Why now is the time to simplify your global payroll payments delivery
Driven by advances in disruptive technologies and digital commerce, many industry business models are being forced to evolve at an astounding pace. This, along with the increased volatility and restructuring of the global financial market, has significantly impacted many company operational practices - not least the processing of payments. Yet for many organizations, their approach to global payroll payments has not moved with the times.
Today, companies are processing international salary and statutory payments in more countries than ever - but while they maybe reaping the rewards of global expansion, the costs associated with that expansion may be going unnoticed.
In this article, we’ll identify the potential pitfalls of sticking with a sub-optimal approach to global payment delivery, and show you how to start simplifying the process.
Inefficiencies in the current payment delivery process
The international banking market has undergone rapid change in the last two years, facilitating new possibilities in how you can deliver cross-border payments. Traditionally, the process has been slow, inefficient and costly for banks and businesses. But things are evolving at pace.
As the transnational payments system moves towards a more standardized and global network, now is a good time to consider how new technologies can help you automate more of your payroll payments process. But first, it’s important to identify the inefficiencies that are likely to exist in your current payments approach.
Are there any time-consuming, manual steps in your processes? Where are your points of failure and risk? Consider, for instance, how many times you are manually re-keying (and checking) the same bank details when a new starter joins your company.
Understanding the whole end-to-end lifecycle of a payment, the journey that new starter information takes before it’s finally in the banking system, is crucial for process improvement. Start digging, and you might well be alarmed at how much manual intervention takes place in this seemingly straightforward procedure.
Failing to adopt a modern, automated approach to payroll payments doesn’t just leave you stuck with manual processes - it has broader implications too.
Another key issue is the lack of visibility of payroll payment data – in other words, your ability to identify exactly who has been paid successfully and how much the payroll actually costs you. Many companies still put aside a 5-10% contingency to ensure they have enough funds to cover their payroll, because they aren’t 100% sure exactly what the total payment is going to be. Modern global payroll analytics can tell you.
Consider too, that if you continue to rely on traditional banking methods to deliver payroll payments, you may be unwittingly paying out excessive transaction fees, especially if you’re using an extensive network of local banks.
By being smarter about how you move money around internationally, you can save significantly on these costs - and also take advantage of faster ‘just-in-time’ payments to keep money in your own account for longer.
For organizations expanding into new territories, there’s the added danger of failing to recognize country-specific payment and compliance considerations. As well as understanding the limits and regulations on how you move money into these countries, you also need to know how to make your salary and statutory payments once it gets there.
In Canada, for example, you need a bank account with a tax utility tool attached, in order to be able to pay your tax liabilities. In Brazil, you need the correct payment delivery timeline in place, as national regulations state that holiday pay must be given to employees ahead of their leave - and termination pay must be delivered on the employee’s last day.
It takes time to develop a deep level of understanding as to how payments work in every country in which you operate. If you’re setting-up shop somewhere new, don’t underestimate the need to very quickly determine how things work. You can get help from banks, local financial institutions, as well as your payroll provider (if you have one).
Simplifying payroll payments on a global scale
Technology isn’t always the answer to a problem. However, from a multi-country payments point of view, a modern global payroll platform can make a big difference. For instance, you may no longer need a bank account in every country. That means the time and cost of organizing, setting-up and managing multiple in-country accounts can be eliminated.
Perhaps more importantly, it will likely mean you’re able to save on bank charges and foreign exchange fees too - which can be costly if the bank’s margins creep-up and you’re not on top of your account at all times. If you operate in a number of countries and use local banks in each one, this can be a headache to manage and the cumulative, hidden costs can become very excessive.
Naturally, the technology-driven automation and standardization of your payment processes represents huge time and cost savings too. By using digital tools and web platforms, rather than lengthy paper trails, and integrating your payroll platform with your HCM software, you can work with a single set of data that no longer requires so many manual interventions.
Finally, you’ll also benefit from the increased visibility of data, enabling better forward planning of your payroll payments and the smarter of use of funding by country. You’ll have visibility of exactly what needs to be paid, where and when, which could enable ‘just in time’ funding for payments meaning you hold on to your money for much longer.
Just a few clicks away
The world of payroll payments is changing fast. And while we’re not quite talking about a two-click ‘approve and send’ process just yet, we’re certainly heading in that direction.
If you’re still relying on heavily manual processes to co-ordinate your payroll payments, the chances are you’ll have some exposure to a number of avoidable, hidden costs that could be eradicated.
Why not take the opportunity to start streamlining now? Standardize your processes, consolidate your global payments network and make the decision to embrace the benefits that automation can bring.