A Guide to Global Payroll Processes and Strategy
Organizations with employees in multiple countries require a different approach to their payroll process and strategy than organizations that don’t.
Delivering an accurate and reliable payroll experience in a variety of languages and currencies while adhering to compliance and legalities in each specific country can be a daunting challenge.
The process of running global payroll can put a severe strain on resources for many businesses and organizations given the fines and penalties they may incur for making mistakes. For this reason, many prefer to outsource their global payroll process to an experienced global payroll provider in order to not only minimize the risk of error and non-compliance but to streamline their payroll process too.
This article delves deep into the challenges organizations face around global payroll and provides guidance on creating a successful global payroll strategy.
What is a Global Payroll Strategy?
Global payroll strategy is the central management of a business or organization’s payroll function for all its locations in multiple countries across the world. A successful global payroll strategy is built on three main pillars, all of which impact the global payroll process itself.
Payroll is an essential part of any organization’s business function, and a global payroll strategy is required to ensure employees receive timely and accurate payments of wages wherever they are working.
What are the Three Pillars of Global Payroll Strategy?
A consistent and trustworthy global payroll strategy is constructed around three main pillars: your workforce, an adaptable IT structure and the expert knowledge that falls within your company. We examine each pillar and discuss the impact they have on global payroll processes so that you are armed with the vital information you need around global payroll.
1. People and employees
The most important element of a global payroll strategy is the employees themselves. People should be paid on time and in the correct currency, while their payroll provider must follow all the necessary compliance and laws in the country where they work.
The process becomes even more complex for organizations with employees in more than one country. This is because each country will have different rules and regulations around payroll based on the job description, salary, benefits, social security payments and employment law.
Here are some key considerations that organizations should make around their global payroll strategy:
Who are you hiring?
What type of personnel are you trying to recruit, at what level and in what industry will they work? Also, are the roles you are trying to fill full-time or part-time? Will workers be paid weekly or monthly? Will you be offering bonus schemes and company benefits?
Answering the above will provide a better understanding of the global payroll strategy you need to pay workers regularly and remain legally compliant in a specific country. There are global payroll providers who can take care of this for you.
What countries are you focused on?
You have recruited new staff so where, exactly, will your workforce be based? Will they work in one country or more? If so, what are the legal requirements in each specific country? Are there cultural differences to take into account?
These questions should offer vital clues into the global strategy you should take in order to run a fully compliant payroll process.
Is there a deadline you are working to?
You have completed the hiring process and are ready to start work in a foreign country. Will there be an implementation period? Is this affected by reporting deadlines around tax, for example? Will public holidays or major events cause issues around your implementation plans?
When you consider that your global workforce is spread across multiple countries, each with its unique laws, legislation and cultural traditions, global payroll becomes that much more complicated. Your global payroll strategy should allow for these varied nuances in every location where your workforce is based.
2. IT and Global Payroll
Running a global payroll process without the right technology is impossible, especially when your organization operates across multiple countries and time zones. A manual process where approvals and pay cheques require a senior manager’s signature simply won’t work in the modern age.
If your organization has employees in more than one country, you will undoubtedly require digital technology and payroll software in order to create a smooth workflow. The best cloud-based global payroll software provides full visibility into every aspect of an organization’s payroll including country-specific deadlines, document exchange, centralized file management and import and export mapping technologies. Its integration with third-party business software is also important to create a connected, borderless business.
This process should already be in place before you launch into any recruitment drive or global expansion so that new employees receive the best possible experience and support from the get-go.
What roles should global payroll software perform?
Global payroll technology should be fully scalable and support future business growth without the need for a major system overhaul. Using a cloud solution gives Human Resources (HR) departments the power to automate the payroll process, add and remove employees and give employees access to important information as and when they need it.
Businesses should be clear on how they want to manage their payroll process from the outset. The software they choose should be able to handle payroll in multiple countries and currencies and identify potential problem areas such as outdated manual processes which could cause bottlenecks and require modernization.
3. Global Payroll Expertise
When a business or organization expands into a new country or multiple countries it brings a fresh set of complex challenges around payroll and compliance. It is unlikely that an in-house payroll team will possess the necessary expertise or local knowledge of payroll laws in specific countries other than those in which they are already established.
In-house or outsourced global payroll?
Close consideration must be given to whether your payroll team has the capacity and knowledge to support any expansion plans before the start of the hiring process, or if a new in-country payroll expert should take care of the process.
Enlisting the services of a global payroll provider will remove this burden for you. They will have in-country payroll experts with in-depth knowledge and experience in payroll legalities and compliance. This will save time and reduce the possibility of errors and incurring fines and penalties.
Is global payroll software simple to use?
An established global payroll provider will remove the complexity around global payroll before you begin the process of hiring employees in a new country. The best payroll portals are simple to use and provide everything you need to run global payroll in one portal, regardless of language or currency, including unified cross-border reports.
Why Do Businesses Require a Global Payroll Strategy?
We live in a world where modern working patterns bear little resemblance to older working practices. Digitalization means businesses can recruit top talent from all over the world and are not restricted by country borders. It also means they require a multinational payroll strategy to help streamline the process and remain fully compliant.
We have already highlighted the numerous complexities involved with compliant global payroll provision including language, currency, and local laws specific to each country.
Most businesses lack the resources required to perform global payroll within their existing payroll team and therefore enlist a global payroll provider like IRIS FMP to do this for them. This will streamline the most complex part of the global payroll process so that businesses can manage their entire payroll from a single interface that automatically applies the correct pay rates, benefits, tax deductions and more for every employee in every country.
While some businesses and organizations continue to use patchwork solutions for their global payroll, many others recognize the affordable benefits of using global payroll solutions and the in-country expertise this will provide.
Delivering a Global Payroll Strategy
Armed with the knowledge of the steps involved in running global payroll across a diverse range of countries, implementing a payroll strategy that best matches your business goals, objectives, and expansion plans is next. Adopting an effective global payroll strategy will deliver a range of benefits including greater efficiency and cost savings for all businesses when run by a company with global payroll expertise rather than in-house teams whose knowledge of payroll may be restricted.
It is important to follow due diligence when choosing a global payroll partner. Your partner should have an established system in place to guarantee the protection of sensitive business and personal data and provide open communication lines so that errors or changes are promptly addressed.
IRIS FMP Deliver In-Country Global Payroll Solutions and Unrivalled Expertise
IRIS FMP has been proving businesses with global payroll solutions for more than four decades and in 135 countries worldwide. Discover how we can support your global expansion plans.