A centralized payroll process is one in which a single payroll provider coordinates global payroll activities, delivering data consistency, decreasing the potential for errors, and streamlining the overall payroll process.
Benefits of a centralized payroll process
For large, multinational corporations running payroll on a global scale, a centralized payroll process is usually the better option compared to a decentralized payroll process. A few beneficial outcomes of a centralized payroll process include:
- Control: A centralized payroll process delivers better control over expenses, payroll compliance and data. Having one standardized process also improves accountability and creates easier access to important analytics that can inform strategic business decisions.
- Data security: Payroll systems are full of sensitive data – names, addresses, banking details, social security numbers, and so on. Having a centralized payroll process ensures that there are fewer opportunities to compromise sensitive data.
- Enhanced productivity: A well-designed centralized payroll process benefits the entire company. By making key payroll data accessible in a single location, information flows through the company easily. This increases efficiency and allows departments to more easily reach operational goals.
How centralized payroll data can contribute to business growth
Taking things one step further, what exactly does it look like for companies with a centralized payroll process to leverage unified global payroll data? For manufacturing companies that serve clients all over the world, global payroll data can help them make decisions on where to expand production facilities. By examining the total compensation cost for employees in various geographies and comparing it to revenue and efficiency data, organizations can determine the most strategic locations in the world to grow their businesses.
Having a centralized payroll process and access to global payroll data also helps organizations model their growth plan in accordance with their strategic plan. For instance, by combining total compensation and employer liability costs, and measuring the total against anticipated gains in a specific geography, organizations can assess whether the investment to grow in a certain area aligns with their long-term financial goals.
When organizations can analyze data such as total compensation cost, workforce spend, and the number of direct and contingent employees in different regions, they can pinpoint the specific effects of these factors on other aspects of their business, including turnover, staff and work environment. The key to maximizing the potential of global payroll data lies in companies’ ability to tap into it. Having a centralized payroll process is instrumental in making data easily accessible and consistent across countries so that you can tap into those insights effectively.
When to consider a centralized payroll process for your business
Many smaller businesses start out with decentralized payroll systems simply due to convenience and cost savings. But each stage of growth presents greater complexities in the existing systems. At what point do you call it and invest in a centralized payroll system?
Local expertise can be invaluable to a growing multinational company entering new global markets. However, too many independent decision-makers can also undermine the goals of the larger corporation. If you’re struggling to collate data across the organization, or you’ve reached a point where your incompatible systems are making it difficult to share the information people need, then it's time to make a change. Management should never be left in the dark when it comes to details about how the company operates in different countries. But that's exactly what happens when your global company outgrows your decentralized payroll processes.
A centralized managed payroll solution can help you tighten up the reins on company finances. It can also help you stop wasting money on inefficient systems that are limiting productivity. Every year, U.S. businesses suffer $47 million in lost productivity. A big chunk of that is from using poorly designed or antiquated systems that cannot keep up with current business growth.
What to look for in a global payroll provider
Implementing a centralized payroll process can be daunting amid the nuances of global payroll and contingent labor. And compiling financial metrics from disparate sources makes creating accurate, timely reports an arduous undertaking.
A global payroll partner with expertise in managing these challenges can help. With solutions for integrating processes to deliver total workforce analytics, a global payroll partner can support companies that are integrating labor and payroll data into a centralized system of record by providing:
- A global data structure that manages payroll and labor costs globally
- Tools and processes specifically created to integrate with organizations’ existing information systems
- A compliance framework that facilitates adherence to regulatory requirements
A centralized global payroll partner should help manage global payroll data efficiently and economically, and offer organizations rapid, easy access to the essential reports needed for making strategic decisions.
Partner with Safeguard Global to centralize your payroll
When you're a smaller business, a decentralized system can work fine for a while. But as you grow into a global enterprise, a centralized payroll process will put you in a better position to ensure compliance and meet strategic objectives.
Centralized payroll processes provide standardization that limits errors, mitigates risks and allows for clear oversight in terms that executive management can understand. And though establishing a centralized payroll process can be a significant organizational investment, companies often see immediate ROI, with better access to data, enhanced productivity and better visibility over finances.
At Safeguard Global, we prioritize partnership and deliver flexible solutions that are tailored to your business needs. Schedule a free consultation with us to learn more about how our solutions, Payroll 360 and Payroll Express, can help your business establish a centralized payroll process that is reliable and scalable.