In the past, businesses that expanded internationally had two options for paying their employees: They could outsource to a payroll aggregator, or they could hire a Big Four accountancy.

In either case, that means handing the company’s payroll data over to someone else. When the company needs access to their own payroll data, they have to ask their payroll partners to retrieve it. This can often take days.

For a CFO whose job is to act strategically and demonstrate future-thinking, this lack of access to payroll data and reporting can prevent fast decision-making.

Below, we will explore why a whole new approach to payroll technology is necessary for companies that aim to be agile and responsive.

The payroll manager’s challenge

Getting international employees paid on time and in accordance with local labor laws is a herculean task. That’s why payroll gets outsourced in the first place.

To illustrate the complexity of a payroll manager’s work, take a company like Freshworks, which builds cloud-based business software, has thousands of employees and just so happened to be hiring for a payroll manager position at the time of writing. The responsibilities of a Freshworks payroll manager include the following:

• • Stakeholder management.
  • Audits and full reviews of payroll operations.
  • Handling compliance requests.
  • Managing relationships with international payroll providers.
  • Payroll reporting and coordination with the company’s finance and treasury departments to reconcile those numbers.
  • Managing and leading a team of payroll professionals, who play a vital role in upholding the employee experience that Freshworks has developed.

Clearly, this is an important role for the company. Anyone reading that list of responsibilities can imagine how the right payroll manager could help Freshworks grow its organization — and how the wrong payroll manager could disrupt a crucial business process.

Even still, many companies continue to undervalue their payroll operations. It’s not a business unit that receives the kind of investment in technology or digitization that, say, sales and marketing do.

“In practice, payroll either nests within HR or finance, but in either instance, these discrete functions view themselves as having more vital missions on which to focus,” EY’s Sheri Sullivan and Marjukka Maki-Hokkonen write.

“Payroll is a side issue. It is also one of those areas where the organization pays little attention right up until the moment something goes wrong. Run payroll brilliantly and no one notices.”

That’s a frustrating position when payroll is the largest expense for most companies, and a business-critical process. Payroll should be given more importance.

The work that goes into running payroll brilliantly

At the risk of being reductive, let’s say two things happen when payroll runs so smoothly that no one notices:

Employees get paid on time

Following the example from above, if the Freshworks payroll manager wants to ensure that their global employees in Germany, France and the Netherlands all receive their paychecks on the right day, then that person must ensure whoever handles payroll processing in those countries can pay those employees accurately and on time each pay period.

That’s captured in the fourth bullet point above about managing relationships with international payroll providers. If that responsibility isn’t met, there will be angry workers in Germany, France and the Netherlands.

This is becoming a challenge for smaller companies, too, not just companies the size of Freshworks. As remote work becomes more common and teams increasingly operate across borders, smaller organizations are now needing to meet the complexities of global payroll, specifically ensuring that employees are paid timely and accurately, regardless of where they are working from.

Payroll data supports executive-level decision making

When teams stretch across borders, then executives have to make decisions about scaling into new countries or moving away from certain locations. Global payroll data are crucial in facilitating those decisions, Payslip founder and CEO Fidelma McGuirk writes in Global Payroll magazine.

“Payroll data can tell many stories if standardized, consolidated, and liberated through smart reporting and analytics tools associated with innovative technology platforms,” she says.

“That is why more global employers are turning toward advanced technology that can meet their demand for centralized visibility and consolidated, real-time global reporting to inform strategic and predictive leadership decisions.”

Let’s return to the Freshworks example one more time. In 2020, Freshworks hired a new CFO, Tyler Sloat, to guide its transition from a growing, mature startup into a public company. In Sloat’s first week on the job, Forbes India’s Harichandan Arakali writes, “there was a meeting in which three different groups made presentations with the same definition for a particular set of data, but each with a different set of numbers for that same definition.”

Freshworks can’t afford to have local data discrepancies influencing global decisions. That’s true for sales, for accounting, for payroll, for everything.

And so the company’s brand-new CFO took steps to ensure he was getting the most accurate data available to aid his decision making. “Sloat got Freshworks to completely overhaul its IT and management information systems across every important process in the company,” Arakali reports.

These are the stakes for growing companies. If there are systems or processes in place that get in a CFO’s way, then those systems and processes need to be updated or replaced.

Legacy payroll models only support half of that work

Payroll aggregators and Big Four accountancies do a good job of ensuring people receive their salary payments on time. But those models are built for payroll calculation, not multi-country payroll management. They don’t have purpose-built reporting software and therefore cannot fully support executive decision-making.

Some of this is a result of legacy thinking. Aggregators and Big Four accountancies have massive networks of local payroll experts. Here is a list of all the payroll leaders in EY’s network, for example.

But managing those networks alone fails to capture the global dimension of global payroll. “There is a prevailing perspective that payroll responsibility sits solely at the local country or regional level,” Deloitte’s Katie Heath and Laura Edell write.

“This perception may inhibit the global mobility program owner’s goal of running a truly global payroll process that relies on nimble and timely communication between home and host country HRIS/payroll systems to facilitate wage and tax reporting and financial budgeting.”

In many cases, the laissez-faire attitudes companies have toward their own payroll functions create problematic blind spots.

When payroll managers cannot easily pull their own data, they cannot support the decision-making of the executives who rely on them, nor can they easily report on the very business operations they’re responsible for. This is a common problem at all companies today.

And it is the problem global payroll control platforms solve.

How a global payroll control platform is different

At Payslip, we’ve built our global payroll control platform to ensure payroll data is accessible, usable, and relevant at both local and global levels.

Here’s how that platform works:

• • It imports data from HCM and HRIS systems, as well as local payroll providers and any other relevant sources (e.g. your accounting software).
  • It automates and standardizes all of that data so you can make apples-to-apples comparisons of labor cost figures across countries (without having to rely on manual processes or spreadsheets).
  • It integrates payroll processes into your company’s wider IT ecosystem so you can pull detailed, consolidated reports whenever you need.

This is a payroll model that honors the expertise of local payroll providers, organizes all of those relationships into a single dashboard, gives you the tools to assess and manage those relationships, and keeps you in total control of your data.

Global payroll control is a value add, not a rip-and-replace

Multicountry global payroll delivery is about finding the best ways to manage multiple local providers. As a result, your network of vendor relationships can grow, shrink or take whatever shapes that make sense for your business.

This also means you don’t need to terminate or replace those relationships when you adopt a global payroll control model. If you have existing relationships with aggregators, Big Four accountancies and/or local payroll providers, you can keep those.

A platform like ours gives you the tools to manage payroll data and access it easily. We do this by automating data flows into the platform from all sources, then standardizing data formats so it looks the same across all countries.

What happens, then, is your payroll provider delivery will get tracked and translated into usable data. That gives you full visibility into payroll performance, as well as an easy way to manage service-level agreements and track KPIs.

To learn more about how our platform works with and augments existing payroll processes, have a look at Payslip’s integrations. When you’re ready to book a tour of our platform, you can do that here.

For more information about our Global Payroll Control Platform contact us today.