Tax changes are frequent, and unless payroll providers have contacts and relationships throughout the world, compliance issues can cause costly mistakes. One size might not fit all unless you want to go through numerous solutions and maybe even manage some payroll runs yourself when you feel it necessary! This guide was developed to help the global payroll manager garner a better understanding of where products exist that could provide timely and cost-effective added advantages to their global business. Depending on the answers to these questions, a variety of global payroll scenarios might be optimal. This guide provides perspective; it will not provide step-by-step how-to’s. It was developed to suggest possibilities. It allows you to see fundamental design components for each option. If you use each approach with what you are trying to achieve – you should be able to notice how to assemble a tailored alternative that is right for you. Read through this guide and take some time to consider what you will need for your particular requirements. Learn more about where solutions could be found and apply the information to assemble an assortment of worldwide alternatives that work together in a unified way, producing all non-inclusive needed administration tasks seamlessly.
Nothing is more fundamental to employees than getting paid. How many times have you heard someone say, “I can’t come into work. I’ve got to get to the bank before it closes?” Your company is expected to get it right, and payroll is often a measure of employee satisfaction. Employees will not hesitate to complain about their paycheck when it is wrong…but they won’t rush to HR about a benefits error. Accurate and on-time payments are expected anywhere in the world. If you get them wrong, you hear about it. It may be the same process everywhere in the world, but there are many variations that must be navigated. These issues can include attachments; tax structures, rates, and slabs; benefit deductions; country-specific rates for social security, medicare, pensions; country-specific payroll deduction rules for items moving ex-engagement types, recoveries onto full and final settlements, long service leave permissibility, and payment timing.
Overview of International Payroll Services
The new landscape is evolutionary rather than revolutionary, but the concept of importing or exporting an expatriate means the impact of the movement is magnified by at least 10-fold. The emerging best practices respect no borders. People are more traveled, patronizing the rest of the world. There is a clientele base that expects transactions to be completed before they travel (e-banking) or shipped (e-products). International banks in the plane of their base (headquarters) have offices in different countries (branches). Corporate head offices and manufacturing entities are spread globally. To cull the best technological resources to remain competitive, the enterprise is okay with contracting or engaging the jamboree of the best-talented individuals to achieve corporate goals across several countries.
Imagine a world without borders. There is an emergence of a truly global economy. Information, products, and money cross borders more quickly and easily than ever before. A growing number of businesses are proving more than ever the words of Canadian-born business visionary Marshall McLuhan, that the world is a global village. This new understanding of the world has forced businesses to push their service and product boundaries beyond the original borders of the home country. This internationalization (commonly called “globalization”) of the corporate world has a tangible and direct bearing on the import of the businessperson, and the expatriate, into the cockpit of a global community. Importance of Global Compensation
As a result, management cannot determine the impacts of their own business results and the operational and financial impacts of employees in business influenced by periodic standard activities, the organization of savings, and payments. There is no integration between the competence/qualification matrices and global compensation. You cannot measure how the conceptual aspects related to personnel management processes impact the company’s other strategic business goals and functions. There is no standardization of procedures on recruitment costs, hiring process, and contraction. The significant difference between the quality of life, cost, and practicality of executing plain procedures according to the company’s local entity location means there is no possibility to assess personnel management-related risks in various businesses that are independent of the country. The organization does not manage intangibles by managing and disseminating structured equity disputes and key talent programs as differentiators and integral components of the remuneration package offered by external entities.
In a world where agility and profitability are linked to innovation in organizational models and global compensation, the centrality of HR functions in business becomes increasingly evident. Without HR management standardized across all businesses, it is impossible to envision a robust corporate and strategic function that generates results that truly add value to the business. Bonuses, mass hiring, furloughs, downsizing, and processes related to payroll execution vary from subsidiary to subsidiary, country to country, region to region, making normalization and comparability of processes and structured activity management impossible.
Key Considerations for International Payroll Services
Whether you manage your multi-country payroll in-house or use multiple vendors, consider these important criteria when selecting a company for global payroll services: cost, reporting, global reach and local support, the complex nature of your business model and processes, payer of record, international payroll compliance, modern user interface and single sign on (SSO), experience with your countries and regions, references. While it may be tempting to partner with additional in-country vendors due to cost, they end up generating hidden costs and duplicate workloads for your team. Besides ensuring you consolidate your international payroll into a single solution, ensure you’re ready to meet all your business needs and have the scalability to meet your future needs.
Most small and medium-sized businesses (SMBs) rely on locally based payroll services for their local payroll needs. However, when companies start to hire employees in other countries, they reach a tipping point where the complexities of managing multiple international payrolls become too unwieldy to be administered in-house. Companies with international payroll service needs, whether in one country or many, also need to be concerned with compliance, accuracy, and data security, and many types of reporting. The right international payroll company can ensure that they remain secure and compliant. There are several essential considerations which we will explore in this article that can help guide you with selecting the proper international payroll company for your business.
Compliance with Local Laws and Regulations
Some countries may also require that compensation paid to employees who live or work there be made through a local financial institution. This rule can create a significant obstacle if international employers are not willing to join or maintain accounts in local banks. Add to the fact that every bank has its own set of rules, that the ACH rules vary from one country to another, and that each company needs to use the right financial template to correct the funds transfer request and employers, payroll managers have at least 10 obstacles to their employees’ payments. To ensure the reliability of salary compliance for an international workforce, companies need to hire reputable and reputable global payroll services. These companies need to make sure that their payroll managers are well-versed in local payroll regulations and that the companies’ payments comply with these latest regulations.
One of the biggest challenges global companies face when paying their employees is ensuring compliance with local laws and regulations. Multinational organizations must understand that every country has different rules when it comes to payroll management, including how to calculate taxes, file tax reports, issue employee tax certificates, and provide other important documents. This makes things much more complicated for payroll managers. Not only must they know the specific regulations for each country, they must also be able to apply these rules according to local labor standards.
Currency Exchange and Taxation
When conducting a business in any other country, it is very important to fully understand all the tax obligations that apply to your business. This will give you an understanding of the international tax and social security schemes that may be associated with such things as a tax relief factor. Other important international compensations for payroll to consider include: currency exchange and taxation. Moreover, other employment solutions that are associated with international workforces. This is because you will need to calculate accruals and payments for staff and perhaps the company car data when working in another country, and your employees may also need to file for certain tax deductions from your global payroll. As for currency exchange and taxation, that is to perform as the permanent establishment, or tax benefits that you may be qualifying for.
When doing business in another country, it’s important to always remember that currency values can fluctuate greatly from day to day. One day your business is doing well, and the next, it may be struggling to keep its head above water. As long as you are doing business in other countries, this will, of course, have a fallout. Notice from this that relying on an international payroll company is very important. Also, an international payroll company can assist your business to navigate through the various tax regulations in each country you are doing business in. In fact, international payroll services can provide your business with all relevant advice and take drafted responses that will keep your business consistent with every tax rule, not just in the country you are doing business in but every country you are filing NRI taxes.
Benefits and Incentives
The payroll process by itself is getting sufficiently automated. The systems can be fully integrated and with the right safeguards can ensure that the right models are delivered time and again. The systems can also assist in sending out the right mix of alerts so as to help the payroll professional to ensure that their control tasks are duly undertaken. The payroll process will also benefit from the global shared service trend where processes which are able to consistently deliver on the required agreed service levels, handled by specialized service providers, are often able to deliver economies of scale thus benefits are realized.
Another important element to be considered is the realization of benefits, as payroll professionals will need to consider the taxability aspects of these. Various other steps in the payroll processing can be simplified and made highly efficient if most, if not all, benefits were included within the scope like housing, transportation, leave travel, club memberships, first aid facilities at site. The way many of the statutory and other retiral benefits are handled will see significant change from a payroll processing STP/Non-STP perspective as they vary according to the provisions of the local liability/control laws which many a time are not in sync with the global policies of the Corporate. Self-service along with appropriate workflow options can be made available on the executive dashboard so as to ensure integrity in data processing. As implementing tools like self-service, ESS, MSS, the administrative function of payroll processes will see a distinct change.
Best Practices for Managing International Payroll
Solid practices employed are: strategy ownership, due diligence, agreement terms, governance, vendor service models, integrations, ongoing monitoring, and issue management. The advice comes from those who have already spent time and energy on globalizing their payrolls. Best practices are not a one-size-fits-all solution. They are instead a milestone in the evolution of an organization’s payroll services delivery transformation journey and the value it provides to the organization. It is difficult to find a societal participant who says “we don’t care about payroll services reliability, efficiency, or data quality.” Payroll might be invisible, but it deserves attention. Payroll Service Providers (PSPs) are a part of a rapidly evolving business services industry. Similar to those providers seeking to leverage opportunities to innovate, increase quality, and shift costs through digital transformation. Their digital workforce process transformation activities are designed to upgrade their service from the traditional payroll services model to the innovative HR Services model. Employers are racing to meet the opportunities and demands of the digital future. Companies are compelled to seek out and provide best-in-class resources, processes, systems, and digital transformation staffing to achieve their digital evolution goals. Digital economies are worldwide today. They require global digital payroll processing – just because it is payroll. Key considerations for a new international payroll structure include strategy ownership, due diligence, agreement terms, governance, vendor service models, integrations, and ongoing monitoring issue management. Part of the advice comes from a 2000 member GMAC survey of 99 companies with valued over one billion dollars. Of the corporations that participated in the GMAC survey, 78 of them had some degree of global payroll, often times because of unplanned mergers or acquisitions. There is an entire chapter on the information learned from the survey.
Welcome to Global Compensation: A Guide to International Payroll Services. This guide is designed to help an organization with its global payroll strategy, especially when considering the implementation of an international payroll services model. Payroll is often an organization’s most invisible topical matter. Payroll is considered by many as routine and not of business-critical value. Understanding where international payrolls occur, the size of the organization’s payroll costs, and the complexity of pay policies and the numbers of employees involved may shift reaches other conclusions. Many organizations have established a global payroll function for just a few countries, most often as merely a vendor management function.
Centralized Payroll Management
Cons: In an ideal case, the HR system is a worldwide consistent one. While supported by many international payroll providers, the worldwide rollout of a central system will take time and require in many cases local adaptations that can even mean legal concerns in some countries. Even though the HR system typically offers an inbuilt Job/Spot components, it may not be sufficient in some countries.
This solution fits best with large or very large international organizations and makes sense in general in case of global HR functions as well. It is also an adequate method to integrate time and attendance data from different local providers or, in a second step of payroll development, travel and expense data.
In this model, an employee is usually paid from and in the local payroll to ensure local market positioning of salaries and a compliant employment relation. Local costs are often captured locally and reported to the central location, either automatically or through a manual reporting tool, to avoid risks of error. Payroll and tax reports are then consolidated and delivered to the global headquarters. Compliance activities for the local payroll need to be carefully coordinated and integrated in order to secure legal compliance and practical feasibility. In some countries, complex local booking rules exist and need to be included in the local entities.
Centralized payroll management is the best fit for an organization with operations worldwide. It is ideal in a shared services environment where distribution of activities is based on regional needs. It supports global central processing of payroll activities such as capture of payroll data, payroll processing, and distribution of payroll transactions. It also ensures that various local statutory reports and filings are automatically addressed.
Integration with HR Systems
In the past, the only integration tools available to HR needed a lot of help from IT. “Historically, SAP, Oracle, and Workday had an add-on product or third-party provider that had bundled software,” says Jovanovic. “The technology was more like ETL by third-party providers that monitored and integrated data going back and forth between HR system fields and payroll systems. Formal API outputs would come out in a standardized format and with an EIC from an HR system provider like Workday.” EIB, for example, had an EPI integration, middleware for HR SCI file transfer, and a provider route to CI-cast HR and payroll.
Familiar global vendors, like ADP, now bring a range of global payroll services that are configurable with Workday and SAP SuccessFactors. “SAP and Workday are trying to create HR systems to support these global companies and then integrate, very robustly, right into your global payrolls,” says Jovanovic. “EIB OneSource, Ceridian’s latest cloud platform, has very tight integration and enables the fastest time-to-value because of its API-based architecture.”
Integration with HR or workforce management systems can also be a challenge since international payroll vendors tend to have less robust global solutions. But advances are being made. Many of the leading global payroll vendors are now integrating with HR systems. “There are service integrations that cut down on HRIS-to-payroll reporting,” says Amanda Parker. “And in some cases, you can pick your own pay schedules and have full visibility into the payroll process as it progresses, including a collaboration element and preview of the payroll run prior to processing.”
Data Security and Confidentiality
ACL stores confidential records in Tier-4 certified data centers that have the greatest level of security and fault tolerance and are maintained to ensure that our products are up and running 24/7/365. A combination of our sustained reliability and real-time private metering allows us to provide SLAs with less than 5 minutes of unplanned downtime each month, providing the highest levels of availability. We monitor our systems 24/7, and our experts are always ready to respond to any issues that may arise.
Your time and attendance data is critical information, and we understand its importance to your organization. Our customers trust us not only with their payroll-related knowledge but also their proprietary business information. The solutions hosted by ACL are guarded using all reasonable and industry-standard physical, network, and security technologies. Dual-hardened firewalls protect the perimeter of our production environment. Our Datacenter space has strictly controlled access to ensure our customers’ data security. Highly reliable electrical and environment controls ensure availability first and protection second.
ACL delivers service excellence through a robust governance and controls framework. Our secure platform is architected to keep all client data secure, private, and protected. The end-to-end solution is proven through ongoing SOC 1 Type 2 audits that ensure all client data is processed accurately under a strict framework of confidentiality, compliance, and availability.
Choosing the Right International Payroll Service Provider
Some of the top international payroll challenges include a shortage of in-country expertise, lack of understanding of the obligations, compliance, data integration limitations, high cross-border banking fees, lack of visibility across borders, and tax reporting problems. Your partner should be able to address these challenges with thorough in-country knowledge, localized solution delivering accurate in-country compliance while providing key data control to eliminate the need for cross-border banking compliancy issues. You also should have access to consolidated data to assist in efficient payroll tracking as well as all the requirements surrounding data and tax. There isn’t a one-size-fits-all solution for addressing disparate obligations and regulations around the world, so looking at a per-country perspective can effectively use outsource model technology or both.
The choice of an international payroll service provider should be a strategic one. First, choose the type of partner that best suits your organization. These options range from a country-by-country approach typically used by small companies to a partner or a solution that’s going to integrate different technologies – either on your side on the IT support or on the payroll service provider side. You also have the possibility to choose a single model – a global payroll service with subsidiaries for every location where you have contracts. Review different considerations within each of these models in order to find the right fit. Essentially, it goes back to the size of the company. We’re going to find out if you need a global service or a geographical approach. The overall goal is to broaden your options into the market.
Evaluating Service Offerings
Scope of Services – Services could range from just issuing basic paychecks to providing outsourced services for filing of returns, with a variety of options also in between. The question to ask here is if the level of expertise that the service provider offers is right for the organization’s current needs, and if the service is scalable to support growth. For example, can the service provider handle any changes in headcount, time, and attendance records, or compliance requirements?
Service Delivery Model – Is the service provider offering a centralized, decentralized, or a hybrid model of payroll service delivery? The answer to that question is a good starting point for other considerations. While some organizations may readily gravitate towards a model similar to the one they already use or that the parent company is using, change should be embraced as well if and when something new presents more advantages for a particular organization.
Global payroll service offerings can vary widely in terms of scope and accompanying service levels, so it is important to carefully evaluate what is and isn’t included as part of the service package. This article outlines eight key factors to consider when evaluating global payroll service offerings.
Assessing Provider Experience and Expertise
TRAXPayroll offers payroll distribution, tracking, management, and payroll starting at the employee level, pay card prepaid services, weekly or monthly payment schedules, payroll from bank accounts payable or from demand deposits associated with prepaid disbursements, and divided scheduling. From process to contract at the service, to the agreement at the bank, TRAXPayroll allows seamless integration with any financial company you want to use. TRAXPayroll has developed simple software that allows learning and participation in basic payroll opportunities that automate major specific requests and schedule safe payroll from week to week. Accountants and finance professionals no longer need to know how payroll is exchanged and can now easily automate reliable homeowner and payroll pensions.
Is the payroll provider experienced? Has the provider covered all of the potential questions? Look at the complexity of the accounts and the potential for errors (because this is what payroll carriers, brokers, and accounts do every day). Look for a balance of personalization and technology. Anyone who is not offering some level of personalization and technology – as assessed by benefits rather than features – is striving to confine the payroll provider to either a basic low-pricing model or a technology-driven advisory model. It cannot operate in both: integration and cross-selling deter attempts to serve the middle of the market. Look for integration by keeping count of where data is being entered and what services are being provided throughout a site and not just on the dashboard.
Considering Cost and Pricing Models
Considering Cost and Pricing Models When considering any third-party services, especially International Payroll Services, business leaders need to take into consideration not only the cost of the services offered, but also the cost to maintain the environment for the same, including technology costs, consulting, and/or existing internal staffing who are not productive due to lack of technology. The final cost model should take into consideration the primary objective of gainshare from the ROI, delivery of new services, and quality and timeliness of outputs. The cost model should also be designed to include new additional capabilities to be rolled out as part of the sourcing mix. The final cost model will include licensing, maintenance, consulting, and technical support, as well as professional services that may be required for the system to work and potentially extend to more departments or other countries. Remember, an independent costing and return on investment established by a third-party consultancy may yield more accurate results as compared to a TCO or ARD model provided by the vendor themselves.
What is Global Compensation? In a corporate environment that is increasingly global, managing total compensation for employees has reached a new level of complexity. Global compensation management requires a unified operating model, culture, and compensation practices supported by processes that can deliver on the strategic intent of the business. While the importance of creating and managing a cohesive compensation approach across a company’s global locations is clear, pulling together these complexities is no easy feat. The challenges of global compensation are compounded by the constant change in boundaries of legal regulations, exchange regulations, tax laws, local company requirements, corporate structures, pressure on operating teams to deliver more measurable performance and compensation results, and data-enabled insights. Today’s compensation operating model must immerse company philosophy, principles and job-worth alignment and at the same time provide the business leaders with the visual insights needed to make informed compensation decisions.
