Worldwide: Is Your Payroll Department Putting Your Business At Risk?

Seven out of ten global professionals that we surveyed said they were unable to view the status of their payroll processing activities across all the countries in which they operate.

It's a worrying scenario that increases your company's risk of payroll errors and delays.

"If you're an international company with employees in different countries around the world, it's essential to have a clear view and understanding of your payroll activities in each of those countries" says TMF Group HR and Payroll Portfolio Director Darren Beal. "How else can you have the right information at your fingertips to make informed business decisions?"

Gaps in payroll policies and procedures can damage your business. If you make a mistake, even unwittingly, there's a risk of penalties, which can also harm your reputation. And, if you're operating in multiple countries, issues can snowball. Once a regulatory authority in one jurisdiction identifies non-compliance and issues a fine, authorities in other countries might begin to question your activities too. Nobody wants multiple investigations, not least because they're time-consuming; requiring the allocation of resources to prepare for inspections and justify actions taken.

"We once had a client come to us after being investigated in the US," said Darren. "Suddenly, the issue had escalated, and the client became worried about its operations in 45 other countries. How could they be sure they were compliant? The client was in turmoil, wasting valuable resource to try to validate everything."

The need for local knowledge

Company expansion poses its own payroll challenges. A start-up might only have a handful of employees to build a presence in a new country. With no local HR or legal department, there is no experienced professional on-hand to follow the correct local processes. Head office might only be concerned about getting those new employees paid on time, so global payroll departments try to get by without following correct local employment procedures. Such procedural gaps can cost you dearly.

Seven out of ten (69.4%) of the professionals who participated in our second annual survey with the Global Payroll Association said they have gaps both in global policies and processes. "The result indicates to us that many in-house global payroll departments don't understand local rules, and don't know how to find the information they need about local markets," said Darren. Lack of local knowledge is the biggest challenge for the global payroll industry, with 41% of those surveyed admitting to a 'lack of knowledge of local payroll legislation and requirements' – an increase of 6% compared to 2016.

Technology misconception

Many organisations are yet to adopt appropriate technology to support payroll on an international scale. And misconception is rife about the capabilities of technology currently available.

"Companies mistakenly think there is one global payroll system they can buy" said Darren. "There isn't. But there are organisations, such as TMF Group, who can manage payroll for them – on a global basis but with local expertise."

"Other third-party providers might offer global payroll support, but it's likely to be via a shared service centre. A global call centre handler doesn't necessarily have the more granular information you need about employment legislation in Chile, or Vietnam or Bulgaria. This is where TMF Group is different; we offer global reach with a uniquely local perspective. Our payroll professionals are in-country, speaking the language and possess an intimate understanding of that country's legislation and regulations."

Taking a global view

Are you sure that your payroll practices meet international and local requirements in every country in which you operate? Do you have a global view of what's happening across your workforce?

A company might try to produce a global report through manually uploading information, but this is difficult to replicate on a regular basis, to ensure compliance. And a lack of visibility makes it difficult to identify problems. A global payroll team might remain unaware of a developing issue until the situation hits crisis point.

For true visibility of your global payroll, working with an external provider can offer peace of mind, and valuable information to enable confident decision-making. The ability to compile global reports and analyse the data through a middleware solution creates business insight to maximise efficiency, and inform strategy.

"Our middleware payroll software solution TMF Horizon provides global payroll intelligence at your fingertips" said Darren. "It's a single online portal with dashboards providing full visibility of payroll processing activities and performance. TMF Horizon gives our clients that truly global payroll solution they've been looking for to mitigate risk. And, it's supported by local contacts with know-how and expertise."

Learn more about the latest trends in multi-country payroll by downloading the report: Change is coming: the annual global payroll survey 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.