Payroll and its laws, rules, and regulations vary from country to country. Hence, MNCs often deploy independent payroll systems in every country. While it may seem convenient, working disparately may lead to payroll data silos. It may prevent companies from consolidating payroll data and making unified payroll-related decisions at the global level. Global payroll can help resolve this concern.
So, what is global payroll? Global payroll refers to consolidating all the payroll data streams worldwide into a single place. A unified global payroll system helps standardize data and calculate and process payments in the country’s local currency while ensuring compliance with the country’s payroll laws.
While global payroll’s definition explains its need in the global context, let’s look at a few more reasons why global payroll is valuable to MNCs.
Centralized Payroll Control
In the case of MNCs, every geography brings a unique set of challenges. Along with operational and strategic ones, payroll is yet another area of concern with which business leaders have to deal. With a decentralized system, global leaders wouldn’t have any control over payroll in multiple countries.
But deploying a centralized system can help. A global payroll system can help bring data to a single platform. It can provide the company’s global decision-makers with a unified view and enable them to make well-informed global payroll decisions.
Enhanced Payroll Quality Data
Data received from disparate sources and at different times, based on the payroll cycle of a particular country, could create chaos at the global headquarters. The global HR wouldn’t know what to fetch and how to format all the data received and convert it into a presentable format for the company’s management.
A global payroll system can help gather data from various connected sources, process it, and present it to the management team in a format that allows them to make informed decisions. It can help companies calculate the global payroll spend, changing trends and insights into many other aspects, thus enabling them to devise a globally aligned payroll strategy.
Besides, reliable global payroll systems provide high data security levels. Hence, although globally available in a system, every employee will have restricted or need-based access to the data in the payroll system.
Minimized Payroll Errors
A global payroll system can help you automate many payroll tasks. It can save time and minimize manual payroll errors arising. While spreadsheets were once considered a revolution, they’ve now become legacy systems, considering new-age data complexities and the need to gain quick insights. However, about 70 percent of companies yet rely on spreadsheets for payroll!
Deploying a global payroll system is imperative for companies that still depend on conventional data sources.
Lowered Compliance Risks
Globally, compliance is one of the most significant challenges in payroll. MNCs worldwide face compliance-related challenges, as every country’s payroll rules and regulations differ. Besides, they keep changing, which makes it even more challenging for companies to manage them.
Per reports, approximately 25 percent of compliance professionals from firms providing financial services spend about four to six hours updating payroll compliance policies and procedures.
In the absence of a global payroll system, companies can, at the most, outsource their payroll services to external service providers. But doing so at the global level and managing several vendors at a time could become another challenge!
Deploying a global payroll system refers to bringing everyone on the same page. The system would have payroll systems programmed per the country’s payroll regulations and laws. In addition, updating it also wouldn’t be as tedious a task as it could be manually while working on independent payroll systems.
Decreased Administrative Costs
Automation helps reduce administrative payroll costs. MNCs can automate payroll processing and data consolidation with a global payroll system. Thus, they wouldn’t have to employ new or existing staff to deal with those processes. They can process payroll with minimal resources and use the existing staff strength to focus on strategically more critical tasks.
In addition, global payroll systems can involve providing an employee self-service portal. So, routine requests like generating pay slips, modifying bank details, looking at overtime reports, etc., can be handled by employees. HR wouldn’t have to deal with them via email or telephone.
Additionally, global payroll allows companies to set up a payroll ecosystem for new geography quickly. It considers the country’s local, regional and national payroll laws and regulations to ensure compliance across every level.
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