The True Cost of a Global Payroll Solution?

What is the true cost of a global payroll solution?

As with any technology, the costs of implementation and operation are key factors in deciding whether or not a solution is truly right for a business. Payroll solutions are certainly no exception to this, but many organizations come at this challenge from the wrong angle.

It’s easy to get hung up on the ‘sticker price’ of how much a solution costs, without taking into account the counterbalancing effect of savings that can be made through process efficiency, and freed up time and resources. Giving consideration to the underlying - or perhaps hidden - costs is therefore vital to assessing the viability of a payroll solution, and building a business case that convinces senior management to commit to an investment.

Known costs

Obviously, you’ll already have a good idea of the headline costs of any payroll solution you’ve already implemented. But even then, unexpected costs can suddenly crop up without warning, particularly in two important areas:

• Monthly payments: if subscribing to a solution, you’ll have agreed a particular figure to pay per month. But what are you actually getting in exchange for that fee? Is it only for the software, meaning the associated managed services cost extra? And, when operating multinational payroll, how many countries does the fee cover before you have to pay more to add more?

• Upgrades and infrastructure: does the purchase of the payroll software come with a necessity to buy some hardware along with it? And what expenses around upgrades or replacements are likely to emerge further down the line?
  
  

Hidden costs

Cost analysis tends to focus on more tangible areas, but it’s in day-to-day operations that the hidden costs of a payroll solution can be particularly keenly felt. You should pay special attention to two key expenses:

• Errors and remediation: mistakes will always be made in payroll processing, but it’s how often they happen and how much they cost to put right where the costs can really ramp up? Fixing errors in payroll data can lead to delays in processing schedules, while the ramifications of errors can sometimes be even more direct. Overpaying or underpaying wages or tax contribution can lead to financial stress, legal consequences for non-compliance, and extra strain put on the payroll team to fix the problems.

• Manual tasks: businesses who aren’t using a payroll solution with automation at its core are wasting time, money and resources by continuing to complete repetitive and relatively simple tasks manually. Automation can also cut out many of the human errors, and ensure that payroll runs smoothly, on time and with an extremely high level of accuracy.
  
  

Risks of current solution

Despite the importance of ensuring that costs are kept down and ROI is good, the basic bottom line is far from the only thing to consider when deploying global payroll services. There can be plenty of other risks within your current system that can also easily cost you time and money to remediate:

• Security: older payroll solutions have proven vulnerable to cyber-attacks that have forced payroll diversions, a type of attack that has grown in frequency during the pandemic. While ‘patchwork’ security updates are usually made available, these can create new vulnerabilities and threaten the overall long-term security of a solution.

• Expansion or staff redeployment: any good payroll solution is scalable to meet the constantly changing needs of a business, whether it’s new employees being hired, or expansion into new territories and countries. Payroll systems that can’t do this leave a company at risk of failing to pay staff, and errors working their way into processes, especially if the solution isn’t integrated with other related systems.

In summary

All the points above demonstrate just how vital it is to consider every cost implication of an international payroll solution. A payroll provider with an attractive headline price can easily mask further hidden costs down the line, as well as further time and financial consequences in fixing errors that the solution can’t resolve.

What an ideal payroll solution looks like will vary from company to company, but ensuring that a solution stacks up from an overall cost perspective is a good way to ensure your selection is the right one.

To learn more about weighing up the costs of a global payroll solution, and to get expertise on how to build a business case for making a change, download our free detailed guide here.