The good news is that it doesn’t need to be this way. As in other areas of the financial services sector, platform-based services are making it much easier to manage international payroll payments. They provide confidence that your staff will be paid the right amount at the right time.
Why use a platform run by a specialist payroll provider to execute your international payments? The appeal is that you’re outsourcing your potential payment headaches to a professional operator with extensive experience mitigating such challenges – and doing so via an electronic platform through which you maintain control. In practice, the advantages include:
- Access to value-added services. A platform provides access to a range of value-added services that are unlikely to be available in-house, for example up-to-date knowledge on country-specific requirements, providing the business with greater effectiveness and efficiency. In addition, the platform provides a means with which to generate and maintain a single source of payments data, which can easily be accessed and plugged into the business’s accounting systems.
- Improved cost visibility. The international payments process is opaque, where charges are incurred that aren’t obvious at first sight. Making a payment to an employee in another country could incur fees at each stage of the process, from transaction charges to foreign exchange spreads, and correspondent bank fees. You can’t even be sure what it will cost to make your payment in local currency, since rates are constantly changing. Using a platform, by contrast, fees are more transparent – you pay the platform provider’s agreed fees, rather than being on the line for charges through the payments process. And you may have the option of fixing your exchange rate in advance of executing payment. In other words, you retain control and are fully aware of the costs.
- Fewer third parties to manage. Making payments to overseas employees requires you to deal with in-country providers in countries where you have staff – the financial services businesses locally who will receive your payment, process it and ensure it ends up in your employees’ bank accounts. Managing these providers can be stressful and time consuming – particularly if you have staff in many different countries – with regulatory requirements changing from one market to the next. A payroll payments platform and a knowledgeable team supporting it removes this effort from your teams, enabling you to focus on your core activities.
- Flexibility as you expand. Growing businesses regularly launch in new markets, often deploying staff or contractors on the ground. Alternatively, they may make international acquisitions to secure a presence in a new market or acquire a domestic business with employees overseas. Either way, adding new countries to your list of international payroll providers will often cost you, as well as requiring you to get to grips with new systems. Good payment platform providers will do the work for you and may not even charge to add an additional currency to the service they provide.
- Reduced time and expense. Switching to a single payments platform should substantially reduce the amount of time your payroll team has to spend building, executing and reporting on international payments, saving you money as a result. In the case of one company EQGlobal worked with, the time taken to process the international payroll went from four days to 30 minutes as the payroll team was able to abandon its old manual, paper-based system. Their team were able to build their organisational checks and balances into the process to ensure payments are properly authorised.
It’s easy to underestimate the value of these advantages. In many cases, an organisation’s international payroll burden creeps up incrementally over time – they begin by launching a manageable manual system for a handful of staff, but this gradually becomes unfit for purpose as the business grew.
For any organisation not confident that it has what is required to achieve its global payroll goals, or thinks it is doing so inefficiently, a payments platform offering tools that can do the work on your behalf is highly attractive. If you know the platform does what you need to do to a higher standard and more cost-effectively than you can manage manually yourself – and it’s simple to link your systems to the platform – it’s a win-win situation allowing your team to spend more time on other day-to-day tasks.
Linking to a platform is now easier than ever before courtesy of application program interfaces (APIs) – basically a tool that ensures that the applications you’re running on your IT system can work with the applications on another system elsewhere. Using APIs, you can link your payroll system to a payroll payments platform and access the functions and currency coverage it has to offer. It’s a remarkably seamless way of safely and reliably automating the tasks you may currently find challenging, or those you think could be done more efficiently by a specialist service provider.
EQGlobal’s own payments platform offers a good example of what is possible. On behalf of our clients, we currently process international payments in around 130 currencies in 180 different countries around the world.
This kind of global reach, requires specialist understanding of the different systems and rules in each of those countries, isn’t something most businesses, accountants and payroll bureau are going to be able to easily obtain for themselves. However, through an API-enabled integration with our payroll platform, they can access these facilities seamlessly and quickly, instantly automating work that was previously very challenging, and doing so in a safe and reliable fashion.