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Level Blog

3 min read

The top global payroll challenges & how to best address them

Jul 3, 2019 8:00:00 AM

Payroll is hugely important. Beyond the standard employee compensation duties, payroll departments play a central role in ensuring organizational compliance, and thus reputation, with various regulations and legislations.

Managing a global organization has become increasingly complex, and a growing number of firms are moving various, disparate payroll systems to a centralized, optimized global operation.

And though it is yielding significant cost savings, naturally, it’s not without its challenges.

In this blog, we explore some of the top global payroll challenges impacting organizations today, as well as solutions to best address them.

Global payroll compliance

Organizations are grappling with constant change. So, of course, this extends to compliance. Concerns over navigating laws and regulations at the local and regional level, including tax compliance, privacy laws, anti-laundering laws, etc., have been a main obstacle keeping companies from moving local, national and regional systems to a single global operation.

Needing to have a degree of local knowledge within the payroll system for each specific location is overwhelming for companies to manage, and it can result in vast and bottom-heavy operations and processes that are far from best-practice scenarios.

For example, some global companies require overseas locations to meet corporate reporting needs and engage local accounting firms to manage local requirements, while others create local finance departments for each country, which leads to greater complexity and inefficiencies.

Global payroll security

With all the talk surrounding privacy and data security, global businesses need to also take into account how to best manage employee data in an increasingly global environment, and thus, make significant changes to data privacy and protection.

Last year’s General Data Protection Regulation implementation, and its goal of standardizing data requirements among countries in the European Union, has had a significant effect on payroll departments, as the pay process involves handling a range of sensitive personal data, such as employee name, address, age, pay scale, tax code, bank account number.

Thus, employers must be confident in the data security abilities of their processors, whether in-house, or outsourced to a payroll provider.

Global payroll reporting

Global payroll reporting is enormously important for companies to track and manage their global workforce. So much so, the need for gold-standard reporting is one of the major drivers behind a move to a global payroll system.

It’s not uncommon for organizations operating in multiple countries to use different financial systems and data definitions for each region. But this can lead to faulty analysis and decision making, for example, parts of the business may appear more profitable than they actually are.

A lack of visibility in global payroll reporting can lead to problems like fraud, compliance mistakes and violating local regulations. So, as organizations expand across geographies, it’s increasingly difficult to assess and report on performance in a consistent manner, putting management at a greater risk of making the wrong decisions.

Practice globally while managing locally

The ideal global business strategy; Practice globally while managing locally. But in order to do this, organizations must move beyond disconnected ERP systems and to a cloud-based solution where the workflow is built into the core of the system.

Digital technologies have forced organizations to rethink their payroll environments, and more and more are moving from legacy on-premise systems and towards a cloud-based model. This enables firms to standardize their processes globally, while also allowing for modifications at the local, national and regional level.

Consider, PwC’s Annual HR Technology Survey findings; 75% of the companies surveyed have at least one HR process in the cloud, 40% of respondents have moved core HR management systems to the cloud, and 26% have plans to in one to three years.

Concurrently, advances in combining robotics process automation (RPA), artificial intelligence (AI) and others are empowering payroll functions to intelligently automate repetitive processes, traditionally requiring considerable time and resources.

These systems deliver capabilities to meet new regulations taking effect, while also significantly reducing the amount of time, money and resources for global payroll compliance, security and reporting.

Are you ready to transform your global payroll processes?


Learn more 

Level Insights
Written by Level Insights

Bringing you the latest technology news and insights.