5 Global Payroll Challenges Employers Face in 2023 (With Solutions)
Published December 26, 2022.
With more companies embracing work-from-home policies and adopting remote technology, video communication, and the concept of global expansion, global payroll has accelerated. Since businesses are now hiring workers worldwide and maintaining a globally distributed workforce, it's even more imperative to pay employees on time and in the right currency.
While it's a complex task with a plethora of challenges, be it hiring destinations and compliance with local labor and tax laws, you can overcome them with the right payroll solution.
» Are you considering employing remote workers? Here's how to adjust their payroll
1. Ensuring Compliance
Every market possesses its own compliance calendar, which can make it harder for companies with a global workforce to monitor. But just because it's difficult, it doesn't mean organizations can miss deadlines for filing reports or making tax payments. In addition to timely submissions, private firms need to make the necessary Social Security-related contributions, maintain the correct tax rates, possess the right termination policies, and be careful not to misclassify employees.
To ensure compliance, companies can choose between two primary methods. The first is to work with local experts—for example, if you have employees from Germany, you'll need to find human resource experts in this country. The second is to potentially outsource international payroll to guarantee compliance and free up your company's resources.
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2. Inefficiency and Errors in Data Handling
For the most part, payroll processes will depend on manual tasks, such as inserting data into Microsoft Excel spreadsheets. This can both be time-consuming and increases the odds of making errors during the data entry process.
Perhaps one of the most reliable and cost-effective solutions to this is incorporating payroll software into the company's fabric. Automated payroll with the right features has benefits that can mitigate a broad array of challenges, save time on payroll processing, and eliminate costly errors.
3. Maintaining Data Security
In today's digital economy, it's more imperative than ever to maintain data security. Employee payroll data requires the necessary data protection mechanisms to protect sensitive employee information, as well as information about the company. Moreover, it's crucial to comply with data protection rules and regulations in each country. While this is a lot of responsibility for companies operating in the international market, not employing these critical tools and measures can result in compliance issues.
However, using a good payroll service provider is a great solution for companies. This way, companies can transfer their payroll data to a single centralized system with top-of-the-line payroll software for an all-in-one solution: this provides high-level security, easy access, and functional payroll management.
4. Keeping Track of Payments
It's estimated that almost half of all businesses—large or small—employ freelancers, in addition to having a full-time staff. While this is a cost-effective strategy, keeping track of all freelancers and personnel can be challenging. Without a dependable payroll infrastructure, various errors can arise, resulting in additional costs, weakened morale, and lower productivity. The other issue is that businesses need to pay attention to different time zones and foreign bank accounts.
When managing a team of full-time staff, international freelancers, and independent contractors across the globe, companies must invest in payroll software to visualize payroll data. The efficacy of using digital payroll solutions for keeping track of payments is immense, providing a smoother experience for all parties involved.
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5. Lack of Transparency
Sometimes, businesses will turn to multiple payroll vendors to handle their day-to-day payroll needs. The primary drawback to this is a lack of transparency. Unfortunately, payroll data presented by each payroll provider will come in different formats, making data transparency all but non-existent. Simplicity is the key to efficient payroll management, so this can be a tremendous setback for companies.
Therefore, many HR experts typically recommend that businesses standardize their payroll data. A single standard for all your payroll needs can diminish the need for several payroll providers—and once again, payroll software can offer a solution to achieve this.
Overcome Global Payroll Challenges With Payroll Software
In today's highly advanced and globalized economy, installing a global payroll system has never been more pronounced. It's essential to not only accurately run payroll, but also maintain employee trust, which is necessary to retain talent and improve workplace culture.
Paying your employees accurately and on time while also having an unblemished compliance record with local laws is imperative for a successful business. In the end, payroll software can eliminate multiple obstacles put in your way, helping you achieve this goal.
» Want to overcome global payroll challenges? Read TBR's payroll software reviews to find the right solution for global payroll.