Anyone who manages employees in multiple countries knows that when it comes to payroll and compliance, every country has their own rules, requirements, and deadlines. How you handle those unique differences and stay updated on changes to requirements in each country, can significantly impact your organization. Here are a few common challenges of managing global payroll, and ways to simplify your processes to positively impact global operations:
Payroll and tax requirements
Tax and social payments differ from country to country, and it can be difficult and time consuming to calculate these. It can also be challenging to keep up with changes in each country that you operate in. Many companies use a global payroll vendor to calculate all taxes and social payments on their behalf. Using a vendor that is able to keep up to date on changes, and calculate taxes and social payments on your behalf can eliminate manual errors, and ultimately reduce the risk of having to pay compliance fines and penalties.
Technology
Most companies operating in multiple countries process payroll in 1 of 2 ways. The first way is through local payroll providers in each country. With this method there is not one secure technology infrastructure for all global payroll. Payroll processes for each country are different, and there is no standardization between countries. Many organizations using this method are submitting payroll on excel spreadsheets or sending data via e-mail (watch out for GDPR if you are operating in the European Union!).
The other way companies try to process global payroll is through one global payroll vendor, or as few vendors as possible. In this situation, you may have a technology portal… but what are its capabilities?
Making sure that you have easy to use, and robust payroll technology can impact all aspects of your business:
- Payroll – Implementing the right global payroll technology can make your payroll team’s life much easier. It can cut down on the amount of time they spend processing payroll, reduce manual errors (and the risk of compliance fines and penalties), and provide visibility with “pre-process” reports and other cross-checks to ensure payroll is correct each and every time.
- Human Resources – What global HRIS do you have in place? Does your current global payroll service or technology integrate with your current systems? If it does not, your HR team will have to complete dual manual entry for new hires, terminations, etc. in both the HRIS system and payroll system. A global payroll vendor with cutting edge technology will be able to integrate with your current HRIS system and eliminate dual manual entry for your HR teams, reducing errors and ensuring that your data and reporting is accurate at all times.
- Finance – Does your current global payroll service or technology have in country and aggregate reporting across all countries on-demand? Do you have access to all of your payroll data points in multiple file formats?Many finance teams that we work with need access to all of their data on-demand, in multiple file formats. When your technology has this ability, you can pull reports like “all annual salaries in all countries in the local currency, and in US dollars” or “all salary changes across the organization this year” at any time.
- Accounting – Making sure that your global payroll technology works with your existing or future accounting systems is important. Entering payroll data manually into your general ledger can be time consuming and error prone. If you have global payroll technology, you should be able to at least import this data into your accounting system to reduce manual calculation and entry.
- Employees—With global payroll technology employees can electronically and securely submit changes to your administrative teams to their home addresses, bank account information, and view pay slips and year end documents.
Reporting
Reporting across all payroll data in multiple file formats is incredibly important in regards to your organization’s ability for informed internal decision making. I would even go as far as to say that being able to view payroll data across all employees in all countries on demand can give your organization a competitive advantage. How long does it take you to put together aggregate reports like “All employee’s annual salaries in the local currency and in US dollars?” Maybe 1 week, 2 weeks? I once had someone tell me it takes them a month to get this data because they were using local payroll vendors in each country with very limited reports. What if your competitor is able to pull that report in 15 seconds, and make informed decisions based on real-time data weeks faster than you can?
Compliance
Many companies expand into a new country, get business entities set up to start running payroll, but forget about ongoing compliance during the year. Ensuring the correct taxes, employment agreements, and other workplace rules are being adhered to can be an overwhelming task for someone unfamiliar with the regulations in each country. Securing a partner with expertise in HR and payroll compliance can ensure you are maintaining accurate records, reducing risk for fines or penalties, and not putting your company in jeopardy.
Managing a global workforce is challenging, but using a global payroll vendor’s expertise, technology, and reporting can be very impactful and help make your organization successful across the globe.