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The Complete Guide to Global Payroll Implementation

Key Takeaways

1. Global payroll implementation means outsourcing your business payroll function, and commissioning an expert organization to process employee payments, tax liabilities and relevant reporting on your behalf.  

2. The advantages of global payroll implementation include financial savings, staff time savings and enhanced compliance with local employment laws and tax regimes. A disadvantage is that you will no longer have direct oversight and control of global payroll. 

3. To get global payroll implementation right, it’s vital to choose a trustworthy and credible partner with reputation and experience which demonstrate their compliance capabilities, data security commitment and efficiency of operation. 

4. To ensure smooth and effective rollout, you should thoroughly project plan and monitor your global payroll implementation appropriately in cooperation with any partner organization. 

Global payroll implementation is a step which can radically change your business for the better, but choosing the right partner is crucial for success. Delegating international payroll to outside experts can free up key staff to focus more on core business objectives and less on payroll admin. It might also reduce your company’s exposure to potential compliance risks from legal and tax obligations in your countries of operation.

Whether an existing multi-national is seeking support in some new markets, or a start-up needs a partner to take on a full Employer of Record role for all overseas operations, global payroll implementation is something that businesses need to get right. Our article takes you through the main issues, advantages and disadvantages around global payroll implementation, including key points to consider when choosing a payroll implementation expert.  

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What is global payroll implementation?

Global payroll implementation is a process of centralizing all your company’s payroll systems using a single provider: That is, processing all the employees’ gross pay and deductions to end up with their net pay.  In undertaking global payroll implementation, payroll data is standardized, processes are streamlined and global compliance with relevant tax regimes is ensured. Often, payroll information is integrated with a Human Resource Information System (HRIS).  Every country will have its own particular employment laws, tax regulations and system for classifying businesses. All of these will inform the way payroll needs to be run for that country. The UK system is different to Ireland, for example, and both differ markedly from Germany, the USA or China.

Outsourcing global payroll is common, especially for larger organizations working across multiple different countries. This function can often be more efficiently and cost-effectively administered by an organization with extensive global payroll expertise rather than handled in-house by staff who may only have experience of payroll in one or two countries.

Where can I find global payroll implementation services?

Global payroll implementation can sometimes be handled by an international accountancy firm, a specialist payroll company or payroll outsourcing provider, or a ‘professional employer organisation‘ or ‘PEO’. If an international PEO is contracted, they will generally take on all relevant international employer obligations, not just payroll.

It is important that you do due diligence when choosing a partner organization for your global payroll implementation. Your chosen partner should have rigorous contracts and processes in place to ensure that all your company’s personal and business data are protected, any errors or changes are promptly addressed, and that employment rules are followed across all countries concerned. 

How do I choose a global payroll implementation provider?

The first step in choosing a partner for global payroll implementation is to know what you need from the process. The next step is to scope whether there are firms willing and able to meet your needs. A credible and trustworthy global payroll implementation provider will be happy to spend time explaining their services and the value they add.

When reviewing and selecting a global payroll implementation provider make sure that you consider the following:

  • Company reputation
  • A global payroll implementation partner will be dealing with sensitive personal information about your employees and company. You will be relying on them to keep this data safe, and deliver on-time payments to your staff. Search for an organization with an excellent reputation for reliability and trustworthiness as well as a strong track record in working with businesses in your industry and of your size.
  • Range of services
  • You may need a partner who can take on more than running payroll alone. Think about whether you require additional HR outsourcing, visa support, company tax services or a full PEO operation. When comparing quotes, ensure that all potential providers are offering the same scope of services.
  • Compliance strategy
  • Employment law and tax regimes can change quickly and fundamentally, with varied implications in different countries. Make sure you ask any potential partner organizations about their regulatory compliance capabilities and how they monitor and act on relevant changes in your countries of concern. Seek credible assurance that your business will remain compliant at all times.

When you’ve gathered and considered enough relevant evidence, make your choice of provider based on the strongest quotes, bids and/or references and go on to plan the process further.

How do I prepare for global payroll implementation?

Every case of global payroll implementation will be different but here are some of the steps and stages you might want to incorporate for your own company:

  • Discuss and agree the terms of reference for your global payroll implementation project with your selected partner organization;
  • Use the agreed terms of reference to draw up a full project plan. Divide this into phases if necessary for different countries and business areas, according to your own priorities. Ensure that key dates scheduled do not clash with important tax or financial reporting dates;
  • Cooperate with your new contracted global payroll provider to provide them with all relevant employee and business data to begin the global payroll implementation;
  • Communicate with your employees to make them aware of new processes (for example, if the payroll calendar changes) and contact points. Let them know who will handle questions or concerns during project rollout. Provide training and support as needed;
  • Monitor rollout closely using a payroll implementation checklist, and up-to-date payroll performance metrics, and work with your new partner to resolve any issues as they arise. 

What are the advantages of global payroll implementation?

The advantages of global payroll implementation include: 

  • Financial savings
  • Outsourcing global payroll could generate significant financial savings for your company. You will not need to hire in-house payroll or strategic finance staff to cover the countries and business areas taken on by your global payroll implementation partner.
  • Staff time savings
  • Senior finance staff will not need to spend time overseeing payroll and related units and monitoring compliance at a high level, freeing up time to focus on the wider business fundamentals.
  • Enhanced compliance
  • The expertise of your global payroll implementation partner should mean enhanced compliance with local employment law and tax regimes around the world, including during periods of change.
  • Immediate access to payroll expertise
  • Access to a global payroll implementation specialist’s expertise (e.g. around international payroll processingpayroll tax or shadow payroll) could be extremely valuable for a range of businesses and situations:
    • Small businesses and start-ups may need cost-efficient payroll processing in compliance with the legal requirements of several countries but lack the staff and knowledge to scope or implement this for themselves

    • Larger and more established businesses may be moving into new markets and lack in-house familiarity with local employment law and tax regimes for these new countries

    • Companies which are growing rapidly overseas may need to scale up existing payroll processing in some countries faster than in-house payroll teams can handle

    • In some mergers and acquisitions, a new entity may not immediately have a compliant payroll process in place but need one very quickly in order to function.

What are the disadvantages of global payroll implementation?

Disadvantages of global payroll implementation include: 

  • Reduced direct control
  • When you choose global payroll implementation through a third party organisation, you will not have the direct and immediate control over running payroll that you might be used to. If you’ve chosen the right partner, this can be traded off against the smoother running of your global payroll operation and greater confidence in compliance. 
  • Potentially slower change process
  • Similarly, you will find that when you need to make changes across your global payroll (e.g. due to a change of company pay or grading policy) this will have to be communicated and enacted through your partner organisation rather than directly. If your global payroll implementation is working well, then the additional stage of communication should not slow down changes unduly.

A final word…

Horizons enables quick, compliant, and cost-effective business expansion into major international markets whether providing payroll services or taking on a full Global PEO role. We have the ability to implement payroll in 150+ countries around the world and the operational experience to deliver all our services to the highest standards.

If you need support with global payroll implementation, get in touch with Horizons today to discuss your requirements and receive a bespoke quotation.

Frequently Asked Questions (FAQ)

There are several ways to implement a global payroll system. You may use an in-house payroll function or outsource this work to a third-party organization, either solely for payroll purposes, or as part of a wider Professional Employer Organization contract. Your best option depends on the extent of your overseas operations, the capability and capacity of your in-house teams, and the speed of any international expansion.

A payroll implementation specialist has the expertise to deliver a range of payroll services in line with client needs. This might range from providing payroll advice on a new market, through taking on payroll implementation for a single new country, to becoming Global PEO and Employer of Record for all international employees, allowing speedy expansion of global operations without the burden of establishing your own foreign subsidiary.

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