Inefficiencies in payroll tech hit UK's recruitment sector

Research has highlighted significant productivity losses within the UK recruitment sector due to inefficiencies in payroll technology.

A survey commissioned by Finity, which investigated the impact of inefficient technology on productivity, found that 74% of payroll professionals in UK recruitment agencies lose at least 11 hours per week to outdated systems and inefficient workflows. The survey illustrates a critical need for investment in modern payroll solutions.

The research reported that 46% of respondents waste between 16 and 30 hours each week due to outdated technology. Integration issues were revealed as a significant problem, with 59% of respondents citing a lack of integration between payroll and banking systems as a major cause of administrative delays and inefficiencies.

Frustration among payroll professionals due to manual processes was a recurring theme, with 48% expressing annoyance at excessive manual tasks and 45% identifying recurring human errors as a time-consuming challenge in payroll management.

The issue appears to be affecting employee satisfaction, with 57% of respondents considering switching employers for better payroll technology. None reported contentment with the current time spent managing payroll cycles.

Varun Monteiro, Chief Executive Officer of Finity, commented, "The findings of our research are stark: payroll inefficiencies caused by technology and processes are not just a back-office inconvenience – they are a direct threat to productivity and talent retention."

The findings are particularly pertinent given the fact that 43% of companies surveyed admitted to struggling with timely payments for temporary workers due to inefficient technology. The latest figures from the Office for National Statistics (ONS) indicate there are over 1.5 million temporary workers in the UK, amplifying concerns over payment delays.

Respondents identified complex banking and payments processes as a challenge, with 67% naming bulk payments, BACS deadlines, and card reader requirements as issues affecting their ability to pay temporary workers on time.

A further 63% of agencies reported a lack of streamlined payroll, timesheet, and payment systems, indicating systemic challenges in the recruitment sector's financial operations.

Additional research by Finity revealed that 44% of senior decision makers had terminated relationships with payroll suppliers over late payments to temporary workers. This highlights the broader implications of payment delays on recruitment supply chains.

Samantha Hurley, Operations Director at the Association of Professional Staffing Companies (APSCo), said, "These findings highlight a critical challenge facing our industry. Nearly three-quarters of payroll professionals lose more than a day's productivity each week due to technology and process inefficiencies. This represents a business cost and a strategic disadvantage in a competitive marketplace."

"The statistics around payment delays for temporary workers are especially concerning, as timely payment is fundamental to maintaining a reliable flexible workforce. The recruitment sector's success depends on attracting top talent and operating efficiently. When over half of payroll professionals consider changing employers for better technology, this signals a workforce ready for digital transformation."

Hurley added that APSCo will continue to support its members in adopting technology solutions to enhance productivity and efficiency.

Monteiro echoed these sentiments: "It's not just the industry itself that is suffering: our vital temporary working economy is at increased risk of not being paid effectively and on time, which has a tangible impact on people's lives." He emphasised Finity's mission to transform recruitment industry practices reliant on traditional technology, marking a potential shift towards "recruitment fintech."