Put simply, processing payroll is the steps you take to pay your employees for their work. There are several steps to managing payroll from gathering the right details to calculating what you owe employees, to making the payment.
The payroll payments process is how the allocated funds reach the different required parties in different countries at the right time. It involves collecting the right information on your business and employee’s tax status, calculating gross and net pay, and completing the last step of the payroll process—processing payroll and paying your employees.
The global payroll process isn’t just about paying employees the salary they’ve earned. There are other reasons this is an essential part of any business’s operations.
Why are payroll payments important to your global business
While it might be easier to just hand an employee a check without following a set number of steps, it could really harm your business in the end. In fact, the global payroll payment process benefits your business in several ways:
- By following a set process outlined by local or national legislation, you’re protecting your business from breaking any laws and regulations.
- Using a unified system for your payroll process keeps all information in one place, making it easier to track expenses, and pay attention to the overall health of your business.
- For international businesses, a process for salaries means greater payroll payments visibility, which helps you understand cash flow status in any location at any time. This can help you make smarter business decisions.
- Without set process, you can miss a payment, resulting in fines.
- Payment delays can also mean having to pay unnecessary fees to transfer payments to employees
- The employee-employer relationship is strengthened when employers abide by the legal requirements of paying employees by a specific date that aligns with the contract and, in some markets, local laws. This way, employees know when to expect payment and feel confident that the process is compliant.
What are some common challenges or errors that can occur in payroll payments?
To get all of the benefits of a payroll payments procedure, you’ll first need to know how to avoid any roadblocks that could cause you more trouble down the way:
Incorrect wages – your employee doesn’t get the full amount they’re due–such as not factoring in any transfer fees your business needs to pay–it could lead to additional payments.
Timing issues– be sure to choose a payment method that will transfer the money to employees on time every payment period.
Incorrect information – If the employer information (such as the employer name) isn’t recorded in the transaction, it can cause transaction monitoring delays.
Unspecific transactions – For a payment to go through and remain compliant, it must mention that it’s a salary transaction for the employee’s credit evaluations.
Country-specific salary requirements – each country has their own laws around conducting payroll. You can avoid fines and penalties by freshening up on regulation
If you’re hiring international employees from a country that automatically provides subsidized healthcare and you withhold healthcare, you could face fines in the employee’s home country as well as your business’s primary country of operations. For example if you located in the U.S and have employees in Canada or Germany, you will need to provide them with the standard benefits, required by law. In both Canada and Germany employees payroll consists of health insurance benefits, and as an employer you have to withhold these payments.
How can efficient payroll payments save costs
A well-oiled payroll and payments system can limit unnecessary additional costs, or eliminate human errors that can result in costs such as bank fees. A smooth payroll payments operation also saves your company from having to spend resources on hiring.
For example, if a messy payments process causes constant delays in payroll payments, employees won’t trust your company and may leave to find other opportunities where they’ll be paid on time. You’d then have to spend time and money hiring new employees to replace them, which could cost you on average anywhere from 6-9 months of their paid salary (according to SHRM).
How can you create an effective payroll payments process
You can save money by creating an optimized payroll payments process in these ways:
- Streamline the process and reduce errors – stay organized and maintain accuracy by keeping all data and information in one place
- Implement automated systems – think direct deposit, electronic paystubs, time tracking software, and automatic payroll system.
- Stay compliant – make sure the system processes the taxes and necessary compliance measures correctly for each situation or according to each country’s laws.
- Secured payroll payments – Using a unified platform for all stages in the process (including payments), you can reduce security risks.
Utilizing fast and secured payroll payments
Papaya Global is the only global payroll provider that owns its own rail, making sure the payments process are completed in a secure and accurate manner. By unifying payroll and payments, you can ensure you’re working from one source of truth to monitor your payment’s flow. Schedule a demo to learn more.
FAQs
What are some common methods for delivering payroll payments to employees?
Some of the most common methods of payroll payments to employees are direct deposits, prepaid debit cards, or payments made via paper checks. If your business operates globally, the payments process becomes more complex and requires a consolidated solution.
What are the best practices for ensuring the security and confidentiality of payroll payment information?
A few best practices for ensuring confidentiality and security for payroll payments include:
- Providing phishing or scamming training for employees
- Granting payroll access only to those who need it
- Implementing strong cybersecurity tactics and regularly updating them
- Requiring everyone accessing the system to use strong, unique passwords that change often.
- Keep payroll duties separate.
- Be mindful of what you print on checks.
How can payroll payments be tracked and reported on for accounting and compliance purposes?
You can track payroll by creating reports that can be used for business audits, tax preparation on government forms, and workers’ compensation claims. A payroll report can include pay rates, timesheets, overtime, taxes paid by employers and employees, and PTO.
What are some common challenges or errors that can occur in payroll payments?
A few common challenges that can occur in payroll payments include:
- Overpaying or underpaying employees
- Making late payments
- Deducting the wrong amount when it comes to benefits
- Improperly paying employees who have a certain status such as a disability
- Misclassifying employees
