Before starting to implement an international payroll process, it is important to take the following aspects into account, as they can become issues or even pose a threat to the entire payroll flow and, therefore, the activity of the organisation – even the internationalisation process itself.
Cultural component
The cultural aspect is a basic consideration for internationalisation. Beyond legislative specifics (for example, rules regarding the number of payments or their interval), the person in charge of leading the international payroll process will have to deal with de-localised teams and a 3rd party in each country, and each may have their own cultural differences. Controlling the cultural component of each country is essential.
Technology
Technology plays an indispensable role. Having a technological solution to ensure local compliance avoids unpleasant surprises, in the present and the future. (For example:Including automation from the start, when international payroll is smaller, will greatly ease future growth.) Not to mention, given the sensitivity of payroll data, your solution should include a cybersecurity aspect – reassuring both your staff and regulators.
In addition, having technological solutions adapted and customised to the real needs of those who manage payroll, eases pain points, and assures smooth processes.
Control and visibility of information
Closely linked to technology, it is essential that whoever leads your global multi-country payroll process has full control and visibility of your information. Although it may seem a no-brainer, it can sometimes be missed during the process. It’s already too late when problems arise from the lack of control of information appear, because you are already present in several countries.
Defining the management model and providing the tools that allow you to have total control, full visibility, and accurate reporting is something that you must keep in mind before beginning the very first process of crossing your borders.
Complexity of the process itself
As we have shown, the payroll management process at the international level is particularly complex. All measures taken must be aimed at making life easier for those who manage and lead the global payroll function.
The choice of the model (centralised vs decentralised); the communication channels (email is normal, but does not provide the most secure, efficient and compliant means of communication); connections with your finance department; the choice of reporting format (local vs global); the approval process (at the local level, at a global level); the use of language; etc. – everything should be aimed at facilitation and making the process more efficient, not the other way around.
The onboarding process
A solution is to have a business partner to accompany you through this significant global function, one who can also provide local knowledge and visibility, and can grow into other countries with you.
It is also crucial to have a supplier that can manage onboarding and make it a fluid experience (guaranteeing the continuity of payroll payments and activity), that has the flexibility to adopt the processes of your company and, at the same time, adds value.
Conclusion
The internationalisation process involves many parts that are easily overlooked – and omitting them from your planning can have serious repercussions for further growth of your business.
Neglecting to properly consider your international payroll operations can not only affect your business, reputation, and employees, but also your HR/Talent departments and your internal finance functions.
Local Knowledge – International Coverage
Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.
All information contained in this publication is up to date on 2021. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.