Global payroll is challenging. There’s no other way of putting it. Compliance, standardisation, automation, and reporting.
The challenges of running a multi-country payroll are numerous. So numerous and versatile that even experienced HR and payroll teams struggle when it comes to managing international payroll operations.
But what are the different global payroll challenges that businesses face when operating in multiple geographies? And more importantly: How can they be overcome?
Let’s elaborate on those…
Payroll Compliance On a Global Scale
According to the Global Payroll Management Institute (GPMI), the number one global payroll challenge faced by companies is global payroll compliance. Every country has its own deadlines for filing reports and paying taxes, which makes it hard to ensure everything is submitted on time.
Plus, payroll taxes and their respective rates vary between jurisdictions, and so do the rules for tax deductions and administration benefits. Another important compliance aspect to consider is employee misclassification.
Payroll compliance is always a challenging task for organisations, but with a global payroll, the complexity level rises with each additional geography. Businesses can minimise compliance risks by getting advice from local experts or by outsourcing payroll completely to an external service provider.
At Relocation Africa, our remuneration department specialises in payroll for the entire African continent, who each has different deadlines for filing reports and legal processes.
Why Choosing a Single Payroll Provider for Africa is Better
Choosing the right payroll service provider can in itself be a global payroll challenge. There are loads and loads of payroll professionals out there that offer their services in one or even several countries.
Comparing their service features and pricing to make sure they meet all the necessary requirements is a very time-consuming and daunting task.
To avoid wasting time comparing numerous providers, organisations can look into a regional payroll solution.
At Relocation Africa, our Remuneration department have a unique platform to keep everything in the same place, for all of the African countries.
In the 2021 “Getting the world paid” survey, the GPMI found that 43 percent of companies with global operations work with between two and five payroll partners. Another 19 percent even have to manage between six and ten providers. Working with multiple payroll vendors means having to deal with various different processes and systems, which is complicated and inefficient.
That’s why payroll integration is an important aspect when choosing a global payroll solution. Global payroll platforms allow for integration with regional payroll systems used by the different providers so that businesses can have access to payroll data and insights from multiple systems through one centralised platform.
Lack of transparency and visibility
Data coming from different payroll vendors isn’t standardised, which makes it hard to track global payroll costs and compare different geographies. Yet data transparency and detailed insights into global workforce costs are crucial for strategic decision-making.
To solve this global payroll challenge, businesses should invest in a payroll solution that standardises and consolidates all their payroll data into a centralised system. This is where regional payroll reporting capabilities offer even more insights into data.
Manual data handling
The 2020 Deloitte Global Payroll Benchmarking Survey showed that 30 percent of organisations identified manual data entrance as the most time-consuming aspect of payroll processing. The problem increases as soon as data from different payroll providers needs to be entered manually into the central HCM and accounting systems.
Not only does this mean wasting valuable time on dull administrative tasks, but it also creates more room for errors. This global payroll challenge can also be solved through payroll consolidation via a centralised platform consolidating payroll information from regional providers, such as Relocation Africa for Africa.
Data protection and security
Employee payroll data is very sensitive, hence the need for strong data protection. Running a global payroll means having to comply with different data security laws. What’s more, the various different data streams to and from the business’s central system can quickly become a real security risk if not managed properly. Reducing the number of payroll partners and focusing on a regional solutions that report in centrally will assist in the data security of personal information.
A good payroll service provider will offer high data protection standards with regard to their internal systems and guarantee compliance with major data protection regulations like GDPR. Data security during transfers between systems can meanwhile be ensured through the use of a global payroll platform that integrates with the different regional vendor systems and uses encrypted data transfers.
Different currencies and cross-border payments
Another global payroll challenge identified by the GPMI survey is paying employees in different currencies. Businesses have to make sure that the right amount of money is available in foreign currency to pay their global team and allow for additional time for the payments to go through. Plus, transaction and conversion fees can be high.
In many cases, businesses can solve this issue by having their regional/local payroll partner manage employee payments. In some countries, however, there’s a legal requirement for salary payments to be made by the employer through a local bank account.
Time zone, cultural, and language barriers
Going global always comes with cultural differences, language struggles and time zone issues, and global payroll is no exception to that. Reporting and tax filing needs to be done in the local language, and organisations must understand local cultural practices linked to employee benefits. Payroll-related communication is also more complicated and slower across different time zones therefore working with a regional payroll partner will solve these cultural barriers.
Working closely with regional payroll partners reduces the risk of not complying with local payroll practices, since they can offer advice on cultural differences and common practices with regard to payroll and compensation. Having an regional payroll partner also is a big advantage with regard to communicating with local authorities. Time zone issues can be solved through asynchronous communication.
Having an African regional payroll partner can speed up the process. Relocation Africa has the necessary structures in place and the necessary knowledge and experience, they can implement a regional payroll infrastructure much faster than the organisation itself.
Click on the link below to find out how our team of experts can help you: