After years of selling and implementing U.S. payroll and HCM services, I have learned how companies can operate more efficiently and stay compliant managing complex international payroll requirements.
You’re a U.S. Based Company, Expanding Overseas
It’s a quiet Tuesday at the office and your CFO walks in to tell you he’s bidding on 19 government contracts in the UK, Italy, and Canada, and you may need to pay these workers as soon as next month. The company you head up Accounting for is based in New England, and you have not dealt with international payroll in 5+ years, and that was at your prior company. You want to do right by your boss, but you need some help in carrying out this project. After the shear anxiety wears off, you do what any sound minded person would do on a Tuesday at 11am. You take to Google…
Here’s What You’ll Find
Some of the companies you are seeing in your search results didn’t exist when you looked into global payroll 5 years ago. You can go with the tried-and true choices, the big-name companies that everyone has heard of, that provider you used at your last job. That last provider had its flaws, but it got the job done for the most part. Or, you could take a risk – explore the latest and greatest technology, with your own recommendation on the line. Unless you are currently in multiple countries abroad, most international payroll providers will not put you onto an integrated platform with aggregated reporting across your three countries. This means that you will have to be on one platform in the UK, another in Italy, and potentially a third in Canada. How could this be? In the US, you have one payroll and HR provider for 300 employees in 4 states, and the data is easy to export and analyze.
Solutions for Companies That Need Both
Payroll processing in the United States has come a very long way in the last 50 years. If you work in the industry, you may remember days of using the phone and fax method to get employees paid, and stacks of paper reports. Today there are robust technology platforms available to help employers better manage their human capital. The majority of US-based companies have become accustomed to managing their workforce through these platforms, and there are a number of national and local providers to choose from.
In the global space, there are far less options available. Even the big name public companies in the United States that have entered into the international space are struggling to replicate their US technology environment. That leaves them often times having to acquire companies in other countries, and then place their clients on a separate system there.
Imagine you’ve been processing US payroll on the same system for 10 years, and you call that company and they tell you they can help expand into the UK. Great – that was easy! But once you’re up and running, you realize that the UK system is completely different than the one you use at home, and the only similarity is the name of the company on the invoice. This leaves management teams struggling to get the data they need for post-payroll reporting, month end, year end, and so on.
For businesses operating in just one country abroad, it may be most cost effective to go with a local provider in that country. If your global presence expands beyond one country, there are even fewer options available, yet more complexities to be managed in order to maintain compliance. We see many companies using separate payroll systems in each country and wanting to centralize the process.
The good news in all of this is that there are solutions out there that can drastically simplify this process. One solution is WebGlobe, our cloud-based payroll technology developed to simplify global payroll and provide aggregated monthly reporting across all countries and currencies. Imagine seeing all of your global payroll in real time, with access to custom reports each month! In addition to easy to use technology and reporting, we also offer dedicated service teams in each country. You can process payroll seamlessly in 145+ countries from one central system with Blue Marble.
How to Run an Effective Evaluation Process
They key to running an effective evaluation process is due diligence. Research and education on the front end will save so much time and effort on the back end. If you are looking to replace your current faulty system, make sure you know when your contract ends. If you’re going into a new market, find out how long it takes to set up business entities and contracts in that country.
This brings us to the next point: contracts. The majority of global payroll providers will lock you into a multi-year contract, and many of them automatically renew. There are a handful of companies out there that believe in earning your business every time you submit payroll, and they do not require anything other than a non-contractual payroll service agreement. When you partner with a company like this, you have the freedom to leave at any time if the service level decreases. Keep that in mind as you go through product demonstrations and look for the proper functionality.
Lastly, look for companies that will integrate and work with others in the industry to meet all of your human capital management needs. This could include everything from setting up an entity in a new country, drafting employment contracts, making proper tax and pension contributions, and helping with the intricacies of treasury management abroad.
If you find yourself stumbling through any of these roadblocks, you are not alone:
- Regulatory changes internationally – laws change each year and in each country – managing the changes can be impossible without a partner with expertise in each country
- General Data Protection Regulation (GDPR), effective May 2018 – the new data privacy regulations in the EU are no joke – fines can be up to $20M for non-compliance!
- Pension Plans abroad are different than retirement plans domestically – there are pension schemes and requirements that you may not be aware of that need to be in place day 1 of employment
- The cost of doing business in each country can vary greatly – knowing your costs across each country and currency is vital to maintain your global operations and budget
5 Things to Keep in Mind
- It Never Hurts to Ask. Be open minded in your search and ask about upgrades, add-on products and services that can save hours of manpower each month.
- You Get What You Pay for. Read the fine print – the cheapest option is usually not always the best for your business, and will cost more in the long run when you have to add on services or change providers due to service issues.
- Two Contacts Are Better Than One. Look for partners that offer you a dedicated point of contact in the United States, and an international contact in each country so your management team can get questions answered during business hours, and your global workers can too.
- Look for Something Scalable. What if your CFO comes down a few months from now, and mentions a new opportunity in Hong Kong? How will your provider scale the business if you add 100 more countries?
- Think About Global HR. Will you need or want it in the future? Can you get away with using custom fields in your U.S. HRIS system, or will you need something more robust? See if your provider offers global HR solutions to simplify operations in each country.
Getting started overseas or expanding your global operations can seem daunting. With research, patience, and the right partner, your global payroll should be the easiest part of your operations so you can focus on growth.
Talk to us if you’re struggling with your global payroll – our technology and service can simplify your operations and ensure compliance in 145+ countries around the world.