April 28, 2022 Payroll

Going Global: Adapting Your Payroll Process for a Growing International Footprint

During Global Payroll Week, we want to take a moment to truly appreciate the complex details global payroll specialists wrangle to get people paid correctly across the world. They possess a wealth of knowledge when it comes to the high-stakes intricacies of global payroll processes and configuration. This week, and every week, we celebrate their contribution to keeping the increasingly connected international business scene spinning. 

Increasing demand for talent and the more recent acceptance of remote work as a sustainable business practice means companies have more options for expanding their global footprints. Seamlessly adapting to international payroll rules and regulations while juggling the different languages, time zones, currencies, and vendor capabilities that come with global expansion is a unique skill set.  We recently sat down with Karen Shropshire, a Wise Payroll consultant with over 20 years of global payroll experience, to unpack what it takes to properly configure a payroll system to accommodate international workers who expect to be paid accurately, on time, and in the correct currency.

It’s a Small World

When it comes to payroll processes and stipulations, there are as many nuances as there are independent nations. Navigating them calls for the assistance of a global payroll ace. “We, as U.S. citizens, make a lot of assumptions that things work in other countries like they do in this country. That’s the biggest misconception that we have to throw away,” explains Shropshire. “What may be common payroll practice in the U.S. will not necessarily be common around the world.” Adapting–or failing to adapt–can mean the difference between success and failure for a business.  

Although each country may have unique methods or requirements for completing payroll, experienced payroll professionals are adept at finding commonalities that can be helpful in setting things up more efficiently. “There will be processes that are similar based on the region of the world, but the most important thing that you can do is start thinking about each of these elements as a business process,” says Shropshire. “Everyone will have a new hire. Everyone will have re-hires and everyone has an address. Every country issues a national ID number of some sort. In some countries, you may have up to seven. What’s important is determining the data set that matters. Being able to see it from a harmonization perspective in how it applies to a business process gives you a really good foundation from which to look at what your overarching payroll needs are going to be.” When boiled down to such a basic level, global payroll processes can seem more approachable. The need to input the same employee-related data points is universal. 

New Country, New Vendor 

In addition to navigating discrepancies between the different formats of data, global payroll experts have to work their way through the various vendors and configurations that are appropriate for each country. “From a global configuration perspective, maybe you are a company that wants to continue to process their payroll in-country with a certified payroll vendor, but you’re looking to use Dayforce software or something similar as a global HR database so that you can report on it, more than anything,” explains Shropshire. She says that outlining your vision and choosing the right HCM software must be a priority. Having an experienced consultant in your corner from the start can make navigating the certifications and advantages of each vendor a much less daunting task. 

Shropshire’s area of expertise lies in Ceridian’s Dayforce system, which works with approved in-country vendors to complete payroll processes. “In the Ceridian Dayforce world, they have what they call Native global payroll engines that are 100% compliant and allow the client to process payroll within the Dayforce software. Ceridian also offers options wherein they have a relationship through connected pay with an in-country partner that is a certified processor in that country. So, you may be using global payroll in any of those scenarios.”

Shropshire points out that selecting a global payroll strategy largely depends on what will make the best fit for your business. “All options are feasible, and the same core strategy applies: If you understand your business process in that area and the data fields that impact that process for that particular area, then you have the first stepping stones to start a global configuration.

Show Me The Money 

Beyond choosing the right software vendor and navigating differently formatted data, it is important to consider the most important, yet most basic component of payroll: your employees’ money. Global payroll experts must take into consideration how different currencies impact payroll processes as a whole. “When you pay people, it can be different country to country,” explains Shropshire. “The use of electronic funds transfer (EFT), or equivalent to what exists in the U.S., may not be available. Plus, the foreign banking systems and how you fund those banking systems are probably one of the largest challenges that any global employer faces. It’s just not the same as it is here in the U.S. They may have a different bank file that is required for use that may need to be developed–an in-country processor would have that already because it would be standard to their system.” Ensuring that your system is adept to handle these differences is one of the most important steps in configuration.

Making sure that such differences are accounted for from the onset of your payroll configuration will prevent you from potentially detrimental slip-ups down the road. “There are a lot of little nuances that you have to work through. From day one, start the finance side of the process in step so that when it comes time to pay your people, your necessary accounts can be fully-funded and you can pay them on time,” says Shropshire. A delayed pay cycle does not bode well for employee morale and trust in management, factors that can increase turnover rate–something that nearly all businesses are battling as of late. 

International Adaptations 

Because payroll systems can have so many touchpoints, there are multiple elements that will need to be accounted for and adapted based on the particular country’s regulations and rules. Shropshire notes that self-service elements are often something that American-based companies find they need to navigate within differing cultures. “One of the big concepts is that we want everyone to have the same user experience from an employee perspective. Self-service, while it has been around in the U.S. for many years and nearly every employee expects to have it at this point, is not always the case globally. Though, over the past five years, international adoption of self-service accessibility has become stronger than ever before,” she explains

However, providing self-service elements to global employees who are unfamiliar with the concept is not as easy as flipping a “go live” switch. “It’s important to realize the challenges of going into a global marketplace if you’re expecting everyone to have the same self-service experience. This can be challenging,” Shropshire reveals. “You also have to think about training employees to develop those skills and find out if there is a legal requirement in-country to present self-service features in the native language to even allow employees to have access to those features. There’s a lot to consider and look at for each individual country and many details to work through to understand what’s available to you,” she points out. 

Navigating the red tape of what is and isn’t required for self-service functionality in a particular country is an example of what an experienced global payroll consultant can help clients short-cut. 

Acquisitions, Expansions, and New Locations

In Shropshire’s experience, most companies looking to expand their global payroll needs are angling to acquire smaller entities, expand into new territories, or open a new location of a pre-existing company. In addition, most of the global payroll clients she has worked with are larger in size. “Typically, unless you’re a manufacturer or perhaps in the entertainment industry, you’re probably going to be adding small employee counts during an acquisition–typically salespeople or similar positions,” notes Shropshire. That’s not to say that companies with smaller headcounts don’t require global payroll assistance. In fact, the smaller the company, the larger the need for in-depth, comprehensive global payroll support. “The more employees you have, the better deal you get on costs with any payroll provider,” explains Shropshire. “It can quickly become an expensive thing to pay people in-country, so it’s important to properly configure your system.” 

Regardless of the number of employees being paid via your global payroll system, Shropshire recommends looping in an expert. “It’s always going to be in the best interest of the client to engage with a global professional. The reason is that every company runs lean and mean today, so an expert resource such as Wise is a great way to help you gather your requirements without having to increase or overburden your internal staff.” An added bonus if your organization anticipates making multiple acquisitions over time is that the relationship with that professional resource, plus the knowledge they already have of your company, makes it easy to dive into new projects with confidence and speed. At Wise, we regularly hear from clients that our expertise allows them to move at a pace they just can’t achieve on their own.

In addition to the staff augmentation value-add that comes from a global payroll consultant, Shropshire notes that the industry expertise a consultant brings to the table gives internal teams an edge. “You should expect that it’s going to take you three times as long to set up a system internationally. Typically, the resource or subject matter expert in-country is not a native English speaker,” she said. “Trying to get everything into the U.S.-based English business language can be challenging.” Thankfully, global payroll consultants are well-versed in navigating this business culture disconnect and can provide invaluable resources throughout the project. 

As many companies across the globe tentatively nudge toward a new normal, it’s hard to deny that virtual workplaces are here to stay. Workers are awakening to the possibility of leveraging this benefit to relocate to different countries or embrace a more nomadic lifestyle. Regardless, companies are left having to track and account for the evolving international status of workers.

Shropshire believes this trend will have far-reaching impacts. “I think the process of managing global payroll will become even bigger than ever,” she says. “That’s one thing that the pandemic has taught us–people can work from anywhere. You can work virtually from your home in the U.S. or anywhere else that has connectivity. People are seeing this and thinking ‘hey, I can take advantage of some of the different scales of wage differences around the world, and companies are seeing they can leverage high-quality resources that are easier on the budget.’” There’s a good chance that if a large corporation hasn’t already had to factor in the global nature of payroll on their business, they will in the coming months or years. 

Take Your Payroll Worldwide With Wise 

As Global Payroll Week comes to a close, we want to take a moment to appreciate all that global payroll consultants do. Their expertise facilitates the expansion of businesses of all industries and sizes across the globe. If you anticipate needing to examine how your payroll will work when adding staff from different countries, and relying on different currencies or languages, contact one of the experienced and knowledgeable global payroll consultants at Wise today!

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