In this issue of Business & Finance, Executive Director at Immedis, Mark Graham, analyses the risk and opportunity associated with international growth, and the importance of developing a global payroll strategy.
Global Expansion, Payroll & Tax
The past 20 years have seen a tidal wave of globalization as we have experienced a massive increase in the flow of goods, services, people and technology. In Ireland, we are particularly successful at exploiting these opportunities and taking indigenous businesses abroad with success stories including Voxpro, Stripe and DCC headlining the news on a regular basis.
Yet with every opportunity, comes an element of risk. Just when you think you have a solid plan for international growth, the very simple task of paying overseas employees creates more headaches that you ever thought possible.
And if there’s one way to inadvertently drive your business into the ground it’s by making mistakes on how you pay your staff —or by failing to pay them at all. That’s why the most mission critical component for any business’ back end is arguably its payroll operation.
Developing a Global Payroll Strategy
Developing a global payroll strategy is a daunting task. And implementing a global payroll strategy is a career defining moment. So how do you set your organisation up for success?
In house or outsource?
Organisations that outsource their payroll operations can typically save up to 20% off their costs. If you choose to outsource, ensure that your vendor will provide a single point of contact for all your queries to keep things streamlined.
What does your payroll process look like? What are the key dates, stakeholders, data obligations and communications channels to keep track of progress?
Who owns the payroll process on a global, regional and country level? What are the roles and responsibilities within these layers to give you visibility and assurance on risk across all affiliates? What are the escalation processes to ensure everyone is paid on time, every time?
Many people prioritise Gross-to-Net calculations in their payroll strategy. Yet calculation engines within payroll systems rarely get things wrong. The key to accuracy is data. How is your data captured and entered into the payroll system to ensure calculations are accurate?
Technology, Reporting & Analytics
To better understand, manage and respond to the costs associated with paying your people, you need access to the right information. Time and attendance platforms, HRIS, Finance and Payroll systems across multiple countries can leave you with more data than insight. Look for a global payroll platform that integrates with these systems and consolidates data at a regional or global level to provide you with the reports you need.
New General Data Protection Rules (GDPR) Legislation
With the vast amount of information being processed, payroll encompasses a highly sensitive personal data. Yet organisations can be relaxed about the way they transmit this information within and outside their business.
The GDPR aims to simplify the current data protection laws replacing the EU Data Protection Directive.
It is applicable to all businesses within the EU and focuses on the exchange of data between employees, employers and payroll providers. This includes anyone handling the personal data of an EU based individual from outside EU borders.
The official enforcement date is 25th May 2018 – at which time those organisations in non-compliance will face heavy fines. Further information on this can be found at www.gdpr.org
Global Payments & Currency Fluctuations
Paying staff and local authorities in multiple currencies can lead to huge costs in administration and exchange rate fluctuations. The ability to manage through a single regulated provider who will distribute payments accordingly can result in massive cost savings to your organization.
Legislation & Compliance
Time after time, the biggest operational challenge facing payroll departments is the ability to find information on legislation and compliance. With tax, salary and social security processing so greatly affected by changes to legislation in different countries, just keeping on top of the changes is a tall order for anyone.
The implications for fines are significant. Working with a global payroll provider who is an expert on international payroll and tax legislation can ensure that your payroll team are freed up to liaise with internal stakeholders to keep the process on track.