4 Keys to Accurate Payroll for International Businesses

4 Keys to Accurate Payroll for International Businesses

For multinational businesses, maintaining an accurate payroll across borders is one of the most complicated tasks. Whether it’s determining how to establish a legal entity in the new country to pay employees, managing multiple international payroll providers, or even handling the exchange of currency to be able to employees properly, there’s a laundry list of items to check off to get it right.

The average payroll error takes a top performing company 2-4 days to fix, and the lower performers come in closer to 10 days.  This can feel like an eternity to an employee.
CFO.com

As we have talked about in the past as well, employee morale and satisfaction is heavily tied to payroll timeliness.  The purpose of this article is to help you see the bigger picture when it comes to managing global payroll, especially for multinational organizations. There are plenty of unique nuances when crossing borders, along with common expectations that businesses would have in nearly every jurisdiction, such as withholding social security or insurance. Let’s look at a few areas that are critical for maintaining a successful, accurate payroll during international operations.

Accurate Payroll Tip #1: Proper Banking Setup and Validation

When you’re getting payroll established for your international team members, you’ll need to ensure that you’re partnering with all the proper validation services and banking establishments. In international banking, you’ll work primarily with IBAN and SWIFT/Bank Identifier Code (BIC) code validation. When sending money to your company’s international locations, you’ll need the organization’s BIC along with their unique account number and/or their IBAN.

Another consideration is making sure that you get your foreign treasury managed properly before distributing payroll. Managing multiple currencies can be difficult, and where a consolidated global payroll provider comes in handy. This type of service can help you navigate and streamline all of your payroll needs across borders and ensure accuracy.

Accurate Payroll Tip #2: Updated Employee Data

To improve data protection for your international employees, you can use tools specifically designed to improve efficiencies. First, you can make sure that your HRIS has a dedicated payroll feature that can assist with calculations, non-recurring payments, and deductions. While many HRIS systems don’t automatically include these payroll-first features, it is something that you can implement as an added benefit.

In addition to streamlining employee data and making it easily accessible with an HRIS, you’ll need to protect your employees’ data. Sometimes this is even required by law. Personally identifiable information (referred to as PII in the U.S.) includes many data, which may be gathered during administrative processes such as application submission, payroll enrollment, or benefit enrollment.

In regard to PII, the advent of more and more online payroll portals brings the reduction of physically mailed or emailed documents containing highly valuable personal information. Decreasing the paper trail created during the payroll process can help increase protection for your employees’ data. Online portals can also increase accuracy and allow employees to double check their information quickly and easily.

Accurate Payroll Tip #3: Ongoing Compliance Monitoring

One of the most important aspects of international payroll and international business, in general, is compliance management. When it comes to increasing accuracy, you’ll want to reduce manual data entry whenever possible. It may be possible to get away with manual entry domestically, but adding foreign regulations, exchange processes, and language differences into the audit process can make errors almost impossible to find.

A global payroll provider can assist with compliance management. By understanding the requirements in each country that you operate within, you can rely on their guidance while you focus on the day-to-day operations, not the labor laws in your countries.

Accurate Payroll Tip #4: Use Consolidated and Trusted Partners Who Deliver

During global growth, you’ll encounter plenty of service providers that claim to have the answers you need for success. When vetting potential partners, you’ll want to ensure that they can back up their claims and that their services match your processes and needs for your company’s international operations. One way to check into these services is by asking for a SOC 1 report, which you can find out more on here.

You can also choose to work with a payroll provider that consolidates your entire operations under one roof. As a way to directly reduce payroll errors, this option includes both a technology layer – to increase efficiency in payroll as well as reporting – and a service layer focused on the often overlooked nuances of multi-country payroll including withholdings, contributions, and taxes, to name a few.


We hope you found this article on accurate payroll informative and helpful. Celergo has a compliance guarantee for every country it does payroll in; your employees’ information is safe with us and we can help ensure that everyone is paid accurately and on-time. Please do not hesitate to reach out if you have any questions!

 

 

**This article is for informational purposes only. It is not intended to constitute legal advice.

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