If you work in payroll, you’ll know that almost every area has become increasingly complex over the last few years.

Some of that is down to changes in the world of work. Hybrid and flexible working means there is now much greater variance within an organization around where and when people work, which makes smooth payroll processes much more complicated to deliver. 

Alongside this has been the rise of the ‘gig economy’ of contractors, freelancers and interim staff, who come with a completely different set of payroll requirements, across employment status, benefits, tax and classification.

To top it off, workforce flexibility has led more companies to go global in their hiring strategies and employ people in far more countries than before. However, divergence and evolution in the payroll regulations of many countries means that staying on top of all requirements for the global workforce has become an extremely challenging task. According to the American Payroll Association, as many as 40% of survey respondents aren’t confident that their payroll calculations are consistently correct, putting them at risk of compliance issues.

As our report on avoiding global compliance traps has found: “Consistency in the global payroll function is tightly linked to quality in the global employee experience. Compliance is at the core of this.” Given the possible ramifications of fines, legal sanctions, and poor talent retention and acquisition due to non-compliance, it’s an area of payroll management that’s essential to get right.

Automation and Standardization: The key pillars of effective global payroll compliance

The most obvious option for addressing the challenge of multinational payroll compliance is centralization, but this tends to be a bit of a square peg in a round hole: some processes work better in some countries than others. At the other end of the scale, decentralization accommodates country-specific needs, but removes the consistency in approach that enables holistic end-to-end visibility of payroll functions and performance.

As highlighted by Stuart Gaston, a Solutions Consultant Manager at CloudPay in our compliance report: “Too often, global payroll providers operate as aggregators, contracting with payroll processing companies in different countries and then pulling everything together into a single customer-facing dashboard. There’s no global standardization of the data, and it then becomes a very manual process to get that data into one format.”

The solution is technological: a global payroll solution and associated payroll provider that can provide all the functions and up-to-date expertise needed to cover all requirements in one payroll system. A good partner will lean on two particular principles to get this right:

Automation

A payroll platform with embedded tools allows businesses to monitor payroll data constantly, and ensure that it is complete, current and accurate. This includes areas like onboarding, where information needs to be correctly recorded by human resources systems (HCMs) so that employees get paid at the right time, with the right amounts deducted. Given that Gartner has found that the average organization loses $12.9 million a year through poor data quality, the importance of this can’t be overstated.

Robotic data validation adds further checks and balances, instantly flagging up any incorrect or missing data, so that everything that flows into the payroll process is accurate, whichever country it refers to. It also frees up the payroll team from making the checks manually, removing some of the most time-consuming tasks from each payroll cycle. And just as importantly, automated payroll gives teams the time to focus on particular countries such as France, Germany and China where payroll is often especially complicated and demands a human skill set.

Standardization

Automated processes are essential for payroll compliance because they minimize the risk of human errors, particularly from data entry. When payroll staff make mistakes – and even the best and most diligent team members will get something wrong every now and then – it leads to corrections, refilings and reprocessing. 

This slows payroll cycles down, and risks non-compliance. But that risk is exacerbated when payroll data from different countries is in different formats and reports. As Stuart Gaston stated in our compliance report: “If a company is getting multiple reports, in different formats from different countries, it’s nearly impossible to get everything right, and red flags are harder to spot.”

Our compliance report highlights that payroll accuracy and cycle times both improve when payroll data formats and workflows are standardized. Being able to view and follow data in a consistent way throughout payroll processes gives better visibility of any issues, and allows risk management to be streamlined through the use of a single compliance program. And when payroll regulation changes crop up in certain countries, it’s easier for payroll operations to react and respond quickly with standardized processes in place.

In summary: a partnership for success

As Stuart Gaston pointed out in CloudPay’s compliance report, it’s important to avoid providers who simply work as ‘aggregators’, contracting work out to several processing companies in different countries and compiling it into a single, customer-facing dashboard. These offerings often look attractive at first glance, but they don’t enable any data standardization, or any visibility of data outside what the dashboard provides.

For the best approach to compliance, our report concludes that it’s vital to work with a good global payroll partner who can bring a full suite of technology and country-specific expertise to the table. A unified, cloud-based global payroll solution will use one platform for all payroll processing and employee data management across every territory, and as a single access point for integrating various systems. In particular, the report found that real-time visibility of payroll data, analytics and even internal audits can make compliance an easier, smoother and clearer undertaking.

Learn more about the importance of consistency, accuracy and standardization in this detailed report on avoiding global compliance traps, then explore the CloudPay approach to addressing your payroll compliance challenges.