Here are 5 ways to lower your costs when running a remote payroll.
1. Remote payroll: automate and integrate
Payroll data needs to be handled with care. Automation provides a way to protect this data from human error. According to the Global Payroll Association, payroll accuracy is usually lower than companies like to think.
Digitizing these processes boosts employee satisfaction while avoiding the cost and labour involved in correcting needless errors. If your chosen payroll provider can integrate with your other HR tools or accounting tools, all the better. Automated, streamlined workflows minimize errors and reduce costs.
Let employees help themselves
Another cost-saving benefit of automation is that it allows employees to solve problems on their own. Many cloud-based payroll systems include self-service options for employees. This enables them to make inquiries, apply for leave, and submit reimbursement claims without burdening the HR help desk.
Comprehensive self-service can help HR teams to reclaim hours of time that they can then devote to their core functions.
2. Time-tracking: a clearer picture of productivity
In a traditional brick-and-mortar office environment, it can be hard to calculate exactly how much of an employee’s work day is productive, and how much is spent on breaks and distractions. In this new era of remote work, there’s an abundance of software tools that enable employees to log time digitally.
That gives organisations a way to calculate payment for time worked, rather than time scheduled.
If it fits with your company culture, and your employees are satisfied with it, time-tracking can help to reduce payroll costs. In addition, it provides valuable intelligence on how to best allocate time across tasks and workflows.
3. Consider the costs of different payment options
Remote work isn’t new. But it is happening on an unprecedented scale, and traditional payment methods just aren’t fit for purpose. And while new modes of payment are evolving to keep up, these come at a premium. As the market matures, we can expect things to get better. But in the meantime, these are some of the most widely used options:
- International bank transfer: the tried and true. There’s a certain amount of security and accountability involved in dealing directly with banks, which is why this method persists. But it’s far from ideal: each transfer can cost up to $50, and that’s before factoring in the cost of foreign currency exchange. It gets worse: this method is admin-intensive for your internal teams, and that’s a roadblock to scalability.
- Virtual payment platforms: Wise, PayPal and similar platforms are great for fast, hassle-free payments. Unfortunately, using them to pay your remote employees and contractors is not cost-effective in the long term.
- Digital wallets don’t rely on bank accounts, which allows greater flexibility. The popularity of this method is increasing, especially in regions where large numbers of people don’t hold bank accounts.
Choosing the optimal method for your company is crucial to reducing your payroll costs. For many companies, the most cost-effective solution is to partner with local entities, or Employers of Record, in the countries where their candidates live.
4. Do your homework to avoid nasty surprises
This one is preemptive but equally important. As the saying goes, a stitch in time saves nine. That’s especially true when it comes to juggling compliance rules in multiple jurisdictions.
Small mistakes can have huge financial consequences, so this is one area that every organization should iron out before they start hiring abroad.
Get your papers in order
Every country has its own employment laws and tax regulations. To avoid costly fines down the road, make sure you’ve covered all the administrative bases before your new employee or contractor commences work.
Classified information: employers or contractors?
Misclassification of employees as contractors, whether intentional or not, attracts huge fines, stop work orders and severe reputational damage.
Whether you’re keeping payroll in-house, or outsourcing, the onus is on you to ensure you’ve classified all the people in your organization correctly.
5. Work with an Employer of Record
When all is said and done, the most cost-effective way to handle remote payroll is through a strategic partnership with an Employer of Record (EOR). A good EOR eliminates the time-consuming, expensive legwork of onboarding, compliance and ongoing legal obligations.
A really great EOR plugs you into a global employment infrastructure that allows you to access new markets without the expense of establishing your own entities.
Whatever your business needs, we’re ready to find solutions to power the next leg of your journey.