New research by Finity reveals that payroll errors are now almost universal, with 89% of respondents reporting issues with payments within the last year.
The Finity UK Payroll Efficiency Report 2026 surveyed people employed in finance and payroll departments, and the results paint a picture of a core business function under unprecedented pressure. It also highlights how outdated technology, poor integration and manual processes are significantly affecting performance, accuracy and productivity.
Payroll errors remain widespread
Two-thirds (66%) of payroll professionals deal with errors regularly (weekly, monthly or quarterly), with 38% facing issues every month.
Despite widespread conversation about digital transformation across the sector, many payroll teams are still heavily reliant on manual workflows. Almost half (48%) state human error during manual payroll processing is the most common cause of errors (up from 43% in 2025).
In fact, Finity’s research revealed the most common causes of payroll errors can be largely attributed to internal systems and processes rather than external factors.
Almost one-third (32%) of respondents reported having to handle incorrect or incomplete data – with a further 32% blaming stress, workload or time pressure and 30% stating disconnected or non-integrated systems as key causes for these issues.
Poor integration driving payment delays
More than two-thirds (68%) of payroll professionals also experience payment delays due to their current systems and processes – a surging year-on-year increase from 43% reported by Finity in 2025.
The single biggest impact on worker payment delays is poor integration between systems – including onboarding, timesheets, payroll and payments – according to 49% of respondents.
Overly complex or messy banking and payments processes (46%) represent the second most-common operational barrier.
Manual workflows are still common
Despite advances in technology, manual processes are still deeply embedded in day-to-day payroll operations.
Of those surveyed, 43% report handling bank reconciliation manually, with just over a third (36%) processing timesheet approvals the same way.
A lack of automation is a core issue for 32%, emphasising that labour-intensive, manual workflows increase the risk of errors and can slow down end-to-end payroll cycles.
Multiple systems, multiple risks
Using multiple platforms is now standard practice within the industry, with 70% of organisations using more than one system to run payroll.
However, 63% report experiencing issues when transferring data between systems – either frequently (18%) or occasionally (45%) – including mismatched data, duplicate entries and failed transfers.
Lost productivity for tech-constrained teams
Inefficient technology continues to impact on productivity of the UK’s payroll workforce.
More than three-quarters (77%) of payroll professionals say they lose up to 11 hours per week due to inefficient systems or processes – up from 75% in 2025.
This underlines a critical productivity challenge: payroll teams remain time-poor and unable to operate at full capacity due to fragmented systems and administrative burden.
Complexity impacting payroll experience
The administrative burden is also affecting payroll professionals directly:
- 28% describe their payroll systems as outdated and/or overly complex
- 27% feel overwhelmed by payroll administration
- 26% say a lack of integration between back-office payroll and banking/payments causes administrative issues or delays
Varun Monteiro, CEO of Finity, said: “Our latest data paints a clear picture of an intensifying issue: complexity, disconnected systems and insufficient automation are creating negative experiences for payroll teams – and putting the reliability of paying workers on time at risk.
“Payroll should be one of the most predictable and controlled functions in any organisation. Yet our research shows that payment delays, errors and inefficiencies remain widespread – largely driven by internal systems that organisations have the power to improve.
“While some progress has been made since 2025, the persistence of manual processes, poor integration and data transfer issues suggests that industry-wide financial unity is still a way off.
“By better aligning payroll and payments through technology and integration, organisations can reduce errors, unlock invaluable time and ensure workers are paid accurately and on time.”
Samantha Hurley, Operations Director at APSCo, the international trade body for professional recruitment companies, added: “These findings reflect the operational reality many recruitment businesses are navigating. As recruitment businesses manage increasingly complex workforce supply chains and compliance demands, the processes behind paying workers have become more demanding, yet the technology supporting them has not always kept pace.
“For recruitment businesses, this goes beyond an internal operational issue. The ability to pay workers accurately and on time underpins trust across the entire supply chain, from contractors to clients. When payroll processes become slow, fragmented or difficult to oversee, they can create unnecessary risk and administrative burden for recruitment companies operating in an already complex environment.
“As scrutiny across labour supply chains continues to evolve, the ability to demonstrate reliable and transparent payroll processes will become increasingly important. Recruiters that take a proactive approach to strengthening their payroll processes will be better placed to maintain trust with workers, clients and regulators alike.
“Ultimately, efficient payroll operations are not just an administrative function - they are a critical part of running a reliable and competitive recruitment business.”
