Workforce Treasury Headache: Managing Multiple Local Bank Accounts
Discover the complexities of managing workforce payments across various bank accounts in different locations, and learn how Papaya Global's Workforce Payments offers an efficient, centralized solution to this global challenge.
Alex Margolin| Jan 17, 2024
- Traditional bank-to-bank transfers remain prevalent for global workforce payments but create complexities.
- Managing unconnected accounts globally involves varying compliance requirements, & fragmented reconciliation procedures.
- Monitoring these accounts involves considering KYC, diverse funding schedules, transaction codes, and bank cut-off times.
- Papaya Global's offers a centralized paytech solution, streamlining global direct deposits and eliminating the need for multiple bank accounts.
Pandemic. Market turbulence. Spiraling inflation. Leaps in AI across the workplace. It may still be in the first half of the 2020s, but we’ve already seen several decades’ worth of change when it comes to where or how people work.
With so much instability, it’s not surprising that so many companies are still using traditional payment methods like bank-to-bank transfers for their global workforce payments. They may be slow and extremely risk-averse, but they provide secure, regulated channels for payments.
Bank transfers will keep funds safe, visible, and accessible. But the process is innately fragmented. To make cost-efficient and compliant workforce payments, you often need a bank account in every country your teams are in. All these accounts, each with its own process, schedule, and file structure – not to mention its own KYC requirements.
The reconciliation process alone, carried out manually, could require hiring an entire team to complete.
Let’s take a closer look at what it really means to manage your workforce payments funds on multiple bank accounts in different locations through the lens of three steps in the process.
1.Monitoring bank accounts in multiple countries
Monitoring bank accounts for salary payments to employees in multiple countries involves a specific set of considerations – tailored to each country’s specific banking and regulatory environments – to ensure timely and accurate payments.
- KYC at every bank
Every bank requires its own Know Your Customer procedure in order to process payments – and has its own requirements for completing the process.
- Funding accounts in time for payday
Ensuring that all the bank accounts designated for payroll funding have sufficient funds to cover salary payments. Some countries can be on a monthly schedule but on different days of the month. Others can be on the 15th and 30th of every month, others every two weeks, and some will be weekly.
- Transaction Codes
Banks use specific codes to identify and categorize different types of transactions. Managing multiple banks requires mapping and aligning the transaction codes for different banks so that workforce payments are properly classified.
- Bank Cut-off Times
Ensuring payments arrive exactly on payday means staying on top of transaction cut-off times at each bank, aside from keeping your own tabs on local closures. Different banks may have specific deadlines for processing transactions, and meeting these deadlines is crucial.
2.Managing multiple currencies
Your global workforce expects to be paid in local currency. That means managing a variety of currencies, mitigating risks associated with FX fluctuations, and ensuring accurate and compliant international payroll processing.
- Currency Conversion
Determining the applicable exchange rates for converting funds from the company’s base currency to the local currencies of each country where employees are located. Finding reliable financial sources or currency exchange platforms to obtain up-to-date rates.
- Managing FX volatility
Understand and manage exchange rate risks. Currency values can fluctuate, impacting on the overall cost of payroll.
- Banking Partners
Establishing relationships with banks that facilitate efficient and cost-effective currency conversion for international payroll transactions. Different banks may have varying fee structures, and these costs can impact the overall expense of international payroll processing.
- Legal and Tax Implications
Consider the legal and tax implications of currency conversion in each jurisdiction. Some countries may have specific tax rules related to foreign currency transactions, and compliance is essential to avoid legal issues.
3.Reconcile data from different banks in different locations
When dealing with multiple banks that may have distinct reporting formats, transaction codes, and account structures, reconciling data involves bringing these disparate elements into harmony to create a unified and standardized view of financial information.
- Reporting Formats
Different banks may present financial information in various formats. Reconciliation involves manually aligning these formats to create a consistent presentation of financial data. This may include reconciling the layout of financial statements, account summaries, and transaction details.
- Account Structures
Banks may have different structures for organizing accounts. Ensuring that the accounts used by various banks are categorized and structured in a consistent manner is essential for aggregating financial data and generating comprehensive reports.
- Accuracy of Transaction Details
Verifying the accuracy of transaction details, including confirming that the amounts, dates, and descriptions of transactions match the business records and those of the banks. Identifying and resolving discrepancies ensures the financial records are accurate and in agreement.
- Compliance with Local Regulations
Stay informed about local payroll processing regulations, including tax withholding requirements, social security contributions, and other statutory deductions. Ensure that the payroll process complies with these regulations.
The Alternative: Papaya Workforce Payments
In contrast to the fragmented, manual process involved in bank-to-bank transfers, Papaya Global created a one-stop alternative.
Papaya’s Workforce Payments is the first centralized payment technology (paytech) explicitly created to enable international companies to make global direct deposits for their workforces.
It allows you to store funds in a segregated and secure account, manage and view them from one screen, and deliver payments across the globe in a couple of clicks – instead of opening and managing bank accounts in every country.
Companies can use the Workforce Payments for all types of workforce-related global direct deposits – to all stakeholders and for all employment categories – from a centralized and standandardized location, operating on payment rails designed and optimized specifically for transparent, accurate, and on-time workforce payments.
Papaya is a licensed and regulated financial institution authorized to hold and move money across borders. By leveraging Papaya’s technology, global payment network with top tier banks like J.P. Morgan Chase, and our e-money licenses across the globe, you benefit from:
- One-time KYC – You only need to do one KYC – completed in just two days – and it covers your entire global workforce.
- Optimized payment rails – Our platform automatically chooses the best rails for your employees, ensuring that the funds move as quickly and efficiently as possible, with no surprise fees.
- “Land” date guarantee – Banks focus on when money leaves your account, not when it lands in your employees’ accounts. Our technology covers the reconciliation process and reverse calculations, accounts for local and global data, and guarantees your payment arrives on time.
- Bank-level security – Companies use banks because of the high level of trust they have in bank-level security. Workforce Payments offer the same enhanced security features, such as advanced encryption and fraud prevention, which mitigate the risks of data breaches and fraud.
Find out more about how Papaya’s Workforce Payments can transform your payroll and payment operations. Schedule a demo today.