Global payments and payroll integration guide
The relationship between payroll and payments in global operations is critical, especially at a time when international payroll is becoming more complex. The demands of complying with tax law and labor regulations, handling currency fluctuations and conversions, and maintaining payroll accuracy and timeliness mean a smooth end-to-end journey across payroll and payments is extremely valuable to any modern organization.
Making things even tougher is the risk of cybersecurity and the steps that many banks are taking to prevent fraud. An increased rate of compliance checks and greater protection against digital and virtual fraud is having an impact on payroll performance, which is magnified by customer demands for efficiency and transparency.
In this guide, Olga Rodriguez, CloudPay’s Director of Payments Operations, will explore the role of technology in solving these pressing payroll and payments challenges, and how it can facilitate seamless, shortened payroll cycles. She’ll draw on 25 years of experience in payroll and payment systems to highlight how modern, integrated solutions are the way forward, and how customers can get comprehensive insights into their own processes.
Global payroll & payments landscape
“The complexity of global payroll and payments, and the variation in requirements from one country and
region to another, mean that integrating payroll and payments is becoming essential. Consider these
region-specific challenges that multinational companies face:
Some regions of northern Spain require a physical entity in that region to be able to make tax payments
Japan’s regulatory requirements are highly specific, making local expertise a must
China has distinct payment protocols that must be followed
Paradoxically, some of the similarities between countries in their payroll cultures also pose a problem. From analyzing our customers’ data, we know that half of all payrolls are run at the end of the month, and 75% over the last two days of the month. For many larger organizations, having to process so many payments spread across such a variety of payment landscapes in such a short and specific timeframe requires careful scheduling and resource allocation.
Alongside all this, many organizations are still handling payments internally. But this limits their ability to manage multiple payment methods, currencies and relationships with local providers. Add in multiple payment dates, varying processing times, and differing banking hours and holidays across regions, and things quickly become too much for busy payment teams that can only do so much at a time. This pressure can also have knock-on effects on maintaining compliance globally, and in getting internal approval for payroll sufficiently quickly.
It’s a lot to take in, not only for payroll teams, but also for the global payment systems that simultaneously have to cover currencies and foreign exchange, different bank file methods and protocols, compliance requirements, integration with local banking systems, and real-time tracking and reporting. The only way to practically achieve this, and future-proof payroll and payments in the long-term, is full integration of global payroll and payments from end to end.
Global payments challenges & compliance
“In the previous section, we explored some of the practical issues that affect payroll and payments. Organizations also need to be aware of some of the wider, global issues that are often beyond their control, but still need to be addressed or mitigated to keep businesses running smoothly:
Fraud and security:
With digital and virtual fraud continuing to increase – by over 200% per year – banks have tightened up their compliance checks and it can be difficult for third parties like payment solution providers to keep abreast of the changes. Even if only a tiny percentage of payments are stopped by compliance checks, it still means a considerable number of employees don’t get the salary they expect, when they expect it.
Limited visibility and control:
Connected to the previous point, with so much going on in so many different countries, keeping track of everything can be a major undertaking. A centralized dashboard is essential for tracking payments, reconciling transactions and ensuring accuracy, and avoiding payment delays that can be caused by banking differences, manual processes, and a lack of standardization across providers.
Currency management:
Some currencies are more volatile than others and this can lead to discrepancies in salary payments, higher transaction costs and increasing employee dissatisfaction. The best way to avoid this is through a unified system, where organizations send funds to a payroll partner, that can then take care of conversions and currency fluctuations at scale.
Local and cultural expertise:
Some of the country specifics that crop up around payroll and payments are cultural in nature and won’t always be picked up on by global and remote teams. This is where having access to local expertise – especially if they speak the same language as the local workforce – is crucial.
Global technology integration
“At CloudPay, we’re already working hard to facilitate the full integration between payroll and payments that multi-national organizations need. For example, our payment platform is being further enhanced to incorporate dashboards, APIs and payment process automation.
However, one new innovation we plan to bring on stream in 2025 is the ‘payroll-payment handshake’, where bank files are automatically generated as soon as payrolls are approved. We don’t treat payments as an add-on service that should be connected to payroll; we treat the two as a single end-to-end process.
The ultimate goal is to allow organizations to consolidate global payroll and payments within one seamless service. We believe that service should be built on three essential pillars:
Automated technology: where a single platform integrates payroll, payments and HR, and enables a modern, consistent pay experience across a global workforce.
Centralized, real-time data: where all payroll and payment information is unified, with accurate, real-time visibility that builds trust within employees and delivers deeper insights through analytics.
Local expertise: where technology is supported by a global network of local payroll experts, whose knowledge supports compliance with complex country-specific regulations
This unified approach can help streamline processes, reduce errors, accelerate payment processing times and inform better decision-making. New levels of transparency mean that payroll data can be used to guide strategic international improvements, backed up by KPI benchmarks. And importantly, it delivers a solid foundation to adopt innovations like Earned Wage Access, which builds autonomy, personalization and financial empowerment for every employee, boosting employee engagement and retention.
6 strategic recommendations for your global payments
“So, if you’re looking towards integrating global payroll and payments, what’s the best way forward for
your organization? On a practical level, we recommend the following six tips for evaluating different
solutions and what you want your future global payroll and payments flow to outlook like:
1. Look for solutions that fully integrate payroll and payments, and that don’t continue to treat them as separate functions
2. Investigate local partner networks to ensure you have access to the expertise that you need for compliance, and to help you build cultural understanding with workforces in different territories
3. Ensure there is sufficient scale to manage multiple vendors, banking relationships, and payment methods, to maximize the efficiency of administrative overheads and costs
4. Prioritize tech-driven solutions – especially if automated – that can keep you up to date with changing legislation and reporting obligations
5. Choose a payment solution that can support currency conversion in real-time with competitive exchange rates to help minimize cross-border transaction fees
6. Explore the chance to standardize payroll and payment processes across all territories, but with enough scope to customize where local laws, benefits and payment structures require a more specific approach
If you’d like to find out more on making your payroll future-ready, in the Americas and beyond, get in touch with the CloudPay team today.
Summary
Global payments integration
Global landscape
- The relationship between payroll and payments in global operations is critical, especially as international payroll becomes increasingly complex
- Region-specific challenges include physical entity requirements for tax payments in northern Spain, Japan’s highly specific regulatory requirements, and China’s distinct payment protocols
- Payment timing creates bottlenecks, with half of all payrolls running at month-end and 75% over the last two days
of the month - Many organizations still handle payments internally, limiting their ability to manage multiple payment methods, currencies, and relationships with local providers
Technology integration
- Payroll and payments should be treated as a single end-to-end process rather than separate functions
- Full integration should be built on automated technology, centralized real-time data, and local expertise
- This unified approach can streamline processes, reduce errors, accelerate payment processing, and inform better decision-making
- Transparency enables payroll and payments data to guide strategic international improvements, supported by
KPI benchmarks
Key challenges
- Digital and virtual fraud has increased by over 200% per year, prompting banks to tighten compliance checks, which can delay employee payments
- Currency volatility can lead to salary payment discrepancies, higher transaction costs, and employee dissatisfaction
- Limited visibility and control make tracking payments across multiple countries a major undertaking
Strategic recommendations
- Look for solutions that fully integrate payroll and payments rather than treating them as separate functions
- Investigate local partner networks to ensure access to expertise needed for compliance and cultural understanding
- Ensure sufficient scale to manage multiple vendors, banking relationships, and payment methods
- Prioritize tech-driven, automated solutions that keep pace with changing legislation and reporting obligations
- Choose payment solutions supporting real-time currency conversion with competitive exchange rates
- Explore standardizing processes across territories while maintaining flexibility for local requirements
What are the risks associated with global payroll?
Many people forget that global payroll must operate hand in hand with payments. Not only do these payments rely on the varying legislation of different countries, but they’re also reliant on robust banking systems. Digital and virtual fraud is on the rise all the time, and while banks are constantly working to strengthen their compliance checks, they don’t share these controls with payroll providers. This has led to a sharp increase in compliance checks that prevent employees from getting their salary when they expect it.
Why should organizations integrate their payroll and payment processes?
Integration makes both processes faster, more accurate, more reliable and more automated. For example, at CloudPay we’re currently developing a payroll/payment ‘handshake’ integration which will automatically generate a bank file once a payroll is approved. This can reduce the admin burden on payroll and payments teams alike, and decrease the risk of delays and errors that can lead to pressured payroll cycles and employee dissatisfaction.
What are the key challenges of managing multi-currency global payments?
Dealing with foreign exchange fluctuations, especially involving countries with especially volatile currencies like Vietnam or Pakistan is a major challange. It’s an area that global payroll partners can help with, as they’ll have the scale to convert currency in much bigger volumes, and secure better rates as a result. This helps to smooth out some of the discrepancies that can emerge through exchange rates that vary from one payroll cycle to the next.
How do local payment requirements vary across different countries?
Some countries still require physical entities in the local area, such as Spain, where you may need a presence in the relevant part of the country where employees are based. This is where a global payroll partner with local expertise can prove its value, as they’ll understand the specific requirements that their customers have to adhere to, and advise on the most practical way forward to maintain compliance.
What are the emerging trends in global payment methods?
We’re seeing more interest in, and adoption of, alternative payment methods like digital wallets and on-demand pay. However, this needs careful preparation, as it represents a major shift away from traditional cycle-based payroll processes that organizations have been used to for decades. The technology is there to facilitate more flexible, employee-centric payroll and payment solutions — but adjusting to this new way of operating will take time.
How do compliance requirements affect global payments?
Authorities and employees alike expect greater visibility and transparency in payroll and payments processes. This has driven increasing regulation, auditing and compliance demands, all of which have created additional reporting requirements. The scale and complexity of these demands is such that many organizations’ payroll teams don’t have the resources to deal with it all in-house, and are working with global payroll partners to help through a collaborative, expertise-led partnership.
What are the benefits of centralizing global payments?
Centralizing global payments reduces the complexity and administrative burden of handling different payments across various territories and currencies. It also hands these important but complicated tasks over to trained experts who can broker better deals, access better rates, and ensure better cost stability of payments across cycles in the long-term.
How can organizations ensure timely and accurate global payments?
Through using an integrated global payroll and payments system. This can ensure that — whatever the payroll cycle, size of the workforce, or countries and currencies involved — everything is timely and accurate from end to end. Automated processes and built-in controls facilitate maximum visibility and seamless integration, cutting out costly errors and relieving the time pressure from cycle to cycle.