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There’s no doubt that managing payroll for a global team is challenging. Every country has different rules and regulations that apply to payroll; cross-border payments can be a real nightmare; and the multitude of systems and service providers that need to be managed creates a level of complexity that is difficult to handle—even for the most seasoned global payroll managers.
So, how can organizations take their international payroll out of a state where they barely manage to keep track of global processes to a state where they are in full control and even leverage the strategic potential payroll has to offer? Here are 14 global payroll best practices that will help you get there.
A global payroll and compliance calendar allows businesses to keep track of important deadlines related to payroll processing, payouts, reporting, and more. This includes the cut-off dates for payroll changes, the start and end dates for the different pay periods, and deadlines for submitting statutory reports and for remitting withheld payroll taxes. Ideally, there should be a centralized payroll and compliance calendar covering dates and deadlines for all payroll countries.
One of the main challenges of running a multi-country payroll is having to manage different processes for each location. While it’s true that payroll is local and that some processes will always have to be adjusted to country-specific requirements, there are some parts of the payroll process that can be standardized. Streamlining processes across locations simplifies the task of overseeing the entire operation. The same applies to global payroll data which should be available in a standardized format for all geographies.
Payroll consolidation is another payroll best practice businesses should adopt in order to simplify global payroll management. Consolidating global payroll means centralizing and unifying payroll processes, service providers and systems for all geographies in one single system. One of the main advantages of having a unified multi-country payroll is having access to a single source of truth for global payroll data, which simplifies both statutory and internal reporting.
There are many benefits of integrating payroll software with HR systems and other workforce management tools—for instance, that it enables seamless data flows and puts an end to manual data entry. Possible payroll integrations include time and attendance management, accounting tools, and expense management. But integration in payroll also refers to connecting the systems of the different payroll vendors used by the organization to enable automated data exchanges.
The less manual work involved, the higher the overall efficiency in payroll. That’s why payroll automation is high up on the list of global payroll best practices businesses should implement to increase the maturity of their payroll. Data exchanges are not the only aspect of global payroll that can be automated. Other automation possibilities include input collection and validation, payment automation, global payroll reporting and automated audit processes for payroll calculation results.
One part of the standardization process in payroll is the development of clear payroll policies that apply to all of the business’s payroll countries and processes. Payroll-related procedures that should be regulated through standardized policies include expense reimbursement, global benefits management, global compensation strategy, payroll audits and reporting, and the handling of payroll errors. Clearly defining the roles and responsibilities of the different members of the payroll team is another important aspect to consider here.
Knowing who is responsible for which parts of payroll creates important accountability mechanisms and lays the basis for strengthening internal controls. An important concept businesses should keep in mind when defining payroll responsibilities is segregation of duties. Segregation of duties means that no less than two members of the payroll team are involved in carrying out any task related to payroll to prevent fraud and reduce errors.
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Payroll produces an incredible amount of workforce-related data with every payroll run. The use of payroll analytics enables organizations to extract value from their payroll data and leverage the strategic potential of their payroll. Using data analytics tools to analyze payroll data can uncover underlying workforce trends and patterns and enable businesses to gain deeper insights into their global payroll costs. These insights can then be used by the management team to make informed business decisions.
Upping the level of data protection in payroll is among the international payroll best practices that are non-negotiable. Payroll data is highly sensitive and hence deserves the highest level of protection. Key measures include storing all global data in a central database and making sure that all data transfers are secured—especially those between different systems and providers. As part of their efforts to increase payroll security, organizations should also implement a strong data protection policy.
Conducting regular payroll audits is among those global payroll best practices that are often overlooked. Payroll audits are not limited to external checks and controls carried out by statutory authorities, but also include internal revisions of payroll results, processes and records. Auditing payroll on a regular basis not only helps detect payroll errors in a timely manner, but can also reveal existing global payroll pain points.
Paying international employees is one of the major global payroll challenges businesses face. Cross-border payments are slow and expensive, which puts the timeliness of salary payments at risk. Organizations should therefore look for ways to diversify their funding methods and implement an international payments solution as part of their global payroll best practices. One option is the use of a digital multi-currency wallet to fund payments to employees in different countries in their local currency.
Making sure employees receive their pay on time not only prevents payroll compliance issues, but is also crucial with regard to financial wellbeing and employee experience. Since creating a positive employee experience is essential for talent acquisition and employee retention, international organizations should make the enhancement of the employee payroll experience part of their global payroll best practices. This can be achieved through the implementation of employee self-service functions.
Ensuring global payroll compliance is an incredibly complex and challenging task which requires in-depth knowledge of compensation laws and payroll regulations in every country where the organization runs a payroll. Central payroll departments usually lack this knowledge, which is why organizations should consider outsourcing payroll to in-country partners (ICPs) that have the necessary knowledge and experience to prevent compliance issues.
While using local payroll partners is great in terms of payroll compliance, it can also lead to multi-vendor management issues. The more payroll providers are involved in the process, the more difficult it becomes to manage all of them and keep track of global operations. Another global payroll best practice therefore consists in bringing all of the ICPs together in a centralized global payroll solution.
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