Local Payroll vs. Global Payroll

Alex Margolin October 28, 2019

Payroll is clearly the most thankless job in any organization. No manager ever pulls a payroll worker aside to praise him or her for properly calculating payroll. But when there are mistakes or delays…the fingers of blame are quick to point at the payroll worker responsible for the error.

The reason is simple. There is no margin for error when it comes to payroll. It has to be done right and on time, every time. People count on receiving the money they are owed, and they trust the payroll department to deliver. Mistakes deteriorate employee trust in the company, harm a company’s reputation, and in some cases even cause employees to leave, incurring expenses for the company to find, hire, and train replacements.

To make things easier, many companies turn to software tools or payroll providers to help keep track of all the different payroll elements. That could include gathering time and attendance reports from every department, keeping track of overtime and paid time off for every member of the team, ensuring that all benefits are properly administered, distinguishing between regular employees and those who are contract workers, and so much more.

All those tasks have to be performed in a short span of time, especially at companies that use a bi-weekly payment schedule.

Choosing Payroll Software for Your Company

A company that operates in one country, even if it has many satellite sites across that country, can benefit from payroll software or a payroll service provider. Key features to look for include:

  1. Automatic Tax Filing

Payroll is always more than just calculating salary figures for each employee. Since employers are responsible for paying employee taxes and withholding income and social security taxes from employees, legal compliance is part of the payroll package. A payroll platform that handles all tax reporting removes one of the perpetual stress points.

Tax codes change frequently – and unexpectedly. Even if a company only has to worry about the tax laws in one country, compliance remains an ongoing challenge. A payroll system that handles tax filing is typically supported by a company that keeps track of any changes, making it easier to stay in compliance.

  1. Automated Bank Deposits

Since the goal of every payroll cycle is to ensure that everyone on your team gets paid properly, it makes sense to choose a software package that sees the job through to the end. Just as manual processing is slowly disappearing from existence, the same is true of physical paychecks at the end of every pay period. Automated bank deposits are increasingly the standard method of payment.

Direct deposit means the payroll system generates pay stubs instead of paychecks. Employees receive the paystubs with a detailed accounting of all deductions from their pay, along with time off accrued and other information.

  1. Customization

Every enterprise offers a wide range of compensation packages, perks, and benefits. An effective payroll system fits with the specific needs of each company so that flexibility is maximized. A company should be able to set the salary structure for each employee, as well as customized bonus capabilities and other elements that change from employee to employee.

Customized fields are particularly useful in the onboarding process. A tailor-made dashboard can ensure that the most important information is the easiest to find, enabling the clearest view of the entire workforce and each worker individually.

  1. Integration with Your Accounting Software

At many companies, the payroll department hovers uncomfortably between the Human Resources department and the Accounting department, and serves as a bridge between the two. Ideally, the payroll software would sync directly with a company’s accounting software so that all of the entries in payroll would go directly into the general accounting for the company.

Payroll is the largest expense at any company. Keeping it separate from the general accounting ledger means an additional layer of manual processing to integrate the enormous expense. Software that works together with the money management system saves a great deal of time and effort for the entire company.

  1. Clear and transparent pricing policy

Whether it’s a cloud-based SaaS model that charges a standardized monthly fee, a software purchase, or an all-inclusive service charge, make sure that the cost structure is fully transparent right from the beginning. Some services charge extra for filing tax forms such as W-2. Others have late fees and corrections charges.

While every system has its own pricing model, and companies have budgets for their payroll processing, the key is that the client remains fully informed of all fees in advance. Unexpected costs can cause budget constraints. Avoid the problem by checking that all fees are clearly defined before the process begins.

Moving to a Global Payroll

When companies grow and start to open branches overseas, the complexity of payroll goes up substantially on multiple levels.

Each new country is essentially a new local payroll, with its own unique set of tax laws, salary expectations, benefits benchmarks. Each additional location means more spreadsheets with different reporting styles, different languages, and different currencies.

The payroll department must process all of those additional elements within the same time-frame as it did with just one location in order to ensure that the entire team, now distributed across the globe, is payed correctly and on time, and in compliance with the local demands.

An automated global payroll system brings all the different elements together to make them manageable. When choosing a global payroll service, look for the following features:

  1. Standardization of document

With so many different types of spreadsheets passing through the Payroll office, the process can become overwhelming. A global platform must be able to convert all of the disparate documents, different languages, and foreign currencies into a single system that appears in one display.

By standardizing all the data, a global system replaces the need for manual spreadsheets and reduces the risk of error substantially. It makes a massive undertaking appear simple.

  1. One platform for all types of workers

Many companies hire abroad the Employer of Record (EoR) services rather than opening entities abroad. A local partner serves as the official employer for compliance purposes while the company directs the person in day-to-day tasks. Companies might also take advantage of the gig economy to hire contractors for one-off projects.

An effective platform will enable a company to pay workers regardless of their designation so that the company maintains maximum flexibility. It also allows for companies to move people from one designation to another if it decides to move from EoR to payroll, or to hire contractors as full-time employees.

  1. A single view of total workforce spending

When companies expand to different countries, they often adopt the salary standards of those locations. That means a company will have employees at all different salary levels, and with different benefit packages. It’s challenging for enterprise to keep track of the differences within a single location. But when the number of countries begins to climb, the company needs a single, unified view of all the spending to ensure its funds are being allocated optimally.

  1. Support from Customer Success Managers

When a company has employees in one country, it typically has the resources to handle problems or questions that may arise through its finance and legal teams. But a global payroll with local partners in each country requires hands-on support from a customer success team. The CSM serves as a liaison between the client and the local partner.

While it’s possible that an automated payroll platform may never require additional support from CSM, it is essential that the company has real people to turn to in the event that the support is needed.

  1. Cross-border payments

Just as direct deposits are essential in a local payroll, cross-border payments are key to a successful global payroll. The goal of both is the same – ensuring that every member of the team gets paid correctly and on time, every time.

With a global payroll, that means making payments in different currencies. As an added feature, the global payroll platform should also send confirmation when payments arrive at their destination.

Papaya Provides Global Payroll Services For Enterprise

Papaya can help your company navigate the challenges of global expansion. The Papaya platform provides a total workforce solution, covering all types of employees, workers, and contractors. It streamlines all employee data into one view, and provides custom Business Intelligence reports to help companies find the information they need about their payroll spending.

The platform combines the best of automation with in-person support from a skilled CSM team, and provides payments throughout the globe in various currencies, all at the same time.

Make your global payroll simple, smart, and secure with Papaya Global.