Payroll models: Which is right for your company?

Payroll models: Which is right for your company?

December 28, 2019

Managing payroll at a multinational company can be fraught with challenges, including navigating diverse regulations, currencies and languages.

But multi-country payroll can also present opportunity to those companies thatrealize its strategic importance and prioritize efficiency, local expertise and business intelligence. The key is finding the right internationalpayroll management system that helps you attain them.

The three most common models for multi-country payroll are in-house,decentralized and centralized.

An in-house global payroll system requires building an in-country payrollteam in each of the countries in which the company has employees.

Benefits: An in-house system offers the company total control, with allpayroll and employee data—including the processing and validation ofhires—controlled internally. Because the in-house payroll team manages datainternally, it maintains a “single source of truth” across countries, officesand departments.

Challenges: To maintain complete payroll control, an in-house systemrequires staff around the globe, which may put undue pressures on HR staffresponsible for hiring and meeting corporate demand for quality skills andlocal expertise. Additionally, an in-house system may require time and budgetto build out a complete payroll infrastructure.

A decentralized global payroll system incorporates payroll teams insidecompany headquarters with outsourced in-country payroll processing partners ineach country where the company operates.

Benefits: By outsourcing certain payroll functions to local in-countryproviders, you gain immediate cultural and legislative expertise in thecountries in which you operate, which helps you reduce compliance risk inthose countries.

Challenges: In a decentralized system, you have to manage multiple vendorsin different regions and time zones, and there may be inconsistent reportingfrom in-country provider to provider. And because data comes from discretesources, you lack a global view into your payroll data and output.

In a centralized global payroll model, a single provider carefullycoordinates payroll requirements and manages the payroll activity of all in-country providers for your company.

Benefits: With a centralized global payroll partner, payroll validation isprovided a single language and currency, reducing inconsistencies and thechance for error. Additionally, workforce costs and reporting information fromaround the globe are accessible through a single point of access, offering youquicker, faster and more accurate data for analysis.

Challenges: Outsourcing global payroll to a single partner requires a highlevel of trust between the company and provider. Careful vetting is necessaryto ensure that all capabilities promised will be delivered.

Learn more about the three global payroll models to help determine which isbest for your company by scheduling a free consultation with one of our global payroll experts today.

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