Maintaining compliant global payroll operations

The growing complexity of compliance was cited as one of the most pressing challenges facing business leaders, in Mazars’ report Unlocking Trust: why global compliance is on the business agenda. This is further exacerbated for businesses operating in multiple jurisdictions.

The next article in our Growing Global series shines a spotlight on the fundamentals for compliant global payroll operations. Here, we look at five key areas of global payroll operations that can help boost business performance, by ensuring accurate, timely and useful information for decision making.

1. Access to real-time information

When managing payroll delivery across multiple countries, access to timely information is key.  Real-time visibility of the payroll process across countries, at a given time, can help identify potential delays or challenges in meeting deadlines.  Spotting these warning signs early means you can intervene to get things back on track, ensuring employees are paid on time.

Having suitable technology deployed for tracking and live reporting, and crucially all countries involved bought in to the real-time use of the technology, is invaluable. 

2. Global co-ordination, local insight and expertise

Payroll is a complex function with each jurisdiction having its own specific taxation rules and reporting requirements.  The best global payroll operations respect central co-ordination and organisation, and recognise the value of involving local experts in payroll delivery. 

For example, if a French employee has a question on the payroll calculation or a new benefit being offered in France, the best person to advise is a French payroll specialist.  Businesses benefit from local insight and expertise that isn’t available from a central co-ordination team.

3. Sound data security

Failure to safeguard the personal information of customers and employees is a big risk for businesses, and this risk can increase as the number of local payroll providers increases.

Payroll and HR functions store sensitive personal information and ensuring the security of this data across jurisdictions is fundamental. Often companies with global operations will have some large headcount payrolls together with a long tail of very small payrolls across multiple countries, and delivery of the latter often involves using independent, local payroll providers who may not have the facility for secure data exchange.

Ideally, a global payroll provider will support multiple locations without the need for sub-outsourcing. Where this is not possible and independent firms are required, insist on the use of secure document exchange portals.

4. Harness technology for global financial control

Compliance leaders plan to invest in technology more than any other area, with over three-quarters (78%) of businesses looking to invest in new accounting and tax compliance technology in the next five years, according to our recent research [1].

The review process for payroll is always key to strong compliance, and with global operations this does not change.  Ensure that the basics of a sign-off process outside of HR and Payroll functions is maintained across all locations, ideally with Finance input, at least around the release of payments.

Technology solutions that map the local payroll reports of each country to a standard global payroll structure and currency - enabling interrogation and review centrally at global, regional, local and even individual employee level - add value.  These tools not only aid detailed review which adds to scrutiny and quality, but also provide your global Board with readily available global payroll cost information.

5. Integrate local and global systems

Technology, again, is key. Integrating local payroll systems and global HR data can increase efficiency and accuracy.

Streamlined data flows in payroll are fundamental to a high-quality and efficient process, and this applies on a global basis.  If you have deployed a global HR system, you should have a global payroll solution that can readily use this data.  Inefficiency and the risk of inaccuracy are created from the need for reformatting or, worse, re-keying a payroll input.

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Global compliance continues to rise up the business agenda as leaders recognise the inherent opportunities and risks. Payroll is no exception. If you are considering streamlining or outsourcing your global payroll operations, we can help.

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^[1]Unlocking trust: why global compliance is on the business agenda. Mazars, 2021.