Over the past twenty years, the global payroll market has experienced major changes, reinventing the ways we hire, manage, and work with people from different parts of the world.
The best global payroll solutions offer you ways to pay your people the correct amount, in the correct currency and in compliance with local law – regardless of where they are based in the world.
Innovations in technology have created tools that make global payroll tasks both efficient and flexible and help make sure that you are following the rules when it comes to paying your employees.
“Organizations make increasing efforts to streamline their multicountry payroll operation, but this is still a work in progress for most due to piecemeal efforts and a fragmented vendor landscape.”
Now you’re probably thinking there’s too much to consider, maybe it would be best to hand the whole thing over to a global payroll expert, and that might be the right move, but don’t worry, that’s why we wrote this blog.
Our goal is to give you everything you need to know about global payroll solutions from
the key challenges and benefits that come with managing payroll at an international level, and the different ways you can run global payroll, to choosing a global payroll provider that’s right for you.
First things first, identify and document your specific challenges
As you consider various global payroll solutions, keep the following points in mind:
What challenges are you trying to solve?
Start by identifying the challenges you need to address, such as handling diverse currencies for employee payments, ensuring compliance across international locations, or calculating taxes to meet varied country requirements.
Who has the most to gain?
Think about who will oversee the global payroll management and how having a global payroll solution will improve their day-to-day work tasks.
What is your budget?
Global payroll providers typically charge a monthly fee for each foreign employee you hire. To assess costs, estimate the number of international employees you plan on hiring.
What is your ideal outcome?
Evaluate how you’ll measure success. For instance, you might want to unify payroll processes for all international staff or improve compliance monitoring to minimise legal risks.
While comparing global payroll solutions it’s essential to focus on the desired outcomes to make the most of your time.
What are the different ways you can run global payroll?
There are several options for global payroll processing, such as:
In-house processing
This means taking full control of employing and paying your global workforce. However, this method is costly, time-consuming, and hard to scale. Plus, you must have the resources to handle compliance on your own.
Mult-country payroll outsourcing
Outsourcing payroll to a third-party provider is a cost-effective choice if your business is operating globally. A global payroll management provider can handle payroll, compliance, and reporting for international workers, letting you concentrate on your core business activities.
Employer of record (EOR)
An EOR is a third-party service that legally employs people in a foreign country, managing payroll, taxes, benefits, and HR duties. The EOR ensures compliance with local regulations and tax laws, while you retain control over hiring decisions, compensation, tasks, and termination.
Domestic payroll providers
Domestic (i.e. single country) payroll providers cater mainly to the payroll requirements within a specific country. If your hiring needs are confined to a particular geographical location, going with a domestic provider could be your best bet, ensuring adherence to the local regulations and standards.
What are the 5 biggest challenges in global payroll today?
Complex labour laws and tax codes
Labour laws and taxes vary not only between countries, but also from person to person. Every employee’s tax rate is based on numerous factors, such as salary structure, age, and family status.
Laws are always evolving, and it can be challenging to keep on top of everything.
Managing multiple data points
Handling international payroll involves gathering and managing an extensive amount of data. Each department in every location has to submit time and attendance reports, expense reports, and bonus/commission details.
Reporting and visibility
The challenge of reporting and visibility in global payroll lies in the fragmented nature of data. With multi-country payroll data dispersed across various systems, spreadsheets, and locations achieving a unified view becomes complex.
Payments to multiple parties
Even when everything is aligned and calculated, there is still one more layer of complexity. Payments need to be made to a minimum of three parties (employees, tax authorities, benefits vendors), and sometimes as many as ten.
Data management and security
Payroll data holds sensitive personal information, safeguarded by global standards such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act), with severe penalties for privacy breaches.
Payroll data is a highly valued target for cyber-criminals, so maintaining the highest data security standards is crucial.
What are the benefits of global payroll solutions?
As you now know, managing payroll across different countries is complex and time-consuming. An effective global payroll solution simplifies this process by offering a unified platform to handle payroll operations in multiple jurisdictions.
Here are some of the main benefits of using a global payroll solution:
Processes become streamlined
By consolidating payroll operations into one platform or provider, a global payroll solution reduces the administrative burden on your HR departments, enabling them to focus on the bigger picture rather than managing paperwork and compliance in different territories.
Compliance is guaranteed
Global payroll experts will navigate the complex web of local compliance requirements on your behalf. This drastically reduces the risk of fines (or penalties) and ensures that your payroll operations are always in line with legal standards.
Cost efficiency is improved
You can cut down on payroll costs significantly by using a service provider, as it’s more cost-effective than managing separate in-house systems and teams for each country.
Data security is enhanced
Global payroll solutions employ strong security measures to safeguard payroll data, assuring that your employees’ information is secure and protected from unauthorised access or breaches.
Real-time reporting and analytics
A global payroll solution offers reporting and analytics tools for real-time insight into operations worldwide. Access to detailed reports helps you manage resources, identify trends, plan for growth, and align payroll with overall business objectives.
How to choose a global payroll provider that’s right for you?
As you look around for a global payroll provider, consider these factors to help you zero in on the right solution for your unique business and needs.
Automated payroll processing
Choose an international payroll service that automates payroll, calculates taxes and deductions, and follows each country’s laws. This avoids manual data entry and ensures compliance.
Customisable reporting
Many providers offer customisable pre-built reports and the option to create your own from scratch. Robust reporting enables informed decisions for hiring and payroll success.
HR tools
While HR tools vary depending on the provider, they usually help with hiring, onboarding, benefits and employment compliance. Some even integrate with HR software so you can streamline your processes.
What makes Cintra's global payroll solutions different?
Simplify your global payrolls with our suite of fully managed international payroll services—designed to keep you fully compliant across the globe, no matter where you are in the world.
We’re proud to offer you a best-of-breed payroll and HR solutions that helps your organisation become more efficient and innovative by enhancing your employee experience. Book a personalised demo to see Cintra in action.
