During the growth of any business, there may come a time where international expansion becomes a viable option. This can be a hugely beneficial move for an organization as it allows them to serve international markets more effectively whilst benefiting from increased revenue streams that should lead to improved levels of profit.
Expanding your business overseas is a key way to cultivate sustainable growth. In an age where larger firms are more resilient to changes in the global marketplace and international economic factors, expansion overseas can help to secure the long-term viability of your organization.
However, it is vitally important to consider the role of the payroll function when operating overseas. This article focuses on payroll in an overseas context with advice on how to manage this part of your business after the move to international trading has taken place.
Consider pay periods and local legislation
Firstly, it should be understood that the pay periods (i.e., when staff members get paid each month) may differ from the timescales in your native country. Some countries (such as Luxemburg) use a system where staff are paid on the last day of each month, whilst other countries have different rules. You can read a country-specific description of pay dates and differences in accepted practice by clicking here.
A company operating overseas will need to be aware of local customs and regulations for paying its staff and adhere to them. In addition, there may be different forms of legislation that relate to payment procedures in foreign countries. Once again, businesses need to have a complete understanding of these rules in employment law so that they are compliant with them and continue to operate within the framework of native employment laws.
Outsource the payroll function
It becomes apparent to many businesses with overseas operations that the payroll system can become incredibly complex. Legacy payroll systems that work effectively in the home country may not be suitable for overseas operations and it may be difficult to adapt the system to cater for specific practices in other countries.
In these circumstances it can be wise to consider outsourcing the payroll function to dedicated payroll service providers such as activpayroll. These specialist firms have extensive experience in providing seamless and effective payroll services across different countries. Put simply, this can eliminate any difficulties in the payroll process that the company experiences when starting operations in foreign countries.
Such specialist providers will also be extremely knowledgeable about payment legislation and employment laws in foreign countries which will reassure the business that it will remain compliant when operating oversees.
Understand the importance of encryption
As a final point, it is important to ensure that the payroll function uses sophisticated encryption methods when transferring funds to employees as part of their wider payroll security strategy. This is vital whether your organization controls its own in-house payroll function or outsources it to a third-party provider.
Almost all staff will be paid by some form of electronic transfer to their bank accounts and this information must be securely encrypted. Encrypting this data plays a vital role in minimizing the risk of data breeches and various forms of cybercrime taking place during the transfer of funds from employer to employee.
