Global Payroll Challenges: Leveraging FX and Automated Payments for EoRs and Payroll Companies

The global workforce is on the rise, and companies, in order to attract top talent, are onboarding employees around the globe. This means hiring and processing payroll involves more currencies, more countries, and managing that internally is becoming more complicated. Employers of Record (EoR) and Payroll providers streamline the hiring and payroll process globally; however, from a financial perspective, global payroll still faces challenges regarding foreign exchange, cost, and speed of transfers that can be eliminated if partnered with the right global financial operations company. In this article, we will explore how EORs and Payroll companies can benefit from leveraging the automated accounts payable and FX expertise of financial software providers to extend their global reach, improve efficiency and reduce costs.

The majority of EORs attempt to build their own treasury function for payroll processing and hiring across the globe. Every time they need to access a new currency or expand their global footprint, they must find the right banking partner and integrate it with their platform. Unfortunately, it creates a very disjointed financial system that multiplies manual work and gives little insight into total cash flow. When processing salary payments, they will face high FX and slow transfers due to bank layering, whereby payments need to pass through multiple intermediaries before they reach the beneficiary. Delays with transfers can cause huge dissatisfaction among EOR clients and their employees - receiving the wrong amount due to fees, or not being paid on time, even if it's a day difference, can hurt employee morale and motivation.

On top of that, comes the manual reconciliation of salary payouts in the accounting tool. Even with an integration, fees and foreign exchange using past market data must be accounted for in the general ledger, adding to the manual work and time wasted.

In order to lower their FX exposure, streamline financial operations and save money, EORs and Payroll companies can utilise technology provided by fintech software providers specializing in cross-border payment automation, like Fyorin, instead of building a treasury system from scratch.

Rather than relying on traditional banks or EMIs, financial technology companies, through their network of financial institutions, can ease the hassle of global business banking by connecting EOR with the right banking partner based on the needs- whether it is currency, location, or a specific product.

With a greater global footprint and wider access to currencies to pay globally as a local come faster payments and the ability to operate in new countries and hire employees without needing to go through lengthy banking processes.

The financial technology companies could also provide EORs with access to multiple products from one platform and one onboarding, which would reduce banking fees and administrative burdens of sourcing new products for each country for which payroll must be sent or employers need to be onboarded. Using one API for managing the global footprint will lower operational costs and accelerate time-to-market.

That way, financial technology companies like Fyorin empower EORs and Global Payroll companies to grow and scale to new countries, markets and service more customers.

Providing access to local payment rails such as SEPA, SWIFT, ACH, among others, directly through banking partners, allows financial technology companies to eliminate costly intermediaries and deliver cheaper and faster payroll payments. By sending salaries via a local payment rail instead of a bank transfer, employees' salaries will reach their bank accounts almost instantly. This can be done through API without doing anything in the interface of the EOR / payroll system itself. While payroll can still be processed through their own system, payments will be executed through the payments infrastructure.

Additionally, having one platform to access multiple payment rails and currencies opens up new markets for the EOR, increasing service area and improving competitiveness. All that contributes to greater employee satisfaction, and by proxy, customer satisfaction and a better ROI for the EOR itself.

Financial technology providers can help in another way - by grouping payments in the same currency into mass payroll payments can increase operational efficiency. Additionally, by integrating global payroll payments with the accounting tool to mark all payments as paid, manual work can be eliminated, saving hours of valuable time. Using an automated accounting and payments system, there is the possibility of saving well over 40,000 euros a year as a result of the ability to function without expanding the finance department. Having fewer errors and automating work gives greater confidence in the accuracy of numbers, and streamlines month-end processes and audits - again, giving EORs the confidence to scale.

Fyorin partnered with cloud payroll software, Buddy.hr to significantly improve the salary payout processes by seamlessly integrating with their platform. Previously, employers using Buddy faced challenges such as manual transfers, security concerns, and delayed salary payouts. With Fyorin's solution, the clients of Buddy HR can now swiftly approve and process payments directly within their system - saving around 40 hours per year on manual payment processing. This integration offers access to various payment rails, ensuring faster and more secure transfers of funds to employees, with salary payments hitting the accounts nearly instantly. Additionally, Fyorin's network of global financial institutions gives Buddy.hr access to over 100+ currencies, simplifying payroll management for businesses with international workforces. With that, the cloud payroll provider was able to expand into new markets and acquire new clients.

One notable advantage of Fyorin is its streamlined payment approval process, reducing the likelihood of errors and enabling real-time updates for quick issue resolution. Moreover, the integration eliminates manual data entry, enhancing overall security and compliance standards. As a result, Buddy HR clients enjoyed increased efficiency and accuracy in payroll operations, ultimately improving the satisfaction of both employers and employees.