Payroll models: Which is right for your company?

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 that realize its strategic importance and prioritize efficiency, local expertise and business intelligence. The key is finding the right international payroll 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 payroll team in each of the countries in which the company has employees.

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

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

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

Benefits: By outsourcing certain payroll functions to local in-country providers, you gain immediate cultural and legislative expertise in the countries in which you operate, which helps you reduce compliance risk in those countries.

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

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

Benefits: With a centralized global payroll partner, payroll validation is provided a single language and currency, reducing inconsistencies and the chance for error. Additionally, workforce costs and reporting information from around the globe are accessible through a single point of access, offering you quicker, faster and more accurate data for analysis.

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

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