Payroll payment traps and how to avoid them

Payroll management is the lifeblood of any organisation, ensuring employees receive accurate and timely compensation. In spite of this, managing global payroll is not an easy job - any mistakes, missed deadlines, or missing documentation not only divert attention from more important tasks, but could also result in fines. Employee productivity and morale are also negatively affected by payroll delays or inaccurate payouts, which may lead to resignations and higher turnover. Those factors can damage the reputation of the company with new hires, customers, and investors, raise operating costs, but can also hamper growth. In this article we will explore the top payroll payment traps and effective strategies to sidestep them.

Traditional payment methods for international payroll are bound to cause trouble. In the first place, there are usually delays, which are made worse if a weekend or a national holiday is approaching. In order for the salary payout to arrive on time it needs to be processed earlier as cross-border payments need to go through multiple intermediaries to reach the beneficiary. Once payment is expedited, it may also be impossible to provide employees with a transparent status of their progress. As traditional methods incur fees at each step of payment process, the second problem has to do with costs. This means that you or the employee will be responsible for taking on the expense, which will be deducted from their salary, thus reducing the amount they receive.

In order to solve those challenges, You can use a dedicated international payment system that is connected to your payroll system or one that offers multiple payment routes for faster and more cost-effective global payments.

Paying employees in their local currency is a legal requirement in many countries. Due to the volatility of currency markets, manually calculating FX rates can lead to disaster. Remote workers in India, for instance, receive their salaries in rupees. There is also the challenge of being able to make payments in those foreign currencies at all, and the larger the global team, the more currencies there are to deal with.

This manual approach not only introduces the risk of errors but also complicates financial reporting, as the data entered may not accurately reflect the current FX rates. In order to address these challenges, organisations need access to the currencies in which their employees must be paid. Unfortunately, that comes with yet another problem - the more currencies and bank accounts, the more fragmented and disjointed which creates extra manual work and obfuscates real-time visibility. Having access to multiple currencies in one place and paying the global workforce without having to log in to multiple systems would be the ideal solution. Even better if your organisation could partner with a provider that streamlines opening bank accounts in new currencies in case you need to scale into a new region.

Many companies still rely on manual processes to manage their global payroll despite technological advancements. This outdated approach not only consumes valuable time and resources but also increases the risk of errors and delays. From pulling data into spreadsheets, executing payments individually all the way to reconciliation, manual processes can introduce inefficiencies at every step of the payroll process. Organisations can overcome these challenges by implementing a dedicated payroll software that connects to Global Wallets for access to multiple currencies and integrates with accounting software for touchless reconciliations. The automation of payroll processing can streamline operations, reduce errors, and ensure that employees are paid on time.

Many global companies, which have multiple subsidiaries, currencies, and bank accounts, do not have a comprehensive view of their treasury and cash, leading to problems with working capital and payroll processing. Consider the following scenario: payroll needs to be processed in USD, however most of the company's funds are locked in GBP, requiring exchange and transfers from one financial institution to another, causing even more delays. Global businesses should consider consolidating financial data into one platform that gives an overview of their treasury. The ability to access institutions and currencies across the world, as well as aggregate this data from various sources under one roof to give you full visibility and the ease of moving funds between currencies, could make managing cash and ensuring salaries are delivered on time a whole lot easier.

Payroll providers and Employers of Record use Fyorin's global network of financial institutions and our cost-effective, efficient payments technology to make global payroll and hiring easier. With your employees working around the globe, your financial operations should be borderless.

Simplified compliance & business banking - With one compliance and onboarding process you can expand your global footprint and get connected with the right banking partner, according to your needs. Expand your global operations with local accounts to transact globally like a local.

Unified Treasury management - Get a complete view of your accounts across all financial institutions and currencies on one platform. Consolidate fragmented data, increase reporting speed and diversify liquidity risk across our network of global financial institutions.

Streamlined payroll in multiple currencies - Put an end to late salary payments. With access to local payment rails such as SWIFT, ACH, SEPA and others, salaries will reach employee accounts in less than 24 hours.

Automated Accounts Payable - Centralise global and local bills in one platform. Speed up month’s end processes with an instant reconciliation of payroll payments thanks to a two-way sync with the accounting tool.

Faster money movement globally - Pay your employees and staff regardless of where they are. Tap into our global network of financial institutions to send & exchange funds instantly in over 100+ currencies, as easily as you would locally. Lower your FX exposure and save money on exchange fees.

Payments API - Leverage our technology expertise & payment infrastructure directly into your workflow. Scale automation and management of global money movement with our global payments API.

Interested in relying on our cross-border payment infrastructure and expertise for your global payroll and hiring? Get in touch with us by emailing sales@fyorin.com or book a demo.