Authority payments are legally required payments made to government authorities or regulatory bodies.
For global workforce payments, authority payments can include those made to regulatory bodies concerning compliance with local employment laws and requirements, like employment taxes, visa fees, or overtime payments.
Without making the necessary authority payments, companies can find themselves swimming in fees and penalties. Because of this, a lot of these firms turn to payment service processors to ensure these payments are made properly and in a timely manner.
How do authority payments work?
The way authority payments are made tend to vary depending on the requirements specific to the given region. Generally, though, it will consist of five main steps:
The first step involves identifying what needs to be paid. This involves diving into the relevant legal and regulatory requirements.
Then comes the process of calculating the amount that must be paid. This part can involve examining the fees, taxes, and penalties that may be owed.
To prepare the payments, the financial team fills out the necessary forms and gathers the relevant documentation to be able to make the payment.
The payment is sent to the relevant authority, whether electronically, by check, or in person.
This marks the stamp of approval for the whole process. After the payment is made, the firm doing the paying will confirm a payment receipt to ensure that everything was processed accordingly.
5 common authority payments challenges with a global workforce
Authority payments are complicated transactions for any company. And for those firms with global operations, that’s doubly true. Challenges for these businesses can involve anything from data to time zone to currency.
- Complexity – Making global payments to authorities tends to involve dealing with a lot of jurisdictions and regulatory bodies, and this is certainly true for companies with employees in different parts of the world. Things can get complicated fast for companies that get lost in the maze.
- Security – There tends to be a lot of personal information and financial data involved in making payments to authorities. Maintaining a secure infrastructure across multiple countries can be a constant challenge for businesses.
- Cross-border payments – Cross-border payments are always a consideration for companies with a global workforce, especially when it comes to payments as time-sensitive and crucial as authority payments. Companies that lack the necessary technology and infrastructure to tackle this challenge could face a range of extra costs and complications.
- Payment timing – Deadlines are front and center when it comes to authority payments. This especially applies to payroll taxes, as companies can face penalties if these payments aren’t made on time.
- Data management – Data reporting standards and requirements tend to differ from country to country. This can make collecting and managing the data more complicated and time consuming.