Worldwide: Considerations When Choosing A Global Payroll Solution

The classic model of having an internal payroll department doesn't work today for many businesses. Here's why delegating back-office activities to a professional business service provider is a time and cost-effective solution.

HR and payroll are some of the most important tasks within the back-office arena - we are talking about employees' salaries and their well-being and at the end of the day, no business could run without its people. It is vital that the employees get paid correctly and on time, because even a minimal mistake can send a shock wave of discomfort and mistrust through the business.

Payroll is ever-changing

The classic model of having an internal payroll department doesn't work today for many businesses. Often companies will expand to many countries at once, led by their sales and marketing teams, then followed by other departments like service personnel, operations, etc.

It is becoming more common to find companies with operations in 20+ countries, but with less than 100 employees per country in many locations. This is a challenge when trying to justify the need for a full back-office department in each country, and it is the reason why independent service providers exist.

As a Business Development expert, I have come across multinational companies that analyse their payroll procedures and go to service providers for solutions and support. These companies usually spend a lot of time, effort and money in pulling together a detailed Request for Proposal (RFP) document, yet many have the same goal: "We are looking for costs savings in our payroll process".

Selecting the right payroll solution

When looking for a global payroll solution, the focus or decision factor should be on finding the solution that best equips you to be compliant in the countries you are entering. If, on top of this, the solution is cost efficient and gives you the right amount of technology to meet your needs, the solution will not only be right for your business but also easy to sell to key internal stakeholders.

For many businesses the thought process is the other way around, they start with the 'cost saving' factor. The issue with this approach is that, as you build your solution, you realise that cost cutting comes back to you soon enough in the way of additional services needed (that cost more money) and inefficiencies in the managing of the process which requires many more hours put into managing your international operation. You may even run into compliance issues, facing fines that amount to sometimes of millions of dollars.

Another erroneous approach – one that is more prevalent in the US - is to buy an expensive technology solution and assume it will work in any other country the company expands to. It may work well in some countries, but based on my experience with international deals, less than 10% of the companies were in a position in which purchasing an expensive technology solution was the right move. These technologies do give you an appealing platform and lots of functionality, but when it comes to local compliance most of the solutions:

  • come up short
  • are not fully adapted or
  • require additional work (at an additional cost).

In many cases they still don't do the job.

Countless times, I have witnessed clients choose an aggregator for their global payroll needs, following promises of functionality and cost savings, only to find out one or two years later that the spending ended up being higher, even though they still had immense issues to manage the operation globally.

A simpler and more efficient approach

Here's where expert support helps you make an educated decision that really works for your business. When you think global payroll, think compliance with local regulations and about the fact that you need to find a solution that ultimately helps get employees paid on time and accurately. Then, start adding other requirements, like those related to platform functionality, integration, etc.

There are two common scenarios for external payroll support, you can:

  • contract with local vendors; they will have local knowledge and are fast to adapt to changes in local regulation
  • choose an aggregator; a global firm that sub-contracts to local vendors (all or most of the time) and sells you a platform to manage the work - and hopefully see what's being done everywhere.

The cons of these two options are that if you choose local vendors, the amount of time your HRP team will need to dedicate to managing these relationships is immense - and on top of that, most of the time there are language barriers. This means that since you don't understand the local regulations, you are 'blindly' trusting the local vendor.

From the aggregator perspective, the common issues are:

  • lack of access to the local vendors
  • lack of flexibility to quickly contract new services or change existing services (because they have themselves a contract with the local vendor) and
  • most importantly, they won't be able to service you in locations where the local vendor would lose money, because they are forced to see your relationship with them on a one-to-one basis.

Also, most times the platforms aggregators offer are not truly global, they won't work in the countries you need, or they will require expensive interfaces.

The TMF Group approach

We have an option that brings to the market the best of both worlds. TMF Group can help you remain compliant with local regulations, while giving you top-quality platforms and coordination services.  You truly work with one firm.  Here's what we offer:

  • Wholly-owned offices in over 80 countries. We offer you local expertise, in the local language with excellent English capabilities. You have access to the in-depth knowledge of in-country professionals without the need to reach out to expensive consulting firms.
  • Global presence. You benefit from a team of professionals coordinating your compliance globally, and giving you access to each office via a single point of contact.
  • Our offices adhere to the highest standards of compliance and international laws.
  • Response to your needs in any country you work – or intend to work – in.
  • Because we are independent, we can work with any law firm or integration partners that you choose. We can also introduce you to reputable local firms if you need tax or HRP legal advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.