So, you’re ready to dive into the planet-wide talent pool and build an international presence. The biggest snag: figuring out how you’re going to pay your globe-spanning A-team. Here is your guide to setting up a global payroll process, and getting it right from the outset.
What is a global payroll process?
Global payroll processing, as the name suggests, is a way of unifying payroll processes when a company employs or contracts with an international workforce. That includes processing payments for employees and contractors and handling deductions and benefits in line with local laws in the territories where your people live. Because this involves legal and administrative complexity that multiplies with each new territory, it’s not something that most companies can do on their own.
Why in-house doesn’t cut it
Payroll is admin-intensive even before you venture into global hiring. If you’re planning to scale up your operations internationally, it can overload your internal HR processes. When you hand over to experts, you win back time and resources to focus on your core business.
Full disclosure: the pros and cons of outsourcing global payroll
So far, we’ve made the case for outsourcing your international payroll obligations. We stand by that because we know that it’s the best way forward for your business. Nevertheless, it’s important that you go into this with your eyes open, so we’re going to be honest about the downsides, too.
The (minor) downsides of outsourcing global payroll
There aren’t many disadvantages, but they do exist. Here are some of the more significant ones that you should know about so that you can prepare for them.
Giving up direct control
Outsourcing means giving up a certain amount of control. You’ll need to rely on your payroll partner (whichever one you choose) to maintain quality assurance and handle any issues that come up along the way.
Payroll data security
Your company’s payroll data contains confidential information about your costs and liabilities, as well as your employees. Before you partner with a global payroll provider, you need to be certain that your approaches to data security are fully aligned.
This one is really about doing your homework when choosing a provider, which we’ll outline in more detail a little later.
Ongoing coordination with your global payroll provider
Like any partnership, working with a payroll provider requires close and ongoing coordination. Companies must keep their third-party providers informed and updated throughout the relationship. It’s important to not underestimate the size and extent of change management required to make the transition successfully.
It’s best to think of these as business challenges to overcome. And when all is said and done, the advantages of outsourcing easily outweigh the relatively minor drawbacks we outlined above. They’re up next:
The good stuff: advantages of outsourcing global payroll
The benefits of outsourcing payroll for international expansion are numerous, but we’ll focus on the most important ones.
It’s the cheaper option (by a long shot)
You’ll save on the costs of hiring specialized staff to handle red tape in the countries where your hires live. Even better, you’ll sidestep the enormous costs of setting up legal entities in those countries to run payroll locally.
Access to expert insight
A good global payroll provider plugs your organization into a network of experts and practitioners who can guide you. That lets you focus on your core business.
Compliance is taken care of
Employment and tax regulations differ from country to country. Worse still, they change. Most companies need specialist assistance in getting their payroll processes compliant and keeping them that way.
Ready, set, PLAY! Choosing a global payroll provider
There’s no shortage of organisations offering global payroll processing. But not all of them will be the right fit for you. Global payroll processing is often nested within a broader offering. For example, some Human Resources Information Systems (HRIS) offer global payroll in conjunction with many more HR services. Here are the things you consider when searching for the perfect match:
Identify the services you need
EOR or PEO? Terms like these often get used interchangeably, but they’re actually very different things. If you are looking to set up a legal entity in a country before you start hiring people there, you may need a Professional Employment Organization (PEO).
But if you are hoping to avoid the immense costs of setting up legal entities in foreign countries, an Employer of Record (EOR) is the way to go.
The world of global payroll processing is competitive. Providers are not in short supply, so you can afford to be selective. Do what you need to do to vet reputations: research company backgrounds, read reviews and ask tough questions. Have they serviced companies in your industry? Do they have a good track record of solving problems?
Before you outsource, it’s vital you understand the functionalities that your prospective partner’s platform offers. Things to look out for include data recovery and available integrations.
You will need to make use of your partner’s customer service channels, even when things are running smoothly. Make sure they’re up to the task by researching what their customers say about their experience.
Preparing for takeoff
Once you’ve clarified your company’s needs, and done extensive research on global payroll processing providers, you’re ready to start implementing. It’s time to get to work, shortlist in hand:
Alignment is key
Draw up a clear plan with your vendor or service provider. Agree on timelines, clarify communication channels and put the right people in the right positions to keep the project on schedule.
Give your provider what they need
Ensure that your provider is fully equipped to do their work. As we said earlier, this is where the rubber meets the road: you’ll need to trust them with sensitive data, so you’re entitled to know how they handle it.
Bring employees into the loop
Let your employees know about the change, and make sure there are no surprises when calendar changes come into effect. They’ll also need to know if contact points have changed, and they may need some training to enhance buy-in.
Keep your finger on the pulse
Be prepared to monitor these processes, during the rollout and beyond. Keep track of key payroll KPIs to assess the service you are receiving, and optimize it when necessary. The change management you implement through this process can serve as a template for more transformation down the line.
Flying with Playroll
Putting your business on a global footing brings huge rewards, but it also involves risk and a lot of work. Thankfully, there’s no reason to go it alone. At Playroll, we simplify all of these processes and take the heavy lifting of global payroll off your hands.
We’re ready to pass the tests we recommended you use to vet potential providers, and some more that you probably haven’t thought of.
If we’ve made you’re shortlist of global payroll providers, it’s time to get in touch. Let’s talk about your future, and how Playroll can get you there.