Everything you need to know about global payroll consolidation

International business expansion comes with many challenges. One of them is managing payroll for a globally distributed team. In order to take the compliance burden off their in-house payroll and HR teams, business leaders often decide to use local payroll specialists to process their payroll in each market. 

While outsourcing payroll may considerably lessen compliance risks, it also leads to having to deal with disparate payroll systems and incoherent, non-standardized data. In many cases, this results in poor data visibility and reporting and reduces the efficiency of the entire payroll management process. 

One way to make multi-country payroll more efficient, transparent and standardized is to consolidate it. In this article, we will tell you everything there is to know about global payroll consolidation, including when and why global businesses should consider consolidating their payroll and how to achieve consolidated global payroll with Lano. But first of all, let’s look at what payroll consolidation actually means and what distinguishes it from payroll aggregation.

Along with the boost in interest in global payroll, the term global payroll consolidation has turned into a real buzzword which is used by payroll vendors all over the world to describe their global payroll solution. But what exactly does it mean to consolidate global payroll? 

A look in the dictionary reveals that the word consolidation can have different meanings, depending on the context it is used in, i.e. whether it is used in law, finance or another business sector. What they all have in common is the idea that different components are merged together to form one single unit. This is exactly what happens when you consolidate payroll.

Payroll consolidation refers to the process of centralizing multi-country payroll by combining all your different payroll vendors and systems into one single centralized platform - instead of using disparate systems which deliver non-standardized sets of payroll data for each geography. As for the payroll data, consolidating your global payroll means that data from different vendors is standardized and automatically entered into a central dashboard to provide a detailed overview over global workforce costs.

Another term which is frequently used in this context is payroll aggregation - or payroll aggregator to describe the service delivery model of the payroll vendor. While the idea of both payroll consolidation and aggregation might be similar - i.e. a multitude of different in-country payroll partners is integrated into one central system - there are slight differences with regard to the level of integration. 

While payroll aggregators may also provide a customer interface which shows the collected data from all their local payroll providers, they usually offer a lower level of integration with regard to processes and data. Global payroll consolidation, on the other hand, relies on the use of an advanced technology platform which not only collects the data but also standardizes it while providing a centralized and coherent data source accessible to the client.

Unified global payroll solutions often also come with distinct reporting features which enable business leaders to efficiently track their global payroll costs and draw comparisons between different countries as well as with an API which allows integrating the platform with other workforce management tools.

Global payroll consolidation only becomes interesting for businesses once their payroll operations span multiple countries. This may be the case after several mergers and/or acquisitions in foreign markets or after having set up several local payrolls with different in-country partners. In any case: As soon as it gets difficult for an organization to handle their multi-country payroll and maintain data visibility across geographies, it’s time to think about payroll consolidation.

Increasing data visibility is an important factor why payroll consolidation is highly beneficial for multinationals. There are two main reasons for this. First, data transparency enables companies to effortlessly track their global payroll costs (which represent a considerable part of their overall spendings) and create detailed reports. Second, better insights into payroll costs pave the way for well-informed business decisions. For example, global payroll data analytics can be used to manage available in-country resources better and cut unnecessary costs. 

But there are many more reasons for global businesses to consolidate their payroll into one unified solution. One of them is the fact that global payroll consolidation enhances compliance and data security. Global payroll consolidation means that all the payroll data is collected from different providers via automated data flows and transferred onto a secure cloud space. As both transfer and storage of the payroll data happen in one highly protected system, the risk of data breach or theft is minimal. As for compliance, the improved reporting makes it easier for companies to ensure working hours, overtime, PTO etc. are in line with local regulations. 

Another major advantage of global payroll consolidation is that it significantly reduces payroll errors and frees your payroll and HR teams from repetitive manual tasks related to the payroll process. Not only does this increase overall payroll efficiency, but it also allows for a more efficient use of available resources. While data flows are initiated and carried out automatically, your staff can focus on more important tasks.

In a nutshell, global payroll consolidation is the answer to many global payroll challenges faced by multinationals.

Companies that manage their global payroll with a traditional approach, i.e. relying on external service providers without using a cloud-based software solution to consolidate them, face multiple problems. Different data formats, different systems, manual data handling and too many points of contact are just some of them. 

At Lano, we have developed a software solution which is designed to simplify global payroll for you. With our global payroll solution, you can easily manage all your local payroll providers by integrating them with our platform. Plus, you get access to a network of top-tier in-country payroll vendors who can help you set up your local payroll in over 130 countries all over the world in record time. 

Once all your new and existing payroll partners are connected to the Lano platform, our software automatically collects the payroll data from each vendor and then standardizes and consolidates it so that you can visualize payroll data for your entire global team on one single screen and access it whenever you need it for your reporting. No unmatched data formats, no excel sheets, no email exchange and no manual data input needed. What’s more, you can use the Lano platform to communicate directly with your service providers to solve problems faster. 

Interested in knowing more about how Lano can help you with your global payroll? Don’t hesitate to get in touch.