We’re not going to sugar coat it – Payroll is a pain.
Whether your company is currently experiencing growth, or you already manage a global workforce, dealing with a bi-weekly or monthly payroll cycle is never easy. From calculating local taxes, taking into account country-specific benefits, managing PEO suppliers and more – managing a payroll cycle is a complex task that often seems doomed to repeat itself each month.
As companies continue to expand globally, more variables must be considered such as changing local labor laws, compliance issues and more, making global payroll management an increasingly complex concern (and quite a pain).
Here are a few challenges when facing a global payroll process:
Managing Payroll Everywhere
Managing payroll in a single country is manageable. However, as companies grow and expand their operations overseas, the complexity of the payroll process becomes unnecessarily time consuming and filled with redundancy and opportunities for error.
Managing a global payroll in various locations brings with it the pain of planning a monthly and annual workforce budget without knowing exactly how the next month will look from a budgetary perspective. This is because using different payroll management solutions in each country requires manual reconciliation at the end of each month, wasting time and increasing the risk of errors due to miscalculations.
Even if you have decided to use a local payroll management solution, there is a long integration process as well as aggregating and consolidating information collected by different platforms in each location every payroll cycle. Unfortunately, for companies that want a clear picture of more than one country and to understand the bottom line of their global workforce, this is a time consuming task they simply cannot forego. Moreover, these complications can interfere with decision making in a company, a process with room for improvement.
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Compliance in Every Country
One of the main issues globally growing companies must deal with is ensuring that they are compliant with local laws. Health benefits, disability and taxes are all things that a company must cover, and knowing the local law becomes imperative if a company wants to ensure their global growth is set up for long-term success.
In the U.S for example, employer health care coverage is now mandatory, while in other countries coverage is provided for all citizens by the local government. In Brazil, employers must contribute between 26.8%-28.8% of an employee’s salary to their pension fund, whereas in Denmark it is a fixed fee of 10,000-12,000 DKK per employee per year.
Today, companies spend 3X more money to source global talents, but more than 40% of local candidates reject offers from global companies. This creates a vacuum of wasted time and efforts that could easily be alleviated by improving localization of each operation.
Many times the reason candidates reject offers from foreign companies is because they want the assurance that the customary local benefits will be provided without the need to fight for them. Knowing these different factors in each location is a complex and time consuming process requiring knowledge of local laws as well as customs in each country, and ensuring potential employees receive the employment package they expect in the country they reside.
A Costly Process with Minimum Assurance
Managing global payroll is more than knowing local tax and benefit laws and keeping up to date on the legal changes in each location.
Managing a global payroll requires maximum assurance with minimum errors. Unfortunately, when this process is done manually, tasks such as consolidating several data spreadsheets, calculating various currencies or even not knowing if the information provided is completely correct to begin with. Such a task becomes time consuming, is prone to errors, and has no guarantee that compliance will be met 100% of the time in 100% of the locations where your company operates.
Once local taxes and benefits are accounted for, companies need to be able to assess the impact of overtime, added benefits, and other constantly fluctuating information in order to accurately calculate the total payroll cost each month in all locations. Without a solution that automates the entire payroll process, it becomes nearly impossible to accurately predict all costs, asses financial impact and plan for the next payroll cycle.
The Papaya Way
Papaya Global is a leading global HRIS solution that offers growing companies a simplified and automated way to manage their global workforce. Our robust platform is optimized to ensure compliance everywhere, including being the first GDPR compliant global payroll management solution. With Papaya, companies can alleviate the heavy amount of manual effort that goes into each payroll cycle , reducing wasted time instantly.
To learn more about how Papaya can eliminate the pain of global payroll management, contact us today.