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Andy Hone

Jan 18, 2023 · 5 min read

The Global Payroll Challenge No Company Should Have to Face

global payroll challenge

If you can’t access every payroll data point in one place, you’ll benefit from rethinking your strategy

Payroll is the foundation of any company, so why is it frequently so challenging for expanding organizations to manage? The answer comes down to visibility or lack thereof. This common global payroll challenge is easily avoided; yet we often work with companies that, prior to our engagement, struggled to efficiently manage payroll deadlines, local regulations, and more. 

In this post, we’ll cover: 

  • Why some companies struggle with global payroll management
  • The price they pay for the lack of visibility
  • What they should do instead

Why companies struggle with global payroll management

Hiring in another country signals good news. For a startup, it may be the first step toward establishing an international footprint. For a multinational corporation, it means more growth. Either way, what comes next tends to set some organizations up for trouble. Not surprisingly, newcomers on the international scene are particularly vulnerable to these pitfalls.

The scenario may look something like this: The business development team typically drives the decision to hire internationally, leaving HR or the payroll team out of the equation until they are suddenly told to extend an offer to the new candidate and cut a payroll check by the end of the month. With no payroll infrastructure in place in the new country and under pressure to move quickly, the in-house HR team may:

  1. Issue the first payment to the new hire despite questions surrounding any required registrations and the potential need for an entity setup. This route puts the company at serious risk of non-compliance and is a common pitfall for companies that are just beginning their expansion journey. Also, it is hardly an ideal onboarding experience for the new hire either: getting paid ‘unofficially’ in their country may lead to complications with tax returns and the like.
  2. Turn to a local vendor for help. The solution, initially intended to be short-term, then turns permanent and is repeated when hiring in a different territory. While the network of local providers may seem to meet the company’s immediate needs, it inevitably leads to a range of issues. 

Said a fast-growing FinTech that sought our help: “Multiplied by several countries, it quickly became unwieldy and difficult to manage. We were using considerable resources to ensure we remained on top of our activities and complied with all regulations.”

The price they pay for the lack of visibility

When each country's payroll requires its own process, issues follow. Without an expedient way to track payroll deliverables across the organization in a single place, companies have little choice but to follow the lead of their vendors. From the tools they use to the ways they communicate, the vendors set the tone for the engagement. 

Waiting for problems before rethinking payroll strategy

This cumbersome system of siloed information and processes results in a lack of transparency and a clear view of the actions required across different markets. It can also turn into a major headache, putting data security and compliance on the line. In a worst-case scenario, failing to meet compliance regulations or deadlines for tax and payroll filings can have significant financial implications. Many times, companies wait for those types of seismic events to change course. 

Overhauling siloed systems in favor of full visibility

It was partly a concern about the risk of errors that ultimately made the FinTech reach out to us for help. With significant growth ahead, the company wanted to overhaul the complex system of local vendors in favor of a single solution with full visibility. The FinTech needed the ability to hire talent in various locations without having a back-office infrastructure in the country where the new potential employees lived. 

What companies can do to solve the global payroll challenge

The key to streamlining global payroll is building a solid foundation. And that foundation is found in a technology-backed global payroll partner. When every data point from every country payroll is accessible on one platform, clarity replaces confusion. 

A startup eyeing team members overseas is better served getting the hiring right from the beginning with the help of a global payroll company than heading down the path of “we’ll fix this later.” Once a country has been added to a cloud-based global expansion platform, it is easy to scale the solution as the company grows. Full visibility, in turn, leads to other important benefits:

  • Better control: You no longer have to use multiple tools or rely on people in different parts of the world to send the data you need. At any time, you have the independence to view the pertinent data and act on deliverables. 
  • Guaranteed compliance: The right platform comes with compliance built in, ensuring crucial deadlines are met and relevant regulations taken into consideration. 
  • Optimal data privacy: When all communication takes place on a secure platform, the risk of a random email with sensitive information falling into the wrong hands is eliminated. Only pre-approved people have access to the password-protected information. 
  • Increased efficiencies: The use of a single portal and process brings more expedient management with, for example, common input templates and harmonized output reports. 

Do you need help?

Is your global payroll strategy as effective as it could be? We are here to help. HSP Group combines an unparalleled focus on the client experience with GateWay, our global expansion platform, which puts your global footprint at your fingertips. 

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