Multicountry global payroll delivery and management is about paying the entire extended global workforce not just the permanent employees located in one country. It is complex and multilayered work that has become even more challenging due to recent developments in global mobility plus the onset of hybrid and remote working.
Hiring practises have changed globally, multinational organisations are hiring a mix of contractors and fully remote workers to join with their permanent and hybrid staff. All of this needs to be managed from a payroll perspective to ensure that the contractors, who are historically treated differently from a payroll perspective, are effectively accounted for as well as receiving accurate and on time pay.
Hiring international contractors can offer unique advantages, such as specialized expertise, flexibility, and cost-effectiveness. However, paying and managing these contractors can be challenging due to factors such as contractor misclassification, complex local and international labor laws and cultural differences.
In this article, we will explore some of the challenges of paying and managing international contractors and how cloud-based technology can help solve these problems.
Complex International Contractor Payments
Paying international contractors can be complex due to factors such as currency conversion and distributing payments. The process is not the same as that used for regular full-time permanent employees. Taxation and benefit factors come into play. The currency of payment and the method of payment (i.e. through bank transfer, a specific app, online payments etc.) is also relevant and there have been developments in the requests from contractors around the manner in which they are paid as well as the timing of it.
Contractors are often specialist employees who can be in high demand for specific projects so global organisations need to be flexible in how they offer payment and payroll services to this niche element of the workforce
Currency Conversion and Distributing Payments
Contractors can be located all around the world and often choose to deliver their services from the country they are currently residing in. Naturally, they will expect payment in the currency of that country. They also tend to be a digitally savvy subgroup of workers and are increasingly looking to alternatives to the traditional banking options when it comes to payment. Digital wallets, for example are increasing in popularity as a method of receiving payment. So currency conversions and distributing payments become important factors at global payroll departments who are required to distribute payments to a globally dispersed network of contractors. Both the currency angle and a specific payment method can involve additional cost to the organisation so there is a lot to consider.
It is also important to ensure compliance with local laws and regulations while paying an international contractor. Many firms offer services for managing international contractor payroll, which can simplify the task of paying international contractor but as organisations grow and expand into new regions, there is a strong desire to maintain control over their payroll and utilise internal payroll software systems or digital platforms to help pay and manage contractors on an ongoing basis.
Calculating and Submitting Payroll Data
Payroll is local and it is often the case that local country payroll vendors are required to calculate payroll and submit payroll data that is needed to pay contractors located in multiple different countries. This presents visibility and control challenges-how can a global payroll department achieve full transparency over their number of contractors and the manner in which they are paid?
Can they see everything that is happening with their contractors, and can they include their contractors in their overall reporting on their global workforce? These are important questions being asked at global payroll departments around the world. There is also a need to create SEPA and BACS bank files for contractors operating in all countries to assist with the payment process ensuring that global companies are fully capable of paying contractors in multiple currencies and countries.
Managing Contractors Globally
Many companies today are seeking a technology-based payroll solution to help them manage their large number of contractors in a way that enables them to produce and deliver contractor invoices to a HCM platform such as Workday or Success Factors. This is about more than simply ensuring that their contractors are paid accurately and on time. It is about visibility and control-including their base of contractors in the management process for their entire global workforce.
It is also about ensuring that all facts, data and statistics relevant to their mix of contractors is included in the overall global payroll reporting and HR analytics. This is necessary for the bigger picture on labour costs-you cannot submit labour cost reporting that compares costs across countries but does not include the cost of contractors as this would be an incomplete and misleading picture.
Harnessing Cloud-Based Technology to Solve the Problem
Cloud-based payroll management technology can help solve the challenges of paying and managing international contractors. A global payroll control platform helps payroll teams to set-up& manage their extended workforce, generate or receive invoices and report on various employee types such as contractors via reporting tools. A cloud computing payroll system or accounting software can be a real advantage when it comes to a management system for contractors.
It can help you categorise your workforce and generate extended workforce invoices for both employee and company records. Payslips can be produced for employees in specific countries like Dubai. This helps when contractors and other employees in specific countries are paid gross and not paid via an in-country partner.
Such a platform can also ensure that contractors, dispersed over several countries are able to access the wider company HCM eg Workday’s employee self-service portal to access their contractor invoices and pay related information.
Contractor management is a top priority for all companies, it helps organizations to pivot quickly during periods of economic uncertainty. There is a growing need for a digital payroll management platform to fully handle the complexities of international contractor payments.
A cloud-based SaaS technology platform built specifically for global payroll can help multinational companies to manage the payment of their contractors around the world while significantly reducing the administrative burden, time-consuming work hours and complexity associated with contractor payments. By harnessing software as a service cloud tools, companies can streamline the process of paying and managing international contractors, allowing them to focus on growing their business globally.
