), reveals that optimism about AI is growing fast, but so are the risks of falling behind. Over half (52%) of professionals say AI has already had a significant impact on their work over the last year.

However, despite the desire to see the payroll function evolve, MHR’s 2025 report uncovers a surprising twist: manual, admin-heavy processes are increasing. Spreadsheets for payroll processing have more than doubled year-on-year (30% to 63%), manual data input has jumped from 35% to 50%, and duplication of records across systems has risen to 55%.

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“Payroll is facing a paradox. Companies are embracing AI, yet employees are still spending hours on manual data entry,” says Anton Roe, CEO at MHR.