Canadian HR Reporter

CANADIAN HR REPORTER April 3, 2017 FEATURES 13 TECHNOLOGY Coping with a globalized payroll International payment strategies can save employers from headaches By Don Banowetz and Tracy Micciche R apid advances in technol- ogy over the last few de- cades have enabled busi- nesses of all shapes and sizes to go global to find and develop new markets for their products around the world. But globalization can create new challenges of its own, and one of the biggest is how to manage a globalized payroll. Technology can also effectively address these challenges. Organizations often find the impediments to achieving ac- curate, timely payroll payments increase exponentially when they expand operations abroad. A company doing business internationally faces a host of po- tential challenges, including many that are outside of its control — from unstable governments and little banking infrastructure in regions such as Africa, to highly restrictive legislative protocols such as those across Asia. "Payroll and tax challenges in emerging markets are consider- able," says Ruairi Kelleher, execu- tive director at payroll and tax employment specialists Immedis in Dublin. "In particular, the variances in local social security legislation can be particularly challenging for companies to get a grip of their cost structures and maintain (compliance)." In these types of environments, effective payroll processes require treasury officers to not only man- age cash flows, but also prepare for currency volatility. ey also need to help plan corporate struc- tures that optimize tax policy in the different jurisdictions, and ensure compliance with anti- money-laundering laws. An international payments strategy coupled with automa- tion will save an organization from having to track elaborate and highly individualized solutions for each of its regional divisions. Once the overarching strategy is in place, a company can adjust its process, where necessary, to meet each country's local regula- tory requirements, without losing its core goals and principles. Before a company decides what kind of system it wants to use, it has to be aware of the is- sues that can crop up in global payrolls, whether they are ex- change rates, differing tax regu- lations or co-ordinating with finance for funding. Language barriers and impor- tant cultural nuances surrounding employment in foreign countries may also affect the process. ere are four key pitfalls when navigating international payroll — along with potential solutions through the information provided by human capital management platforms. Lack of transparent rules and regulations Every country has unique pay- ment-routing rules and regula- tory requirements, and the vari- ations in information required for each country are numerous. With limited visibility into most countries' activities, require- ments have frequently been unclear, obliging companies to decentralize and work with in- country providers. Moreover, in some countries, this information is compulsory, meaning an omission of even one item can equate to an incomplete payment altogether. As a result, delays and investi- gations become inevitable, leav- ing the employee without a pay- cheque, an organization with sig- nificant manual overhead costs, and staff time wasted overall. With significant advancements in payroll technology solutions, 56 per cent of North American com- panies now outsource the hosting, maintenance and support of their payment technology in order to benefit from a more centralized model, according to a 2014 De- loitte survey of 58 companies in four global regions. Risks of foreign exchange Global organizations are no strangers to the inherent volatil- ity of the foreign exchange mar- ket. With each currency affected by monetary, economic and socio-political issues in its coun- try, businesses operating over- seas inevitably encounter market fluctuations. It is part of the pay- roll manager and finance depar- ment's role to navigate through these fluctuations, ensuring both the company and its international employees are protected from a decline in their currency. One key to achieving this is un- derstanding the exposure in local currency well in advance of mak- ing international payments, and AUTOMATION > pg. 16

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