We don’t need to tell you that payroll is one of the most important things in any business. You need to make sure that your people are being paid correctly and on time—and that can be difficult to manage with global payroll payments. There are different rules, systems, processes, and even a language barrier to compete with.
If you’re just starting out with global payroll payments, then you need to know a few things that will help you manage them. Number 1: which countries do you have team members in? And number 2: how are they usually paid?
How do you currently manage global payroll payments?
When looking at your global payroll management process you need to have all the facts. As we all know, different countries will have differences in the payroll payment process so it’s important to take the time to research the basics of each country your team are in.
You should start by looking at any legislation, best practices and even the systems you’re already using to get an idea of what the current process is, then you should assess if the current process is working efficiently.
Once you know what you’re currently doing you can start to look at which options you want to use going forward with your global payroll payments.
What challenges might you face with global payroll payments?
All payroll processes can have their challenges at times, but when it comes to global payroll payments you might find a few new global payroll challenges you haven’t faced before.
When hiring in a new country that doesn’t speak your native language it can be a difficult transition to complete any paperwork needed to hire your new talent or process your global payroll payments. You might also find that any new software can be in a new language. This is something you need to consider when selecting which option to use for global payroll.
Keeping your payroll complaint is important, and doing it globally is even harder. You need to look at what is the best way to manage your global payroll compliance, and which payroll option allows you to make the transition easier. With global payroll payments you need to consider tax laws, data privacy laws and anti-money laundering regulations to ensure your payments on compliant. Each county is going to have their own set of these rules that you need to be aware of. It’s a good idea to conduct regular global compliance audits to keep your processes up to date.
If you’re going to be using multiple systems across multiple countries than it would be nice to be able to integrate where you can as it can make processing payroll payment changes much simpler. Especially your payroll and HR systems in each country. It can be tricky to find global payroll providers who allow integration, especially in each country you’re looking to expand to. You might also find that if you use a global system for your HR for example, but local systems for your payroll then only some of the products you use can be integrated, making the whole process a bit more difficult.
Each country has its own banking systems which will come with different rules and processes. You need to be aware of the banking systems in the countries where you’re paying your people, as well as how they work with the banking system in your base country. As you might find that deposits can take longer between certain banks and countries, and this is something you need to factor into your payroll payments.
Depending on where you hire new talent you might find that they’re based in a new time zone. This means that when you’re processing their payroll you need to be conscious of this, otherwise you risk paying people late. You also need to be aware of the time zones of any external companies you might choose to use for your global payroll payments, as this can make communicating with them much more complicated.
Currency exchange rates
Paying someone a specific salary seems simple enough… they’re due £1000 this month, so it’ll cost you £1000 + their benefits and your additional contributions. But when it comes to global payroll payments, it’s not always that simple. You have to factor in currency exchange rates. If you’ve offered someone a salary in their local currency and are paying them in that currency, then you’ll need to do the exchange to figure out how much the payroll payment is going to cost you.
Your options for managing global payroll
If you’ve decided you need to change your global payroll process then you have a few different options to choose from.
A global payroll vendor
You can outsource your payroll to a vendor who is able to pay your team in any of the countries they’re based. This option is one which is great if you’re just starting out, or if you only have a handful of employees in each country. But one of the downsides of this way is that they might not offer every country you want to expand to, and you might also find that some global providers aren’t as knowledgeable about every single country as a local vendor might be.
Local payroll vendor
Using a local payroll vendor is a great choice as the vendor is more likely to know about legislation updates, and the best practices in the country. But this option also has some downsides too, you’ll have to use multiple local providers if you’re hiring in multiple countries which can be difficult to manage, and means that each of your team members might end up having a different experience. It can also make reporting on your payroll difficult.
Multi-country payroll provider
Multi-country payroll providers are when you hire one company, and they use lots of in country providers (ICP’s) who process your payroll for you. This option is great if you want a single point of contact but still have the reliability of using a local payroll vendor. You’ll also find with this option that because the company work so closely with their ICP’s you get the same amount of information on legislation updates, payroll process changes and best practices within counties.
If you have an inhouse payroll team you might find it easier to process your payroll yourselves using a software which can do global payroll payments. This option is usually the cheapest as you don’t have to use external people, however, it can be very complicated to do. You’ll need to keep up to date with all legislation in each country, as well as calculate all exchange rates yourself. You’ll also have to navigate any paperwork in different languages, and working with foreign banking systems.
Questions to help you choose the right approach to global payroll
Now you’re at the point of deciding how you should be processing your global payroll payments. So, here’s a few questions to ask both yourself and your potential providers to help you understand if it’s the best option for you.
- What do they do to keep their data secure?
- How easy is the process to onboard a new employee?
- Do they have people internally who speak both my native language and the language of the country I’m hiring in to make communication easier?
- Will this global payroll solution still work for me in a year or two if I expand further?
- How do I stay up to date with legislative changes, can they help with this, or do I need to do it alone?
- Is their solution cloud-based for easier set up and updates?
- How well can it handle supplemental payments, part-time working and flexible working?
- Can the online payroll software be seamlessly integrated with whatever HR solutions you need?
Just Payroll Services offers a full suite of global payroll and HR services! So, if you’ve decided you want a single point of contact solution to pay your people, get in touch and we’ll answer all your questions!