Ten headline findings in 2024

1. Processing payroll in-house using payroll software is widely preferred

We asked: ‘how do you currently process your payroll?’

After a dip in 2022, using payroll software with an in-house payroll team has risen again in line with 2020 – 2022 levels. It's still the most popular solution with just over 62% of respondents using it in 2024.

Interestingly, there has been a huge drop (-74%) in payroll professionals choosing free HMRC software, with just 2.5% of respondents now using it.

Outsourcing to payroll providers and accountants has also seen a decline (-10% and -42% respectively) seemingly in favour of keeping payroll processing in-house.

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Winner of The Rewards Payroll & HR Software Product of the Year Award 2022.
Our easy, cloud-based Payroll Software is safe and secure on the latest Microsoft Azure technology.
It’s packed with automation to save you time, guarantee accuracy and ensure worry-free compliance.

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2. Cloud-based software still reigns supreme

Cloud-based payroll software has been leading the way as the preferred type of payroll solution since 2021.

This year we've seen it gain even more popularity with a 26% increase since 2023, meaning it’s now the method used by 40% of those surveyed.

After a slow decline in recent years, on-premise or desktop software has plateaued and remains the second-most popular choice with 28% of respondents still using it. Will the downward trend continue in 2025?

Managed services in all categories has taken a dip, with Managed Service with File, Spreadsheet or CSV Input sitting decreasing by 15%.

Managed Service with Cloud-Based Interface has fallen by 29%, and Managed Service with Paper, Telephone or Email Input has plummeted by a whopping 43%.

Award-winning, cloud-based software right this way! Find out more

3. Integration is the future

If we were to hop on board the DeLorean time machine with Marty McFly, we’d see that integration is most definitely the future.

The proportion of payroll professionals using integrated payroll and HR solutions is increasing, which isn't surprising as new and improved integrated solutions have hit the market over the last 18 months (including ours!).

Although using two separate systems for payroll and HR remains the most common choice for payroll users with 35% preferring it for now, will we see this decrease in the next few years as integrated solutions continue to be enhanced?

API integration has taken a dip since its almost 100% rise in 2023, perhaps because payroll professionals are increasingly moving to truly all-in-one software.

Tell us what you think!

‘Payroll & HR’ software is great for payroll or HR – but never both!
APIs are way too much hassle to implement
APIs don’t work and cause headaches, I can live without them
I like my separate systems as they are
I don’t know much about integrated payroll & HR software

The benefits of integrated HR & payroll software

One source of truth

By integrating your payroll & HR platforms, data is shared seamlessly between the two, and usually consolidated into one dashboard. That means no more endless screen-scrolling and flicking between systems, just one true source of information.

Accurate data visibility

In the world of payroll and HR, data is king. But if your data isn’t flowing from one system to another it’s an easy way to get lost in the weeds. True payroll and HR integration means data is reflected from one into the other, and that means one source of truth.

Simplify processes

From integration you can expect singular inputs and approvals on things like new starters, expense claims and changes to employee details. Inputting this data once and in one system simplifies previously convoluted processes.

See it for yourself

4. Long-term loyalty with providers is on the decline

Since we began this survey, the results for this question have always been quite volatile. However, as time goes on, we have seen some loose trends emerging.

Long-term loyalty with providers is starting to dip, with companies who've spent ten years or more with the same provider now on a downward trend. In 2024 this declined by 14% and the year before in 2023 by 17% (albeit there was a spike in 2022).

This shows that steadfast loyalty with old providers is declining, and people are shopping around in the market to find the perfect provider to best suit their needs.

Whilst time spent with a provider between five and ten years has shown an increase in the last year, if we look at the bigger picture, this also looks to be on a downward turn overall as well – supporting the idea that loyalty is lessening.

The biggest change of all has been seen in those who have been with their provider for at least one year but less than three years. This has increased by 20% since 2023, with 19% of respondents selecting this option, indicating more churn in the market with customers moving around.

Will this mean the big players in payroll have up their game and become even more competitive to gain and retain their customers?

5. Payroll is less frustrating than last year

After a more frustrating 2023, we've seen a significant 40% drop in the percentage of frustrations reported by payroll professionals. In fact, it has returned to 2022 levels of low frustration.

Omitting the 2023 spike, looking at the wider data trends, you can see a slow decline in the number of frustrations reported by respondents since we began the Annual Payroll Survey in 2019.

For instance, calculating holiday pay was a huge headache for payrollers last year, but software improvements may have eradicated this.

Top frustrations include limited reporting and analytics (13% of respondents selected this), closely followed by limited functionality (12.5%), and poor customer service and support (10%).

The focus on reporting and analytics doesn’t come as a surprise to us, as we know it’s a hot topic in the payroll world, with businesses focusing on analysing their spending, for example, more than ever.

Accessibility of the software (3%) and payslip accuracy (2% as usual) are the least likely to cause headaches as they were considered the least frustrating.

6. Nearly three quarters of businesses think they receive value for money from their payroll provider

Since 2022, we've seen consistent results when asking survey respondents if they feel they receive value for money from their payroll provider.

In 2024, 72% of people said yes – a small 2.4% reduction on the previous year.

Businesses want bang for buck. Team that with the likely fact that the payroll is your company’s biggest outgoing: you need to know your current payroll provider is giving you and your business value for money.

However, before you can understand the value you’re getting, you need to look at the price you’re paying.

But it’s not just about looking at the price your provider charges per employee or per payslip. These don’t fully represent the end-to-end cost of your payroll. There are a number of other factors you need to consider.

Reviewing your payroll provider

Read our Payroll Reviewing Guide to find out what value for money really looks like.

READ NOW

7. The majority of people still think it's easy to switch payroll providers

We asked: ‘When switching payroll provider, how easy did you find it?’ Good news: switching your payroll provider is still easy, with 28% feeling this way.

The majority of people still think it's easy to switch payroll providers, with 28% reporting it's quite easy, and 20% saying it's very easy.

However, those finding it 'very difficult' to switch payroll providers have risen significantly since last year, with 15% of people reporting it's very hard. This means a third of respondents have faced difficulties when switching payroll providers this year.

We want this story to have a happy ending, which is why we’ve produced our very own Payroll Switching Guide to help businesses switch to a new solution with ease. Put the kettle on, make yourself a brew, and get stuck into our guide to switching.

The top three reasons for not making the switch were insufficient incentive to move (27%), more convenient to stay with current supplier (21%), and too much hassle (21%).

The biggest obstacle for switching payroll providers in 2024 is an insufficient incentive to move, with 27% of people citing this. This reason has been on a clear rising trend since we began the survey in 2019, with a 17% rise last year alone.

Businesses also feel that changing providers is too risky, with this response seeing the biggest increase of 30% this year.

What’s more, over 20% of respondents said they think it’s more convenient to stick with their current provider, and it’s too much hassle to switch. Is this reluctance to change based on the effort of switching holding people back from reaching their full potential in payroll?

Money doesn’t seem to be the biggest barrier, with only 8% of respondents unable to secure investment from the business for better payroll solutions.

So, if payroll providers can simply “cut out the faff” of switching, will they see more of an uptake in business and encourage people to switch?

8. There's not enough incentive to change providers... so, people are sticking with their current provider

Turbulent 2023 has settled down and we can see the majority of businesses are looking to stay put with their current provider in the next year.

When we asked, ‘when are you looking to switch your payroll provider?’ 57% of businesses said they are not looking to review at all – a dramatic 40% uplift from last year.

Those looking to review in the next 2 – 3 years has also increased by 23%, with 19% of respondents choosing this option and businesses looking to switch within 0 – 12 months has seen a drop since last year, returning to pre-2023 levels.

What makes switching easy?

What would it take for the passive 42% (who found their switch neither easy nor difficult) to shift towards having a more positive experience? What exactly would make it easier for them?

Tell us by taking our poll.

Communication is regular and timely
Training materials and support are high quality
Data transfer process is taken care of by the provider
First/parallel pay run runs smoothly and is error free
Something else

9. Budget is an increasing obstacle between customers and switching their provider

Although only 8% of respondents reported that they’re unable to secure investment from the business for better payroll solutions, year on year we see budget increasingly coming between customers and their ability to switch providers.

When asked ‘what is preventing you from switching now?’, this was the most cited answer with 18% of respondents selecting budget – aside from 'nothing' and 'happy with their provider'.

33% of respondents aren’t switching because they’re happy with their current provider. Interestingly, after a three-year decline, this saw a 16% increase since 2023.

However, with just a third of businesses sticking around because they’re content, does it show payroll providers can do a lot more to satisfy their customers and keep their loyalty? Is it simply a case of ‘better the devil you know’?!

With a huge 40% rise in respondents saying that nothing is preventing them from switching, what’ve you got to lose?

10. Payroll professionals are more demanding in 2024

The average 'number of features businesses would like to see next' per person was 2.82 in 2023, and 3.14 in 2024, indicating an 11% increase.

When we asked, ‘what would you most like to see from your payroll provider?’, the most popular answer was 'automation of payroll processes' with over half (54%) of respondents saying they'd like this. That's a 35% increase since last year!

Coming in close second is 'improved reporting & analytics', with 45% of payroll professionals wanting to see this, which has been more in demand since 2022 and saw a 20% increase in popularity in the last year.

As usual, branding and customisation options and flexible payments fall behind last in the list, with 13% and 15% respondents saying they'd like to see this respectively.

However, that's still over 1 in 10 respondents wanting to see this in the future – so developers can't rest on their laurels when it comes to developing these features.

What’s more, over a quarter of respondents want the following features: improved employee self-service, better customer service and support, stronger user experience, greater onboarding and training, and a step-by-step implementation process.