How to Evaluate Payroll Software for Multiple Countries

Aug 27, 2020  | Topic: Strategy

If your business operates in multiple countries, you’ll know that payroll processing can be extremely complex. Every country has its own set of rules and regulations, and so the procedures you use for a workforce in one country may not be suitable for employees in another.

The importance of getting this right in every territory you operate in can’t be ignored. Incorrect payroll can easily cause failures in tax compliance or other errors, which often lead to heavy penalties and possible brand damage. So how can you navigate the minefield of processing payroll in multiple countries simultaneously? In this blog, we’ll explain why the answer is multi-country payroll software.

What is multi-country payroll software?

In short, multi-country payroll software is a technological solution, which allows all elements of an international company’s payroll services to be managed from a single platform.

Using a solution like this generates significant efficiencies in how your payroll runs are managed. For a start, it ensures that payroll data is standardized globally across your entire workforce, ensuring consistency of information across employees, departments and territories. But even though the data is in the same format, it is then treated differently - the best payroll software incorporates the local requirements of different countries, ensuring that payroll processing is conducted correctly for every employee.

Furthermore, the benefits of multi-country payroll software can reach into other departments within your business, once the opportunities for integration are considered. Many payroll providers provide integration with both HR software (such as Workday or SuccessFactors), and accounting software (such as Quickbooks, Sage or Xero), so that payroll data is linked to other employee information, like working time and holidays. 

Other employee data sometimes pulled into global payroll software can include data from time and attendance systems, patriot software, time tracking applications - all of which can enhance your payroll reports. 

When fully integrated and working together, these systems collectively create a single source of employee data that covers your entire business. In a world where multinational businesses can suffer from inconsistencies and complexities between territories, this unified data can be an immensely powerful tool, not just for more accurate payroll runs, but for running a business more efficiently.

When is multi-country payroll software right for your organization?

There are many reasons to consider a multi-country solution for your payroll. Certainly, the bigger your organization, the greater the potential benefits of adopting the solution, especially in terms of reducing complexity, improving efficiency and getting more from your employee data. But for large, international businesses and indeed small businesses, there are many more benefits to take advantage of:

  • Risk management: a global payroll solution that includes the necessary expertise for each territory you operate in removes the risk of relying on ‘humans’ within your organization. It also enables the deployment of business-wide, centralized governance to reduce risks, such as fraud.
  • Payroll reports: consistent employee data makes it far easier to collate and analyse information, so that insights can quickly be identified and delivered in a way that the C-suite may find easier to interpret and act on.
  • Automation: with a unified data format, and with successful accounting and HR software integration, it’s possible to automate certain payroll checks, and use technology to simplify other functions through a single, all-encompassing employee portal.
  • Easy expansion: moving into new markets can be difficult enough without having to worry about payroll services or tax compliance. A global payroll solution enables the on-boarding of employees in a new territory in a way that is immediately compliant with local tax filing requirements.
  • Cost savings: multi-country payroll may not necessarily deliver direct savings at individual country level. However, all the benefits stated above can contribute to cost efficiencies for the business as a whole, thanks to consolidation, consistency and increased compliance.
  • Employee self-service: One of the key objectives of most human resources (HR) departments is to drive greater self-service to reduce HR administration, while improving the employee experience. Payroll can be a catalyst to drive greater self-service adoption through features such as ePayslips, accessed via a mobile app. Such functionality should be available in every country, no matter how small, and a global payroll solution can often provide this.
  • Local taxes: If you are looking to set-up business in a new country, another benefit of working with global payroll providers that offer full-service payroll, is they can help provide advice on local tax and state tax rules. This will include specifics around general payroll taxes, how to perform local tax calculations, dates for tax filing and how to complete tax forms. They are also likely to offer general advice around local tax compliance, payroll checks, check printing, direct deposits, pay rates, setting up bank accounts, garnishments and in some cases even health insurance.

What should you expect from your payroll software?

What you should expect depends on the payroll model you choose, and there are three main types:

  • In-house: establishing a payroll team in each country you operate in
  • Decentralized: a payroll team at global headquarters, working with outsourced territory-specific partners that understand local payroll taxes and other requirements
  • Centralized: where all payroll activity in every country is managed through a single provider

Different models will suit your business more than others, depending on your current size, profile and situation. First of all, consider how many countries you currently operate in, and how many more you’d like to expand into. If this number is only a few, then deploying local partners for on-boarding for each case might make more logistical and economical sense. On the other hand, if this number runs well into double figures, then a single solution prevents a ‘too many cooks’ situation. It’s important to consider the hidden costs in each of these approaches too.

Similarly, consider how many employees you have in certain territories. A local outsourced expert would make more sense if your presence in a particular country is just a few people in a branch office. But a large headcount would mean you’d benefit from a more centralized option that better integrates the relevant payroll taxes information and employee data. A good payroll solution should allow you to seamlessly mix and match both.

In summary

It’s worth putting the opportunities of global payroll into the context of where you are with payroll at the moment. You may feel that your current processes and integration are good enough that a global solution wouldn’t deliver enough advantages. 

However, if your current payroll profile is a patchwork of different data formats, different providers and isn’t integrated with other systems like accounting and HR, then the advantages of a unified, connected approach could be truly transformative. 

If you think global payroll would suit your business, then the first step is to formulate a Request For Proposal (RFP) that can help you find your ideal provider. This blog can help you set off on the right track.