I wish to paint a picture for you to make a point about multi-country payroll. Picture this - of the 55,000 employees of one of the world’s largest financial services organization, more than 63% (35,000 to be precise) are based in 40 different countries. While this American multinational financial services corporation is a classic example of a mature organization, its worthwhile to note that there are organizations who haven’t traversed this journey and are only now beginning to invest in foreign locales.
Even at the existing multinationals, much is changing. They are increasingly adopting the trend of globally mobile employees resulting in a massive increase in the number of employees going on assignments overseas. Not just that, the number of short duration business visitors across geographies are on a rise. In fact, it’s becoming quite the norm. For instance, the second-largest Indian Outsourcing Provider is committing serious dollars to employ people in its non-home locations. While multiple considerations must be accounted for when planning for expansion, an organisation’s ability to process multi-country payroll in multiple currencies is an important one to consider as it has a significant impact on employee happiness.
This is quite an interesting tale and concerns any organization serious about growing globally. Having a mobile employee base and hiring in non-resident locations is a stronger premise to invest in an advanced and sophisticated multi-country payroll that caters to the need of a multi-currency setup. However, achieving this is not an easy feat. The challenges and risks were studied by Greyhound Research recently. The global analyst firm confirms that 86% organizations agree that payroll is a key consideration when planning geographical expansion, but not all of these feel confident of delivering a multi-country payroll with a multi-currency setup.
The same organizations stated the following mesh of 3 Ts when expanding to a new geography and processing payroll for an increasing number of globally mobile employees:
Tracking- Refers to the difficulty of tracking an employee’s location at any given point in time.
Taxation- Not being aware of the latest tax liabilities of each of these jurisdictions and paying these taxes on time.
Tag-Teaming- The payroll team does not know what is coming their way since payroll is typically the last team to be told about employees’ travel assignments.
Moreover, these organizations usually struggle with rising cost of delivering payroll in new locations, and the need to invest in technology and efficiency.
In a recent webinar, industry experts iterated their belief that organizations can break out of this maze of challenges to manage the risk of non-compliance by ensuring:
“While platform and automation are essentials and a great start to the payroll modernization journey, another key goal is to keep on top of the latest developments. “
- Having a strong payroll team (in-house or outsourced) with local experts who manage risks such as local taxes, social security, pension, etc.
- Ensuring a single accurate source of data (single source of truth) for payroll processing.
- Having all data on a common platform – read time, attendance, rostering, leaves, expenses, etc. to ensure standardization.
- Planning ahead to make sure that the platform is scalable so as to take care of the organization’s future expansion.
- Ensuring automation starts right from the data input stage until the payroll is processed so that no data goes missing.
- Keeping on top of the ever-changing federal, state and local regulations.
To help organizations achieve an error-free multi-country and multi-currency payroll, we at Ramco believe in partnering with clients to aid them with ‘Ramco’s Payroll Bureau’.
We follow a three-pronged approach to stay abreast of taxation & regulatory changes:
The Charter for Ramco Payroll Bureau:
- We tie up with payroll associations to create a news feed on what’s changing in the regulations of every country.
- Our research team and in-country implants keep track of communications and proposed changes by tax authorities.
- An online assessment tool which updates the regulatory requirements for every region and monitor our platform’s compliance levels.
Whether an organization chooses to outsource its payroll operations or manage it in-house, it needs to ensure that multi-country, multi-currency payroll processing is seamless, error-free and on time. Having the right platform with the right automation and the correct information at the right time is critical. The same multi-country payroll platform forms the backbone of automation, and provides a structured approach to stay on top of changing regulations. I hope you have success in your journey to modernize your company’s payroll!