International payroll, the least digitalized function of many international SMEs

International payroll, synonymous with numerous manual interventions

It is mind-boggling to see how much manual labour is still performed by international payroll professionals. Both the monthly input of payroll data and the compilation of aggregated international HR reports prove to be very time-consuming activities. The main reasons are the diversity of processes between countries and the lack of adapted international payroll tools.

Europe, a patchwork of different payroll legislations & systems

Admittedly, the European payroll landscape is very complex.  We like to compare it to a patchwork quilt and that is no exaggeration: each country has its own legislation (and there are a lot of differences between them!), but also the degree of digitization differs from country to country. Therefore, in several countries, the payroll professional is forced to transmit the payroll data via Excel and/or email. And even though we are big fans of Excel, this working method is absolutely not suitable for the payroll process and very sensitive to errors and delays.

Often, a company's international payroll landscape has developed organically: as the geographical footprint of an internationalizing company expands, payroll providers are added without any long-term vision or planning. And let this be precisely a key requirement for streamlining and digitalizing your international payroll processes.

No improvement without a long-term vision

The importance of a long-term vision in your payroll landscape cannot be stressed enough: every transformation starts with determining the desired outcome. And when determining the long-term vision, you cannot ignore the dimension of "integration."  After all, with integration you gain access to a number of important benefits. The further you go in integration, the greater the benefits. These benefits can be divided among 3 domains:

  1. Vendor Management: if you can buy all your European payroll processes from a single one instead of a multitude of providers, you will be able to achieve a lot of efficiency gains both in drawing up and negotiating the contract and in maintaining the relationship with the vendor.
  2. Overview workforce: as companies internationalize, they increasingly lose overview of the entire work population. After all, this population is spread across different systems, making it gradually more difficult for companies to manage the bigger picture. There is nothing else to do but dive into each of the systems and manually add up the results per country (system). To map your European labour costs, for example, you have to be very careful not to add the wrong items together.
  3. Cost savings: it goes without saying that working with 1 tool for the whole of Europe will be much more efficient than working in Excel and/or on different payroll systems per country. Moreover, all European payroll colleagues will be interchangeable as they all work on the same software. Both the input of monthly data and aggregated reporting can all be done in the same application, reducing manual interventions on a large scale.

The importance of a roadmap

Once your goal is determined, the next step emerges, that of planning. The contrast between the goal destination and today's situation can seem quite overwhelming. But as is often the case, it is best to divide the road to the final destination into stages and work towards it gradually. You have several ways to divide the overall transformation into stages:

  • By country: you can start with the countries where you can make a big improvement with limited effort. Or you can start with the countries where you are not satisfied with (the system of) your current payroll provider and then gradually expand the integration.
  • You can also consider applying your integration for a whole range of countries at once, but first only on your reporting (output integration) so that you have online aggregated HR analytics for all your European countries. Once that is in place, you can then consider integrating your inputs as well.

Within reach of an international SME

Today, the benefits of integration are also within reach of international SMEs: you don't need the budgets of large corporates or an army of consultants to successfully complete a payroll transformation and enjoy integration benefits.

What do you need, then?

A long-term vision, a plan and project skills. And so, step by step, you will get closer to your goal....

Need assistance?

If you would like to have exchanged views on what the international payroll roadmap for your company could look like or if you would like to explore what integration could mean for your international payroll processes, be sure to contact me. You can reach me at:

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