Enterprise Companies Payroll Pain Points & Their Solutions
Alex Margolin| Jul 22, 2019
In the modern age, payroll is much more than simply paying people. Today, it also means ensuring data privacy, extracting business insights, complying with ever-changing tax codes in multiple countries, and much more.
Of course, simply paying people in itself is harder than ever. Workers depend on their employers to provide their correct pay on time, every time. Any given company will employ a combination of permanent workers and contractors. Compensation and benefits will vary from worker to worker, and in a global workforce, so will employ tax rates and tax withholdings.
And the trend is towards even more complexity. Pay periods are getting shorter, with an increasing number of workers paid bi-weekly or even weekly rather than monthly, doubling the number of payroll cycles while reducing the time to prepare them by half.
There is also a trend towards automation, which will need to be managed. That trend opens the door to new challenges such as real-time payments, which cuts the payroll cycle to a single day.
In short, global payroll has never been more challenging. Here are some of the biggest pain points for companies and how to address them effectively.
Pain Point: Compliance
In a Lighthouse Research study (backed by Papaya Global), 70% of employers revealed concern that they had insufficient knowledge of foreign compliance requirements, making compliance a major pain point in overseas expansion. The high figure is not surprising considering how daunting foreign tax codes can be – and what’s at stake.
A country like Switzerland – an international hub for banking and commerce – has no less than 26 different tax authorities and 100 social security carriers, each with its own forms and data requirements.
French employment laws can be their own compliance quagmire, and not just because all reporting must be in French. Overtime, to cite just one example, requires constant vigilance. A regular week is 35 hours in France, and any hours above that must be calculated as overtime. However, if workers put in more than 46 additional hours 12 weeks in a row, the additional hours can be converted into paid time off. The payroll department must keep track of all those moving parts.
Western Europe in general has grown in complexity. The average number of data items payroll managers had to calculate rose to 19 in 2019, up from 17 just two years ago. Failing to adhere to the letter of the law could lead to fines and damage to a company’s reputation.
Solution: Managed Automation
A truly global workforce requires a truly global payroll software backed with support from payroll experts with specialised knowledge of local laws, benchmarks, and norms. Automated payroll ensures that all of the calculations are handled quickly and without errors, and the human support overseeing the process stays on top of legal changes.
Papaya’s cloud-based SaaS automated platform makes payroll compliance simple and secure. All the necessary information is placed into the system and a dedicated staff of Customer Success Managers provide the personal expertise to ensure all compliance issues are handled properly.
The platform also automates GDPR compliance by ensuring all consent forms are secured and all information is shared through the platform, not through email or online messengers.
Pain Point: Calculating True Workforce Costs
When a company outsources its payroll, the total costs are typically included in the invoice it receives from its payroll provider. However, a lump sum bill for all payroll service does not provide enough information for the employer.
A significant pain point in the payroll process is finding a complete breakdown of the costs for each employee. How much is the company spending on commissions to a particular worker? How much did the worker receive in bonuses? What was his phone allowance? What compensation did he receive for being available on-call?
A company needs a full breakdown of all worker expenses in a single glance in order to be sure that the worker is being compensated fairly and to determine if all of the costs are in line with the company’s goals and policies.
Solution: Variable Cost Reporting
The Papaya platform provides advanced Business Intelligence, giving the employer a clear view of all expenses, how they break down for each worker, and how they compare to previous time periods. With Variable Cost Reporting, employers are empowered to make informed decisions on spending.
All detailed salary reports contain the overall salary spending as well as a breakdown of variable costs. These are elements that change from month-to-month, such as commissions or bonuses.
Papaya’s platform provides a cost breakdown in 14 categories and 20 sub-categories. Information is then broken down into more than 350 possible variables. Categories include all the different types of bonuses (sign-one bonus, Christmas bonus, quarterly bonus) or categories of benefits such as 13th or 14th month salary, which are common in some countries.
The reports bring together workers from different countries into a single view and even adjust currency rates into a single report that provides easy comparisons between workers.
The breakdown gives the employer two advantages. First, the employer can check the report for accuracy and ensure that all workforce spending is consistent with the company’s overall goals. Second, it can compare time periods to see if spending has gone up or down. For example, an employer can compare the current month with the same month a year earlier, or the current quarter to the same quarter last year.
Pain Point: Too Many Points of Contact
Managing a global workforce often means navigating between a host of different reporting systems and a variety of providers, invoice types and styles. Employee reports are sent using different templates and possibly different languages.
When it comes to support, payroll managers often have to contact to each provider separately because each will only have access to a small portion of the necessary information.
At the same time, the amount of data that the payroll managers need continues to rise. Benefits, bonus packages, and commissions vary from worker to worker and also from country to country. In many cases, workers’ compensation will change in every pay cycle – an added challenge at a time when the cycles are growing shorter in length.
With the Papaya platform, the entire process is consolidated and standardized. The work process is streamlined into a single, consistent workflow. All of the different systems, templates, and invoices are consolidated into a unified, manageable platform.
Most importantly, with the Papaya platform, employers have one consistent point of contact throughout the entire process – their dedicated Customer Success Manager. All information flows through their CSM.
All of the invoices from each supplier are placed in a single location, with one invoice notification rather than potentially dozens for companies with a large workforce across many countries. The effect of consolidation is a single, global view of the entire workforce. Many steps in the payroll process are eliminated, and there are fewer details to oversee – and to overlook.
Consolidation turns chaos into order. It makes the most complex process simple, even as payroll continues to grow in complexity for those who maintain a manual process.
Pain Point: Confusing Pricing Full of Hidden Fees
Pricing is at the heart of any business decision. Without a clear sense of what services are available and at what price, it is impossible for a company to calculate an anticipated return on the investment. Payroll outsourcing is no different. Too often, however, payroll fees are as complex and confusing as the payroll itself.
Common hidden fees include a “start-up” charge just for hiring the payroll company, before any work has even been done. It is a one-time fee, but it can be a surprise on the bottom line for companies on top of the costs of the payroll processing they expected. A related hidden fee – either in addition to or instead of the start-up fee – could be for system integration.
Some companies also hide the additional costs associated with a full-service payroll. They list the processing fees, but not the costs of year-end tax filings, or for quarterly reports. In other words, the processing fees are only a part of the total package but that is not clear from the outset.
Solution: Cost Transparency
For Papaya, price transparency is an important value. It leads to trust, which is the basis for a long-lasting relationship. There are no hidden fees; every charge is clearly indicated in advance, including a nominal commission on services and setup fees that include on-going consultation, expertise, and software free of charge.
Papaya’s worker management platform is easy to scale and drops in price as more workers are added. The cloud-based SaaS model also allows for fixed prices on global PEO services so that employers always know their workforce costs in advance.
Global payroll for enterprise companies has never been more complex. Now is the time to unify and consolidate your international payroll.