Successful human capital management often begins with accurate and efficient payroll
However, this can be challenging for multinational companies that have to deal with the nuances of different countries’ tax laws, employee regulations, currencies, and compliance issues.
As a result, a growing number of businesses are choosing to outsource their payroll efforts to global providers who can support them with on-ground solutions that are tailored to their objectives and specifications.
On top of minimising risk by putting their payroll management in the hands of experienced service providers, businesses can free up time and redirect their focus towards more strategic goals such as hiring and talent development, increasing market share, and diversifying revenue streams.
Why do companies choose to outsource payroll?
There are many advantages to outsourcing payroll but one of the most cited reasons is that it is more time and cost-efficient. Another popular opinion in favour of payroll outsourcing is that it offers greater resilience against disruption. Especially for smaller, up-and-coming companies.
For example, if a company manages its payroll internally, it will have to hire an employee or a department to oversee all payroll processing. Now imagine what might happen during holiday periods or if a team member is away on emergency leave, this can potentially result in the delay of wage payments. While larger companies may have the resources to avoid this by hiring larger teams, the same can’t be said for smaller businesses.
Outsourcing payroll means that companies won’t have to worry about running into this risk as their payroll provider will always have a dedicated staff on hand to ensure year-round payroll continuity.
What to consider when outsourcing payroll
When outsourcing payroll, approach it the same way you would any successful partnership. Compatibility is of the essence so take your time when researching providers to find the best fit for your company’s needs. We recommend listing down a set of criteria you can refer to when assessing potential payroll providers to keep you on track.
Here is our set of top considerations companies should look at when outsourcing payroll providers.
Scope of service
The first thing you should consider when evaluating payroll providers is the range of services on offer. Do you want someone to help with the calculation of employee taxes and deductions? Do you need a service that handles the distribution of your employee wages and is able to execute payroll procedures that is compliant with the local laws of all the countries you operate?
Ask yourself if the ones on your shortlist cover everything your business requires in the present and if their services can expand to accommodate any additional needs in the future.
Finding a provider that can supplement their payroll solutions with high-quality, personalised customer service also makes a world of difference. Payroll is complex and you want to work with a partner who understands your business and can give you the attention and support it needs when challenges arise.
Source: Shutterstock/Sasin Paraksa
Data protection and security
The safety of your employees takes precedence over everything and as an employer, you’ll need to take additional measures to protect the sensitive data involved in payroll activities. We’re talking assets like employee addresses, banking information, and social security numbers.
Understand the steps being taken by the provider to encrypt sensitive data, the type of technology they’re using to secure that data from being compromised, who has access to the information, and what type of insurance protection the provider has.
We also recommend finding out about the payroll provider’s credentials to check that they can be trusted to protect the integrity of your data. Certifications such as ISO 27001 and ISAE 3000 are the international standard on managing information security and are often referred to by organisations for quality assurance.
Working with a payroll provider with the knowledge and expertise of the local regulations and changes in the legislative environment is vital. Especially for multinational companies that need to manage payroll for employees in various locations.
This is so that you don’t run into any non-compliance risks that might result in harsh penalties, reputational damage that can compromise the good standing of your company, and revocation of licenses.
A local tax and payroll specialist will not only help to ensure compliance in every location you operate in, but it also means that you won’t have to worry about hiring and training internal staff. A payroll provider that can be trusted to oversee all matters relating to compliance will help you to eliminate risk as well as save on costs and time.
What is the compliance record like for their clients?
Does their payroll software have built-in compliance controls and legislation interpretation tools to help minimise the risk of non-compliance?
What is their level of knowledge relating to the specific industry or country and how do these laws apply to your employees?
Visibility over performance metrics
Global payroll is made up of many components, making it vulnerable to risk. When evaluating payroll providers, look for ones that can provide you with a clear communications plan and reporting interface that will make it easy for you to understand the insights and performance metrics behind your payroll processing.
Learn what are the basic features the provider offers and if the management reporting dashboard is easily accessible and appropriate for your business’ needs.
Some providers include an employee self-service portal which can be useful when employees need to access or change their information.
Source: Shutterstock/Wright Studio
If your company already has an existing Human Resource Information System (HRIS), working with a payroll provider whose technology can work with your system will make things much easier. Look for providers whose software is compatible with yours or can be easily integrated with an API, otherwise, you may have to migrate your entire system over to theirs or manually provide them with data during each pay cycle.
Manage your global payroll with comprehensive third-party solutions from Airswift
The complex nature of payroll is made even more delicate for companies that operate in multiple regions with conflicting laws and legislature. Partnering with a global solutions provider like Airswift can help you minimise risk while freeing up time to redirect your resources and time towards focusing on other aspects of your business.
As part of our Global Employment Outsourcing network, Airswift’s full-service payroll solutions can be customised to suit the needs of businesses of all sizes.
This post was written by: Leanna Seah, Content Marketing Coordinator