International expansion is a fundamental requirement for any business to become a multinational corporation. While this presents significant opportunities, it also increases responsibilities, one of which is managinginternational payroll. Below are some best practices for this process.
Preliminary Steps Which Should Be Taken
Employers of large businesses who are expanding globally should first review the technology and payroll procedures for the countries in which they plan to operate. This will be necessary in order to decide if existing elements are sufficient or if adjustments are necessary in order to remain profitable and in compliance with local laws. It is also important for economic trends to be examined, as well as potential workforce changes that will be needed in the future. This will enhance the ability of HR departments to respond to any changes involving payroll.
There are some excellent technological systems and practices which are being employed around the world, but it is absolutely essential to ascertain the existing inventory state with regards to payroll data and resources for every region where a business plans to expand. Differences exist between countries when it comes to the manner in which employee payroll data is reported, and employers must pay close attention to regions where they are expected to directly report the payroll info of their employees to an international payroll team, versus countries where payroll data is reported to local teams instead.
Will Payroll Processes Be Electronic Or Duplicative?
Determining whether payroll procedures will be electronic or duplicative is important, as it will provide payroll with the knowledge and confidence needed to consolidate various systems and procedures. Any merger or acquisition which results in a business becoming a multinational firm could lead to payroll redundancies, so it is essential for HR staff to collect data on existing payroll systems and processes which the acquired firm uses before the merger is finalized, as this will prevent redundancy issues.
Language differences will exist and must be documented, as this to will help payroll maintain compliance while enhancing efficiency. In every nation where the concept of payroll exists, it is key to understand the local term that is used most to convey that idea, as a failure to do so can result in accidentally providing information which is incorrect.
For instance, while the expressions “new joiner” or “new hire” may refer to employees who have recently started working for the firm, in some nations it would be more accurate to use the term “new joiner” instead of new hire as it allows for more accurate data. The expression “new hire” is considered in some countries to be auspicious, and HR must familiarize themselves with the correct terms to use so confusion is avoided. While payroll technology has become more advanced in recent years, those companies that are looking to expand abroad must do so carefully so that the process is as streamlined and hassle free as possible.