When it comes to managing cross-border payroll, validating payroll tax anomalies, ensuring compliance to all local laws and proper salary disbursement are among the challenges organisations face, The Hindu Business Line breaks down their complexities.
Payroll departments operate at the intersection of finance and HR functions. While in some organisations payroll aligns closely with HR, in others, they report directly to their heads of finance. The payroll team is responsible for accurately executing payments for one of the largest expense overheads in any organisation: employee salaries and wages.
Managing this overhead accurately for a single country by ensuring timely inputs from various input sources across the organisation, validating payroll tax anomalies, ensuring compliance to all local laws and proper salary disbursement might seem a daunting task. These complexities generally multiply when an organisation’s geo-distribution requires managing payroll services across multiple countries. So, what are these complexities?
The United Nations Conference on Trade and Development (UNCTAD) reported that, as of 2006, there were almost 80,000 active MNCs worldwide. This number should have grown significantly over the past decade as organisations increasingly found themselves expanding in search of new resources and markets. With this expansion comes the increased complexity of managing a global workforce and their salary disbursement.
Here are some of the complexities that an organisation will face while managing global payroll:
Knowledge of country-specific rules: Seldom do two countries have similar payroll and benefits rules that define the composition of an employee’s salary. Errors in implementing these rules can adversely affect the overall payroll process and further result in gross employee dissatisfaction. While developing in-house competency is one of the routes to take, having a partner with a cross-border experience of managing global payroll will help negate this risk.
Divisional HR and payroll platforms: Ensuring 100 per cent accuracy in payroll inputs could ensure near-perfect payroll outputs. While there are several other factors that contribute to overall payroll accuracy, payroll inputs play a critical role in the overall process. With HR contributing to around 90 per cent of the payroll inputs, it is essential that organisations streamline and automate their payroll input gathering process.
Organisations that have already invested in a global or regional HRIS will need to work towards integrating their HR platform to their payroll solution to ensure seamless flow of information as opposed to periodic updates being fed into the payroll solution.
Lack of automation for payroll processing: Even today, there are organisations that continue to compute payroll through spreadsheets, however, this is unsustainable in the long run. On the flip-side, having a payroll platform that is integrated into the organisation’s local HRIS and other ancillary HR modules like time and absence, will help automate tedious processes like payroll input gathering across all sources org-wide. An automated payroll process will help increase process efficiency and accuracy while providing significant room for sustainable growth as organisations continue their expansion journey.
Lack of a GLO-CAL approach: While an organisation could be global in nature, it is nevertheless important that their approach to addressing payroll requirements needs to be at a local level.
Local language support: Not every country in the world has English as its preferred language. Having payslips, payroll-related documentation and employee support in a preferred local language will go a long way towards heightening employee satisfaction and overall payroll governance.
Compliance on the ground: Staying on top of changes in local payroll compliance is a critical part of the overall payroll process. The years 2020 and 2021 saw numerous changes in local payroll tax laws and local benefits to help support salaried employees. Payroll practitioners the world over had to remain vigilant to ensure they abided by them.
Accuracy in disbursing global payments: The challenges of global payroll do not always end with payroll processing; ensuring accuracy disbursement is equally key. For global payroll disbursement, compliance with local laws is paramount. Having a fully automated unified solution will help payroll teams refrain from initiating multi-channel payments for each country. Payments to tax authorities, social security and other benefits providers can be made seamless.
Now, more than ever, businesses are looking for ways to survive and thrive, organisations the world over will continue to expand their geographic borders therefore it is of critical importance for payroll teams to take adequate steps to combat the challenges that could arise from cross-border payroll.
Source: The Hindu Business Line
When it comes to managing cross-border payroll, validating payroll tax anomalies, ensuring compliance to all local laws and proper salary disbursement are among the challenges organisations face, The Hindu Business Line breaks down their complexities.
Payroll departments operate at the intersection of finance and HR functions. While in some organisations payroll aligns closely with HR, in others, they report directly to their heads of finance. The payroll team is responsible for accurately executing payments for one of the largest expense overheads in any organisation: employee salaries and wages.
Managing this overhead accurately for a single country by ensuring timely inputs from various input sources across the organisation, validating payroll tax anomalies, ensuring compliance to all local laws and proper salary disbursement might seem a daunting task. These complexities generally multiply when an organisation’s geo-distribution requires managing payroll services across multiple countries. So, what are these complexities?
The United Nations Conference on Trade and Development (UNCTAD) reported that, as of 2006, there were almost 80,000 active MNCs worldwide. This number should have grown significantly over the past decade as organisations increasingly found themselves expanding in search of new resources and markets. With this expansion comes the increased complexity of managing a global workforce and their salary disbursement.
Here are some of the complexities that an organisation will face while managing global payroll:
Knowledge of country-specific rules: Seldom do two countries have similar payroll and benefits rules that define the composition of an employee’s salary. Errors in implementing these rules can adversely affect the overall payroll process and further result in gross employee dissatisfaction. While developing in-house competency is one of the routes to take, having a partner with a cross-border experience of managing global payroll will help negate this risk.
Divisional HR and payroll platforms: Ensuring 100 per cent accuracy in payroll inputs could ensure near-perfect payroll outputs. While there are several other factors that contribute to overall payroll accuracy, payroll inputs play a critical role in the overall process. With HR contributing to around 90 per cent of the payroll inputs, it is essential that organisations streamline and automate their payroll input gathering process.
Organisations that have already invested in a global or regional HRIS will need to work towards integrating their HR platform to their payroll solution to ensure seamless flow of information as opposed to periodic updates being fed into the payroll solution.
Lack of automation for payroll processing: Even today, there are organisations that continue to compute payroll through spreadsheets, however, this is unsustainable in the long run. On the flip-side, having a payroll platform that is integrated into the organisation’s local HRIS and other ancillary HR modules like time and absence, will help automate tedious processes like payroll input gathering across all sources org-wide. An automated payroll process will help increase process efficiency and accuracy while providing significant room for sustainable growth as organisations continue their expansion journey.
Lack of a GLO-CAL approach: While an organisation could be global in nature, it is nevertheless important that their approach to addressing payroll requirements needs to be at a local level.
Local language support: Not every country in the world has English as its preferred language. Having payslips, payroll-related documentation and employee support in a preferred local language will go a long way towards heightening employee satisfaction and overall payroll governance.
Compliance on the ground: Staying on top of changes in local payroll compliance is a critical part of the overall payroll process. The years 2020 and 2021 saw numerous changes in local payroll tax laws and local benefits to help support salaried employees. Payroll practitioners the world over had to remain vigilant to ensure they abided by them.
Accuracy in disbursing global payments: The challenges of global payroll do not always end with payroll processing; ensuring accuracy disbursement is equally key. For global payroll disbursement, compliance with local laws is paramount. Having a fully automated unified solution will help payroll teams refrain from initiating multi-channel payments for each country. Payments to tax authorities, social security and other benefits providers can be made seamless.
Now, more than ever, businesses are looking for ways to survive and thrive, organisations the world over will continue to expand their geographic borders therefore it is of critical importance for payroll teams to take adequate steps to combat the challenges that could arise from cross-border payroll.
Source: The Hindu Business Line