International payroll compliance encompasses a huge amount of manual effort and the resulting likelihood of human error with potentially significant damaging consequences. These pitfalls include sanctions such as expensive fines, legal repercussions as well as damage to your company’s reputation. With so much at stake, payroll automation should be at the top of any international HR to-do list.
Benefits of payroll automation
First the why. We can talk about payroll automation all day but what’s in it for your business? The many advantages of a global automated payroll system include:
If you are an employer, you need to be as efficient as possible when it comes to your workforce payroll management. According to the American Productivity and Quality Center (APQC), well-run organizations can take between two to four days to resolve a payroll error. The worst-performing companies need between five to 10 days to fix the same errors.
Using an automated global payroll software drastically reduces the time and resources allocated to processing employee information and minimizes errors.
And without errors, you eliminate costly overpayments and damaging underpayments. From a global compliance perspective, this efficiency will result in a reduction of legal risks and actions, including judgments, penalties, and potential employee litigation.
An automated payroll system can also be integrated into an organization’s other manual payroll systems. These include HR management tools, ERP systems and expense software. The faster and more accurate time and expense reporting system ensures your company’s management has access to real-time accurate information, including job and leave absences as well as labor allocations and expenditures.
Accuracy is important on so many levels and to so many parties. Employees want accurate pay; employers want accurate pay and governments want accurate taxes paid. Automated payroll solution ensures accuracy and keeps all parties happy.
Automated payroll processing means less human interference which equals higher levels of accuracy. Anyone that has managed payroll knows that computing income taxes, deductions and other withholdings can be time-consuming.
Once you consider the fluctuations in tax rates, and new laws being passed at a local, state, and federal level, it’s difficult to ensure the accuracy of your payroll. An automated payroll solution ensures a high level of accuracy, compliance and adherence to government laws through technology such as Robotic Process Automation (RPA).
RPA is a system that mimics human action, in this case, your HR personnel, and is ideal for payroll tasks because they tend to be repetitive, rule-based, and high in volume.
Cloud-based technology means you’ll always have access to payroll data whenever your HR team needs it. Rather than manually updating and saving excel spreadsheets, an automated system saves your every move on its global payroll cloud interface.
Pouring over spreadsheets, making calculations and filling out government forms every payroll cycle is tough sledding. If that weren’t tedious enough, there are potential legal ramifications if your payroll is delayed or if your calculations are wrong.
Another advantage of cloud-based technology is automated data verification. This process ensures that your payroll data is accurate and in full compliance with the local tax and employment laws.
Based around built-in cost structures for each employee including their salary terms, benefits, tax contributions and more, automated verification will check all data during the payroll cycle. If any data is incomplete, inaccurate or inconsistent, automated verification will flag the discrepancy and investigate it. With this in mind, it’s no surprise that many payroll managers choose cloud-based technology to gather and aggregate payroll data.
Robust data security
Unlike an old-fashioned filing cabinet, an automated payroll workflow offers the latest in advanced security. That’s everything from one-time passwords (OTPs) to two-factor authentication, to encryption, to keep your payroll information, confidential.
Encryption is one of the fundamental features you need to secure your payroll data. This includes when the data is at rest, for any backups of the data and even when it is being transmitted between systems.
With a smart payroll system, all data is transferred through secure, encrypted communication channels. Payroll data is typically stored on encrypted networks like Amazon’s S3 storage for ultimate security and peace of mind.
Manual payroll systems have little to no security features. Even worse, systems like these often rely on unsecured email chains for the transfer of bank details and confidential payroll data. Hard copies of your payroll information aren’t secure either and erasing or hiding printed information in a data breach is more difficult than changing passwords on your payroll software.
While businesses have to keep accurate records to ensure correct payroll cycles, they also need to fulfill obligations to the IRS. For example, employers need to report all federal income tax, Social Security, Medicare tax liabilities and unemployment tax to the IRS every year or quarter.
And at the state level, businesses also have to report state income tax withholding and state unemployment tax according to their state’s policy. With so many filings to make, payroll automation systems handle the essential aspects of the payroll workflow, while keeping you compliant with federal and state laws.
Helps the company’s growth
Global expansion and the move into new markets offer a variety of complex challenges. One of the ways for your company to grow is by outsourcing your global payroll. Doing that will help you to automate the payroll process. Without one, your company could be at risk of costly and timely errors, whilst enduring an unnecessary drain on resources. Errors when it comes to payroll often lead to expensive and harmful legal and regulatory risks.
A global automated payroll system will free up your time and resources so that you can focus on achieving your business goals, including global expansion.
What to look for in an automated payroll solution
Once you have your CFO and HR experts in the same room, you’ll need to start brainstorming about what you want from your payroll system. First on the board will be questions like:
“Does this new system work with our current HR software?”
“Can this software adapt to our company’s expansion?”
“Does this system include all the features we need?”
Speaking of features, your list of wants should include:
Customize your paid and unpaid time-off policies. Prevent miscommunication, missed shifts, and costly payroll errors with a PTO tracker.
Time and attendance tracking
Track and manage employee time for payroll, invoicing, and scheduling. Benefit from accurate timesheets and project tracking.
Get easy income statements to balance sheet submission tools. Track what’s coming in and what’s going out with financial statements and tailored reports to keep your accountants and CFO in the loop.
Federal, state, and local tax filing
Make sure your new payroll system can keep up and file any federal, state, or local laws and taxes that may apply to how your employees are paid.
No matter the time or place, make sure you have a helping hand if you need one.
How to automate your global payroll
So, you’ve made the decision to move from a manual payroll system to an automated one. Here you can find a step-by-step guide to get your company on the path to automating its payroll.
Step 1: Find the right payroll provider for you
Researching different payroll providers should be your first port of call. There are various automated payroll systems out there but not all software will work for your business. Depending on the size, nature (does it operate and hire internationally?) and features you need, some systems will outweigh others. For instance, do you need federal, state, and local tax filing capabilities, tax penalty protection, around-the-clock customer service or all three?
Step 2: Input your system information
It goes without saying that for your new payroll automation to work effectively, it needs to be fed the correct data. Although tedious, this stage of the payroll process is perhaps the most important. Get it right and you’ll help prevent mistakes when your next payroll cycle is run.
Step 3: Gather the relevant documentation
You’ll need important documentation before you can get started, such as W-4 forms. You should also take the time to notify your employees of the change.
Step 4: Provide training for your employees
Most automated payroll systems these days will be easy for your HR team to pick up. But depending on the software, you may have to provide additional training or resources for your employees. Either way, employees should be given time to familiarize themselves with the new automation software.
Step 5: Automate your payroll
Once you’re ready to push “Go” on your new payroll automation, make sure to integrate your existing payroll and HR tools into your new system.
The Papaya Global Advantage
Multinational companies have to comply with ever-changing payroll regulations, making managing a global workforce extremely challenging. Failure to adhere to these regulations can result in sizeable consequences.
Using a global automated payroll system ensures those risks are negated, allowing your company to focus on achieving your global expansion goals, free from timely and costly errors. Even better, the implementation of such a system also offers your company a wealth of benefits that can aid in your company’s global expansion. Schedule a demo with Papaya Global today and take your first steps towards automation heaven.
Article top image credit: Permission granted by Papaya Global