Andy Brown highlights the key challenges facing the global payroll industry

The challenges facing the global payroll industry are substantial. As organisations are characterised by ever increasing global workforces, payroll processes become more and more complicated. What’s more, international payroll isn’t strictly limited to a straight forward business transaction; it is an employee’s livelihood, and it is therefore crucial to pay the right person at the right time.

Our research has shown that 57% of payroll professionals experience returned or failed payments every month, with nearly 60% finding local payment requirements to be the most common problem. Furthermore a high proportion of companies experience problems with their global payment processing and delivery, with the needs of the industry not being sufficiently met by current cross-border payment providers.

We also found that 73% of companies were unable to upload a single automated multi-currency payroll file – both the cost of time and the error risk is high. Errors are damaging to a company’s reputation, and are caused in part due to the significant labour-intensive administrative duties required to manually enter data into payroll systems.

Foreign exchange is also a huge industry with $5.3 trillion being moved around the world in currency exchange every day. However, foreign exchange providers and even banks often lack the specialist knowledge required to make global payments with speed and accuracy, and nearly 60% of payroll companies found local payment problems to be the most common problem. What’s more, 79% of companies are not aware that there is a single vendor who can deliver cross-border payroll payments – with some companies relying on a combination of foreign exchange providers and banks to deliver successful payments overseas.

It is fair to say that processing cross-border payments is a complicated task, which will hopefully be made easier as a recent survey showed that 70% of businesses are likely to shift most of their payments to electronic in the next three years. However many factors still need to be tackled including different financial jurisdictions in each nation, lack of in-country knowledge by the payment provider, slow delivery times on payments, volume of recipients and global spread of employees, and bank charges incurred as a result of bounced payments due to incorrect data.

The main problem is lack of awareness around the payment delivery services that specialist global payments companies provide – because the industry has been dominated by banks and foreign exchange providers, there needs to be a culture shift towards more specialist companies in order to address the growing needs of the payroll industry.

In terms of a solution to these challenges, the main requirement when paying overseas employees is accuracy – the right amount being paid to the right person at the right time. For payroll companies and operators, the need for operational efficiency and cost effectiveness is also a key consideration as part of a wider business objective to remain competitive and profitable. With an apparent lack of visibility for specialist global payments services and continued reliance on banks and foreign exchange providers, there needs to be a culture shift for the industry. It needs to be re-educated on where the main pitfalls are occurring and what cross-border payments services are available to close the gaps.

Accuracy of payroll payments is paramount to companies who are paying employees abroad, and in an industry which still needs to gain recognition for its available services, there are vast improvements to be made to global payroll operations. Streamlining these processes could be saving time, costs, and the company reputation while improving employee retention.