How To Plan a Global Payroll Implementation

As payroll becomes increasingly global, manual reports and spreadsheets become untenable. Many businesses will need to invest in global payroll implementation to meet the needs of their full-time employees, short-term contractors, and part-timers.

Global payroll implementation is the process of using one source of truth for all of the company’s payroll systems. Through global payroll implementation, your business can use one platform to process employees’ gross pay and deductions to arrive at the net pay.

If your business doesn’t have a payroll process or is switching systems, keep reading to learn how to successfully implement this essential action.

What is payroll implementation?

Payroll implementation is the process of transferring all of your company’s payroll data and processes onto one central platform. This process streamlines payroll, reduces payroll errors, organizes all payroll activities, and saves your organization time.

When companies use manual methods instead of automating their payroll, they can inadvertently make inaccurate payments, which can lead to noncompliance and other penalties. Conversely, implementing payroll can provide you with several benefits from financial savings to accessing payroll expertise.

What are the advantages of payroll implementation?

Through payroll implementation, companies can:

Save money: by outsourcing global payroll, your company can save money by avoiding costly errors. Outsourcing also means the company won’t need to spend money on hiring and onboarding a new payroll team for each location.

Dedicate time to other important initiatives: letting an experienced provider handle payroll means the finance team can focus on other important initiatives that drive the business forward.

Ensure compliance: a global implementation partner will understand local and global labor and tax laws and will be able to stay up-to-date on policy changes so that you’re always compliant.

Receive guidance from payroll experts: by hiring a global payroll provider, you’ll be able to smoothly move into new markets, scale payroll processing, build and pay teams located all over the world, and more.

Not only will payroll partners ensure compliance, they’ll guide you through the processes essential to growing your business. Let’s take a look at your options when it comes to payroll implementation.

What kind of payroll implementation services exist?

When it comes to global payroll implementation, there are several routes businesses can take. International accountancy firms, specialist payroll companies, payroll outsourcing providers, or professional employer organizations (PEOs) are a few common choices.

Just be sure to thoroughly research each option when choosing a partner. Your international payroll implementation partner should have a team of local and global specialists who can guide the company on how to stay compliant, extensive coverage so you can manage your entire workforce from one view, knowledge of payroll data security standards, and actionable analytics.

Understanding and documenting your existing payroll process will save you time, money, and ensure you pick the right provider for the business.

Understanding your current payroll process

After reviewing potential partners to implement payroll, it’s time to take a look at your existing strategy to identify any gaps in the process and assess what you’ll need. Once you have an idea of what you’re missing, go through and see whether providers can meet your needs. In this stage, it’s time to start asking questions such as how their services work and how they can help you meet your goals.

You may also want to look into the providers’ reputation and see whether you can trust them to handle your sensitive data and deliver payments on time. Specifically look into organizations with strong track records for transparency and commitment to payroll compliance. In addition, it’s important to choose a partner that can meet your needs.

If your company hires contractors, freelancers, and employees from around the globe, the partner must be able to meet your needs and run global payroll.

Lastly, compliance is of utmost importance. How does the potential partner remain up to date on compliance laws and regulations? Are they able to quickly act on changing legislation to ensure you remain compliant?

After conducting your research and narrowing down the best fit for your company, it’s time to start the payroll planning. For a successful transition, review the steps below.

The stages of payroll planning

Global payroll management is an operational role that begins after opening a legal entity, employees sign their employment contracts, and HR completes the on-boarding process. The groundwork for success, however, starts much earlier:

1. Connect with local partners

Researching the country where the hiring takes place to learn about the local customs, salary expectations, and common benefits. That information is necessary in order to make an appropriate offer to prospective employees.

Getting the offer right is a major challenge for companies exploring global expansion. It is essential to have a local partner on the ground to advise on all workforce related matters and keep up with changes in tax codes and labor laws.

Much of that information is available online. However, it’s likely that your team members won’t be able to act as a genuine authority on compliance in every country on the global payroll software or be able to stay up on local legislative changes in numerous countries.

The most reliable sources are those who have a vested interest in accurate information, such as those who carry out or advise on payroll in those countries. They will also have the knowledge of local cultures and markets. That knowledge can hasten the learning curve about issues for external companies.

By the same logic, it is also advisable to have a local expert draft the employment contract. A contract should include all of the legal aspects of employment as well as common practices in the local market. Only a local expert will be fluent in both.

2. Ask the right questions

Having a local partner will go a long way to ensuring legal compliance. But taking a proactive position in the payroll journey requires knowing which questions to ask partners or how to gather research from other sources. Formulating the right questions may even precede finding a local partner, but for the most part, “knowing what you need to know” is a parallel, early step in the hiring process.

The following questions are a good starting point:

1. What are the standard working hours and number of annual vacation days?
2. What are the mandatory benefits and non-mandatory benefits in the local market?
3. What taxable items must appear on the payslip?
4. What documents is the employer legally obligated to collect and hold for each employee?

These questions cover some of the variance your company will likely encounter when working in different countries simultaneously. For example, in some countries, pension is part of social security and in another country it will be a benefit on top of social security.

Another example is medical and life insurance. In Italy, it is considered a taxable in-kind benefit. The amount the company pays is added to a pay slip. But in the UK, it does not appear on the pay slip and requires a different form to complete.

That’s why it’s best to learn as much as possible about the particular country’s payroll procedure and pay slip. But a local partner remains essential to help companies navigate the differences that often appear from country to country.

3. Collect the necessary documents

Once you decide to expand to a particular location and employees have accepted and signed employment contracts, the onboarding process begins.

Every company is responsible for collecting and holding documents related to the employee. These documents vary widely from country to country, but most include some variation of the following:

1. Worker identification number/social security number/tax identification number
2. Work visa/I-9 Worker eligibility document/W4 form (or local equivalent)
3. Bank details
4. Application form/CV/contact information
5. Health and pension benefits record
6. Employee handbook (outline of company policies)

Depending on your location, some governments will ask for additional information such as the employee’s birth certificate, proof of address (such as a utility bill), or even mortgage information (when appropriate). The legal obligations vary widely from country to country, so it’s often useful consult with a legal expert to determine which documents you’ll need for a particular country.

Your company is responsible for ensuring the safety and security of all employee documents. The information is highly confidential and with GDPR and related regulations, the penalties for mishandling the information could be severe.

4. Integrate global payroll software with your management systems

After ensuring legal compliance and onboarding employees, the next step is to implement a payroll and payments solution. With the growing complexity of payroll at all levels, a manual solution will likely prove untenable.

Many businesses are already managing human resources and expenses digitally. Any payroll and payments solution you choose should integrate with those to ensure the smoothest process.

Key integrations:

• HRIS – a human resource information system allows companies to improve workforce management, plan HR costs, track hours and attendance, and more. A global HRIS makes payroll reporting quicker and easier by replacing spreadsheets and manual calculations.
• Expenses management – this system monitors employee expenditures companies need to reimburse. The system makes it easy to track employee spending and account for all of the outgoing payments associated with business travel and other employee-initiated costs.
• Single Sign-On (SSO) – SSO is a security procedure that allows individuals to use one sign-on to access all of their applications. It prevents workers from exposing their usernames and passwords when they use a different application.
  Along with following the steps of payroll integration, there are other ways you can create a painless transition.

Ensure a smooth global payroll implementation

Global payroll implementation may look different for each company, but there are a few steps you can take to make sure the process is as smooth as possible.

• Step 1: review the implementation plan with your partner – get aligned on what you’ll need to implement payroll and what each party is responsible for. Jot down dates for task deadlines to stay organized.
• Step 2: share your data – at this point, you’ve vetted your provider and established they’re trustworthy of handling your data. They’ll need all the relevant employee and business data to begin the implementation process.
• Step 3: communicate the new process with employees – it’s likely that this new process will change existing payroll dates and procedures. Communicate those changes with employees and give them a contact so they can ask questions.
• Step 4: monitor progress – check in with your provider and ensure your team is checking the boxes on their end, working with both teams to make sure you’re addressing any roadblocks or issues as they come up.

Papaya’s payroll and payments solution

Hiring abroad or managing a global workforce can feel daunting. Papaya helps companies regain control by offering complete transparency through direct access to our local partners, a consolidated overview of your global payrolls, global employers of record, and fixed pricing without hidden fees. The Papaya platform integrates with your HRIS and ERP and ensures full legal compliance.

Team members are paid in their local currency and receive payslips in their native language through our secure worker’s portal – Papaya Personal.

See how Papaya’s global payroll solution manages all aspects of payroll, including hiring, onboarding, managing, and paying a global workforce. Schedule a demo to learn more.