What To Look for From an International Payroll Software Solution

As the world gradually returns to normality post-pandemic, it’s natural that many organizations are considering international expansion into new territories. But whether you’re just at the evaluation stage, or are already a multinational organisation, you’ll no doubt be aware of the complexities of international payroll management.

No two countries are the same in terms of the legislation and regulations they apply around pay, and many operate in completely separate currencies, but you’ll have to ensure your payroll processing is compliant in every single country you operate in. The consequences of not doing so are usually severe: legal recourse, significant financial penalties and even major brand damage.

The best way to avoid these pitfalls and cut the complexity is by deploying international payroll software. This blog explores how it works, and what to look out for when considering which solution to adopt.

What is international payroll software?

International payroll software, also known as global payroll software, is a single platform from which every element of payroll services can be managed across multiple territories. 

By using it, global payroll can be significantly more efficient, particularly by standardizing payroll data across every employee, department and territory, wherever they are in the world. This standardized data is then handled in different ways, according to country-specific legislative requirements, so that every employee’s payroll is always processed correctly.

Once up and running, international payroll software can aid operations in other departments through a variety of different integrations. For example, HR software like Workday and SuccessFactors, and accounting solutions like Quickbooks, Xero or Sage, can make use of standardized global payroll data and interlink it to other vital employee information. This can include data points like holiday time, working hours, absences and other metrics, but this also works both ways: this kind of data can be drawn into international payroll software for the creation of more detailed payroll reports.

The ultimate goal is a single source of truth regarding employee data, one that covers the entire global workforce. Given that so many businesses are still hampered by inconsistencies between different territories, this unification of data can be a huge asset, both for payroll accuracy and for more efficient operations across a business as a whole.

When is international payroll software right for your organization?

International payroll software can be beneficial for a business for a variety of reasons. While the positive impacts are felt more strongly in larger organizations, they can make a significant difference to businesses of every size, in several key areas:

• Risk management: a good international payroll software solution will incorporate centralized governance, as well as expertise for each of your territories, so that you no longer have to rely on humans for risk control
• Reporting: with consistent global payroll data, it’s much easier and faster to find insights that the C-suite can make decisions on. It also enables a prioritization of metrics in reporting to drive overall business strategy, as long as your international payroll provider has the capability to enable this. (Our <recent webinar> discusses why more granular metrics than the standard SLAs are so important now.)
• Automation: some payroll checks can be automated thanks to unified data and integration with account and HR solutions, along with the introduction of a single employee portal to simplify other functions for end-users
• Expansion: easy onboarding of employees in new territories can be enabled, with tax filing compliance ensured immediately
• Cost reduction: a combination of consistency, consolidation and better compliance should help deliver savings at an overall business level
• Employee self-service: features such as ePayslips, mobile app functionality and on-demand pay can be rolled out, so that employees everywhere can conduct their own payroll functions. This improves employee experiences, and cuts the admin burden on global payroll and HR teams
• Local taxes: a good international payroll software solution should come with vendor advice and help on dealing with national and state-level tax rules. This can include important information around tax calculations, filing dates and form-filling, along with general help around compliance, paycheck printing, minimum wage rates, bank accounts, social security, health insurance and other considerations.
  
  

What to expect from international payroll software?

There are three kinds of payroll model you can deploy, and which one you choose will define your international payroll software experience:

• In-house: a payroll team operates in each of your territories
• Decentralized: a global payroll team at headquarters works with outsourced partners at territory level for local expertise and support
• Centralized: one provider manages all payroll activity in every territory

Which is best for your organization depends on many factors, such as size, profile and future plans. In particular, your current number of territories, and the number you want to expand into, is important: local partners for on-boarding may be better for a smaller number, but a single solution makes far more sense for more global operations. In any case, it’s important to remain aware of any hidden costs that may crop up.

The same principle applies to the number of employees within each territory. If there are only a few in a particular country, then a local outsourced expert can easily take care of things. But a large headcount would benefit from a more centralized, integrated option that harmonizes global payroll information and other employee data. International payroll software should enable you to combine these two approaches across different territories as required.

In summary

Ultimately, how useful international payroll software would be for your organization depends on your current state of play. If your current processes and integration are already performing well, the benefits of a switch may only be marginal.

Where international payroll software really pays dividends for companies where the payroll profile is still a muddle of different providers and data formats, and where integration is lacking. This is where a more unified, standardized approach can be revolutionary

If you think international payroll software would suit your business, start by formulating a Request For Proposal (RFP) to help you find your ideal provider. Read this blog to learn more.