International payroll – How to find the right solution for you
Organisations have to deal with many challenges to ensure compliance, cost efficiency, quality of service for the employee – and, not least, quality of life for the payroll manager. All this within a constantly changing environment and the unpredictability of the marketplace.
Because international payroll is complex and costly to manage, a common response by organisations when asked what their issues are, is a requirement for greater efficiency and cost effectiveness.
However, a more detailed scrutiny mostly reveals the biggest issues are compliance, followed by inadequate reporting, with information being passed insecurely or on excel spreadsheets, contrary to the data protection requirements, such as the US-EU Privacy Shield and the EU’s GDPR, which, when introduced in May 2018 made it imperative that data be passed securely – or face high fines.
Yet companies still negotiate over pennies on a price per payslip, whilst not appreciating that they may be losing millions in tax, fees and foreign exchange – permanently.
Finding the right International Payroll solution
There needs to be open and honest dialogue between the client and the supplier of services. The provision of international payroll is seen by non-specialist providers (such as erstwhile domestic payroll providers or international relocation firms) as an opportunistic, quick fix, market entry.
It’s very important when selecting a provider for either multinational or expatriate payroll that the services company has been delivering compliant payroll, globally, for many years, where they have honed the art – and science – through the development, from knowledge and experience, of efficient, secure processes and specific systems. Quick fixes leave the client exposed and can lead to distrust in the marketplace.
In the very first instance, organisations need to be circumspect when choosing a supplier and getting solutions for their international payroll challenges; find out how long they have been providing the solution and if they take responsibility for delivery and compliance, rather than act as ‘post box’.
It’s important for companies to firstly define what their processes are and if they have the capabilities, resources and/or will in-house to run this; if a good outsourced provider will be able to articulate this. However, companies need to be open about what needs to be achieved; although this typically becomes obvious as the procedure is followed.
No matter how good a process or idea is, people will make it or break it. The former much more likely if people are properly and effectively communicated with and motivated; many organisations remain blissfully unaware of the ideas of their payroll manager and fervently resist change. The process needs to be clearly defined to help achieve ‘buy in’, to then set expectations and strategy.
The early transition part of the implementation process is pivotal and needs to include finance, IT, HR, operations as well as payroll personnel – and the company wide communication plans.
Payroll is largely about data management and IT is typically a separate department from HR and Payroll. Often the data in companies is very disjointed, inconsistent or not ‘clean’, leading to collation and data validation issues. Companies need to ask their provider or project manager about integration and validation tools, as they will need a System of Record.
Even well managed, highly motivated people can make mistakes when carrying out work manually; therefore, automate where possible to remove error, reduce time and cost, affect compliance and the ‘boring bit’ of payroll.
Finally, the last 15 years has seen many updates in capabilities as well as complexity of international payroll. We have moved from a highly manual process to greater automation more synonymous with domestic payroll. We now have the tools to ensure accuracy and speed and to allow more time to be spent with individuals to deal with any issues; process is paramount, complexity is standard, and flexibility is essential.
Payroll is seen as a background, supporting service that isn’t really noticed – until something goes wrong; pay dates are missed, the wrong amount is paid, or there’s non-compliance at the cost of high penalties.
In short, when an organisation is looking to find the right solution for international payroll:
- There needs to be honesty from both the client and the supplier of services.
- Clients must be circumspect when choosing a supplier in the first place; find out how long the provider has been doing this for and if they take responsibility for delivery and compliance.
- As organisations develop their international capabilities payroll personnel will be able to illuminate other areas of the business-like HR, Finance, Legal and Operations.
For more details, on how we can help find you the right solution for your international payroll requirements, contact us on – firstname.lastname@example.org