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Why It Pays to Have a Clear Payroll Payment Strategy

Global payroll can cause headaches for treasury, whether or not the company centralizes the function. A global strategy helps set the right direction, companywide, for payroll payments.

By Don Banowetz, Tracy Micciche | Updated on November 01, 2016
An efficient payroll process is one of the fundamental mainstays of every successful organization. Salary payments must be delivered on time if a company wants to establish long-term sustainability. An employee who hasn’t received his or her wages will not only be unhappy, but could potentially foment discontent among colleagues, leading to a broader decrease in morale and trust.

Organizations often find that the impediments to achieving accurate, timely payroll payments increase exponentially when they expand operations abroad. A company doing business internationally faces a host of potential challenges, including many factors that are outside of its control—from unstable governments and little banking infrastructure in regions like Africa, to highly restrictive legislative protocols like those across Asia. In global businesses, effective payroll processes require treasury officers to not only manage cash flows, but also prepare for foreign currency volatility, help plan corporate structures that optimize tax policy in the different jurisdictions, and ensure compliance with anti-money laundering laws.

Treasury needs to be running payroll-related due diligence around each country the business is entering. A global company that makes the mistake of applying the same approach to payroll funding for all the countries in which it has employees will most likely find itself in violation of local laws. Many countries have specific rules around how employees and taxes are funded, rules that don’t apply for other types of payments.

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