You’ve had success in the US market, but now it’s time to reach new clients, increase growth and profits, and diversify. What are some key factors to consider before you make a move to another country? Many companies want to expand, but they don’t understand the complexity of moving operations into a new country and things can quickly get out of control if you’re not prepared.
Factors to Consider
Once you’ve assessed your current business strategy and goals, you need to understand your competition. What markets are they moving into? How can you compete in a new country? Understanding not only the new market, but cultural differences, business structures, and operations like payroll and human resources is a key to success in a new country.
Challenges with Expansion
The challenges of entering a new market start before you get there. What type of business structure will you need, setting up new bank accounts, registering with local tax authorities – these decisions have to be made before you hire your first employee! Each country has unique employment laws and regulations, so your human resources and payroll processes must be ready before you begin hiring. Ensuring payroll accuracy, determining currency rates and universal payment methods, managing cultural differences and language barriers are just some of the challenges companies face when entering a new market.
To get started, you have to know what your options are to manage payroll and compliance to avoid issues, fines, or penalties. Multinational US-based companies manage more than 34 million workers worldwide, but only 25% of companies are satisfied with their current technology in place, so it’s important to identify what you need and how much it will cost.
In-house Payroll Team
If you have an internal payroll team, it may seem that the easiest way to manage payroll in a new country is to have your US team manage the payroll. This scenario is very common, but often leads to errors due to regulation and currency differences, information security, and staffing required in-country to manage payroll.
Managed Payroll
Managed payroll puts the ownership of global payroll on a vendor, who manages the process from beginning to end, reduces risk of compliance issues, and maintains security and accuracy of the payroll. The issue with managed payroll is the cost and lack of control over the process, no access to reporting, and delays in determining actual payroll costs per country. Other concerns with managed payroll include security breaches, and lack of control over employee data. Fines and penalties can be strict and the company is liable for mistakes – not the payroll vendor. Customer service can also be a problem with managed payroll, as there can be delays in getting specific in-country questions answered.
Full Outsourcing
With a full payroll outsourcing model, your payroll data is sent to an in-country provider to manage payroll and compliance in that specific country. If you have employees in multiple countries, you must hire a new vendor for each country, so this can lead to many issues with lack of reporting, language barriers, and no control over the process. This option is also the most expensive way to manage payroll in multiple countries. Reporting is often delayed or not in the same format for each country, so if you operate in multiple countries it is almost impossible to determine your actual payroll costs from month to month. If there are any errors in the payroll process it takes months to identify mistakes and correct the employee payroll.
Single International Provider for all Countries
Using a single global payroll provider to manage all of your countries on one platform is the most efficient and compliant way to handle global payroll. With one provider you have access to all of your countries in one place, real-time reporting across all countries and currencies, and one point of contact for all of your payroll. This takes the guess work out of the payroll process, as you can create customized reports based on your needs, and get help from a US-based team and direct contact with in-country experts for specific questions. You can focus on your core business and let your payroll technology take care of the administration of global payroll. With consolidated country data you have business analytics in one place, and can quickly spot trends and make adjustments where necessary.
If you are considering expansion, or if you need to simplify payroll operations for your global employees, talk to us – our cloud-based technology, customized reporting, and unique hybrid model gives you total control of your payroll without the compliance headaches. We make global payroll easy so you can focus on growing your business overseas. Click here to learn more