The complexities of global payroll management are numerous, and they can quickly become overwhelming if not handled correctly. With the onset of the pandemic and distributed workforce, these challenges have only increased in recent years.
According to EY 2021 Global Payroll Survey Results, the primary challenge for the payroll department is
- Evaluating remote working policies and their impact on multi-jurisdiction payroll withholding (58%), followed by
- Effect of compensation programs for talent retention (13%), and
- Introducing new technology to track and manage employee work location to remain compliant with local and global regulations (13%)
So, how do you keep up with the complex world of global payroll management? Here are some tips!
4 Practical Tips to Make Global Payroll Management Easier
Here are the four best tips to help you manage global payroll and ensure everything runs smoothly.
1- Know What Local Labor Regulations Mean for Your Global Payroll System
When it comes to the complex world of global payroll management, one of the most important things you need to know is what local labor regulations mean for your business.
For example, if an employee works in France and has a dependent who lives outside France but also works for your company, are they required by law to pay social security on behalf of that dependent?
You can find this information in a country-specific employment guide or by contacting local authorities or other national experts on cost-effective labor compliance.
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2- Build a Team of Payroll Experts
A team of payroll experts is an excellent resource for your organization. A dedicated team can help provide the kind of oversight that can keep you out of trouble. They will also help ensure your employees get paid in full and on time, which builds trust with them and assures continued satisfaction for years to come.
Here are some tips to help you build a team:
- Choose the right people: The core group should include at least one person from each department—payroll, HR, accounts payable/receivable (AP/AR), finance, and IT—who specializes in global payroll management as well as someone from accounting who knows how things should work inside your company’s accounting system.
- Establish clear responsibilities: Define responsibilities for everyone involved with global payrolling operations. This way, there will be no confusion about what each person is responsible for doing at any given point during this process cycle.
- Develop an action plan: It should outline how those responsibilities will be carried out over time, so everyone understands what needs to be done to achieve those goals.
3- Draft a Strong Benefits Strategy
Global benefits strategy is a tricky topic. On one hand, it’s important to be consistent with the company’s culture, especially regarding health insurance and retirement plans.
But on the other hand, if you have employees in multiple countries, you need to tailor your benefits packages so that they meet local regulations and the needs of your workers.
How do you strike this balance?
To start with, we recommend looking at what your competition offers its employees in each area. Compensation surveys are great for this purpose. This will help you determine how much money employees are making in similar roles worldwide—and whether you need to adjust the benefits.
4- Automate Whenever Possible
With global payroll management, there are many things to keep on top of. For example, as your business grows and you hire more employees worldwide, your HR department has to grow with it. So you mustn’t let these processes become too complex or difficult to manage.
That’s where automation comes in.
You can automate the process of hiring new employees, maintaining employee records, and keeping track of paychecks. In addition to saving time, automation ensures that all employees are correctly classified as exempt or non-exempt, and their wages are calculated accurately.
Global Payroll Management Is Getting Complex Every Day
It is no secret that managing a global payroll department is an incredibly complex and demanding task. The process involves collecting, analyzing, and reporting data from multiple sources in different countries. Besides, the laws and regulations of payroll and taxes are regularly changing.
Not only does this require a lot of time and energy, but it also requires resources (both financial and human) and knowledge about the payroll laws in each country where your employees work.
The best way to avoid these problems is by outsourcing your global payroll operations to a professional provider specializing in this area.
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Outsourcing Global Payroll Management to a PEO Provider
As your business grows, you might find that the complexity of managing your international payroll systems gets overwhelming and challenging. This can lead to errors, inefficiencies, and increased costs.
That’s where outsourcing payroll to a global PEO payroll provider can help.
In addition to saving money by outsourcing, there are other benefits as well:
- Outsourcing allows you to focus on running your core business while a third-party company handles the complex aspects of global payroll management.
- You get experts who understand local laws, regulations, and customs that vary greatly from country to country.
- It reduces your legal liability and provides a more transparent way of handling global payroll processing.
Besides, partnering with a PEO provider gives you access to market-leading software solutions. Specifically, they may offer:
- Software solutions that can be tailored to the needs of your business. This means you can customize them to meet the needs of both employees and employers.
- Tools that integrate with your existing systems and processes. As such, you’ll be able to access these platforms without rebuilding or changing what you already have, saving time and money on implementation costs overall.
Final Thoughts
The payroll world is getting increasingly complex, but it’s not impossible to manage and stay compliant. You can either set up a global payroll management process or hire a third-party service to handle your international payroll. Happy Global Payroll Management!
