Emerald Technology Aug 22, 2022 9:43:15 AM 10 min read

What Nobody Is Saying About Local Payroll Vendors

If you run a global business, you’ll know that work has transformed over the last decade. Perhaps “work” has changed little, but the definition of workers has been revolutionized by the rapid change in how we work. Most businesses have a combination of in-house, freelance, remote, and hybrid workers. These workers also span the globe in a way they most likely didn’t before, crossing multiple time zones. 

As with most business expansion, the vast majority of businesses who now find themselves in this position are using systems devised decades ago. One of them is payroll. With multiple employees in different countries, it can be tempting to outsource your payroll to a local payroll vendor or accounting firm in that geographical location.  

 

Local knowledge is the best knowledge, right? 

Not always.  

This becomes especially true when the sheer volume of outsourced payroll becomes almost impossible to track. The more you expand the business, the bigger the payroll headache gets. You’ve built a fragmented, sometimes temperamental payroll system.  

Each time to expand, you add yet another payroll provider, with their own communication preferences, terms and conditions, pricing models and cultural eccentricities.  

We think that consolidation of these systems is the best way forward and we aim to explain why.  

First, it’s important to remember that not all payroll solutions are the same. Far from it. Most payroll solutions are working like it’s 1998, and as we just mentioned, with the massive changes in labor markets, this is not acceptable anymore. Taking the time to stress test each vendor's claims as the business moves into new territories can take time and cost employees.  

 

One missed wage payment is all it takes to lose A+ talent.  

Perhaps they communicate well, but their back-end systems are woeful, and you won’t know this until it’s too late. Maybe your business is based in England, but you have employees in the Netherlands. The Dutch famously have the shortest average working week of any nation, around 29.5 hours. What if you need payroll support when everyone has already gone home? 

What if you need payroll support in Egypt or many middle eastern countries on a Friday? Countries in the middle east sometimes work Monday to Thursday and take Fridays off to attend prayer.

These are just two instances out of 195 countries where using a localized payroll vendor can scupper your business plans and your talent retention ability. Local payroll providers also have set ways of doing things, and they don’t always integrate with your way of doing things.  

They might have a software stack that looks very different to yours, from expenses to timesheets. Keeping track of these differences and manually integrating them into your own tech stack can take time, time that you don’t have. Staying on top of local currency conversion rates, decentralized payments systems, multiple bank accounts for each vendor, salary changes, the list is endless.  

Working with a single centralized payroll provider is the only way to mitigate these problems. But how do you choose one? 

Here’s our take on this. These are the considerations when choosing a global payroll provider.  

 

1: People vs Platform? 

Should your global payroll solution be platform based or should you lean on real human beings to get things done? The answer is both. Taking one solution and attempting to make it fit is, well, the square peg in the round hole problem you had with using local payroll vendors. 

The vast majority of global payroll vendors claim to have a unified system, they don’t. And they seldom merit an apples-to-apples comparison. Some vendors are just implementing an age-old aggregator model of stitching multiple technologies together and slapping lipstick on it. These systems are just not robust enough for modern business payroll requirements. Especially if you require advanced reporting like compliance and analytics.  

We don’t believe a platform only solution is the way to go. We think people come first, and we at Emerald will always be a people first company. If you need payroll support, there will always be an actual human being on the other end of the line. We think we have the perfect hybrid solution.  

 

2: Data And Analytics 

By 2025, over 80% of business data will consist of unstructured data. Giant data lakes filled with NoSQL databases waiting for someone to extract insights that could potentially make or save you millions of pounds. Bifurcating your global payroll system is a sure-fire way to add that data to those data lakes. By using a unified solution, all the data is SQL readable, digestible and usable. Data allows for greater visibility in your payroll ecosystem. Stronger intelligence on payroll arms your business to simplify corporate oversight, align payroll objectives with larger business OKRs, and allow more of a strategic outlook.  

Yes, even payroll effects strategy.  

 

3: The Singular View 

When you work with a single global payroll vendor, you’re getting a single version of the truth across all payroll dimensions. Once you fracture this view, it becomes near impossible to keep track of things. It’s also why your global payroll provider should be able to integrate with your HCM. It’s the only sure-fire way to get a singular view. Tying payroll to recruitment, training, human resources management and performance management is the ideal situation here.   

Working with a single version of the “truth” with payroll means you aren’t cobbling together a picture made up of multiple systems and people. Integrating APIs and pre-built connectors can further help to integrate your payroll to other parts of the business and build a smarter picture of where your business is right now.  

4: End-To-End Standardization 

It’s always going to be a challenge to standardize payroll across multiple countries, currencies and languages, but that doesn’t mean it’s not impossible. Your global provider should have clearly defined best practices and proven methods for user adoption. What experience does their implementation team have? What about workflows and tools? Are they included in the fee or charged extra? 

By using a singular vendor, you ensure that your global staff footprint is reading from the same page.  

 

5: The Compliance Issue 

Every multinational company knows this word like the back of their hand. Compliance has become, rightly so, a front and center word for boardrooms across the globe. Failure in any part of your payroll matrix, especially things like statutory filings and staff payments, can land your business with hefty fines, and sometimes worse.  

A fragmented payroll system that requires huge amounts of plate spinning staff to never make a mistake, ever, is a recipe for disaster. Without the ability for stakeholders to monitor or at least understand liability, legal information and regulatory statutes on the fly, the entire business can be shut down until regulatory bodies are convinced you’re listening to them. 

We all know that actionable due dates vary from country to country, but the host country isn’t concerned with how “complicated” it is. They just want you to remain compliant. Providing a holistic solution to this takes a lot of stress off stakeholders and allows them to place their talent where it’s best used, growing the business.  

 

6: Room To Improve 

You can always do better, right? Even if you’re performing payroll functions at a high level, you can always improve them. Reducing issues and staff hours is always worth looking into.  

Ask your vendor how they are improving the system they use. Ask them about what technology they are utilizing. Can you get a person on the phone if you need one? Will they walk you through the system step- by-step? 

By continually refining the way they work, it ensures they can adjust to the way you work.  

 

In Conclusion: 

Work practices of the 21st century have outgrown spreadsheets. The legal liabilities alone have developed beyond all comprehension over the last decade. If you have a global workforce and still silo your payroll into local payroll vendors, it’s time to talk to someone about fixing the problem.  

Emerald Technology FAQs

Is Local Payroll A Compliance Risk For Global Businesses?

Yes, with multiple payroll systems and vendors all working at once, it’s easy for something to slip through the cracks and cause catastrophic legal and financial repercussions.

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Is A Single Payroll Provider Better Than Multiple Payroll Providers?

Absolutely, from unified software to standardized procedures, having a standard way of tackling payroll is vital. Multiple vendors cause confusion and major issues. 

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Is Compliance An Issue With Local Payroll?

Yes, it is. When your payroll is split into segments, it’s hard to make sure your vendor is keeping your workforce compliant. 

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Is A Platform Global Payroll Solution Better Than A People Based Solution?

We think a hybrid is probably the best way forward. You need a person on the end of the phone sometimes and it’s nice to know you have one with Emerald. If you have a payroll issue, we are literally a phone call away. That can’t be said for platform only based solutions. 

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What locations do Emerald search, hire and payroll in?

We offer a limitless solution. We source, onboard and payroll employees in every region worldwide (except sanctioned countries.)

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Who are Emerald’s customers?

We support Pre-IPO, VC or PE backed technology start-ups. We are a trusted partner to some of the most innovative and globally recognised technology companies since 2000.

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How quickly can Emerald onboard employees?

We can compliantly onboard employees on average of just 24-72 hours.

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What is the difference between Emerald’s Employer of Record solution and Automated Payroll Platforms?

Both support organisations in payrolling employees globally. However, an Employer of Record provides a risk-free bespoke approach, with a high level of experience and knowledge unlike an Automated platforms. An Employer of Record provides end-to-end support including worker onboarding and any HR administration, which a Payroll Platform lacks.

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