Imagine the situation — it’s 4:30 pm on a Wednesday, and you’ve just finished payroll for the UK. Now, you have to check in on your vendors in Germany and Australia, which each have different tax laws, currencies, and pay schedules. The process is slow, frustrating, and prone to errors.
What if global payroll was easier? What if compliance was automatic, and payroll errors were a thing of the past?
With a global payroll management strategy and the right software, you can automate calculations, ensure compliance, and cut errors. Hours of work done in minutes—less stress, more time for strategy.
This guide will help you handle payroll across multiple countries, tackle challenges, and choose the right system to keep things running smoothly. We’ll include insights and practical tips from Ian Giles, Global Payroll Strategist & Advisor and Menaka Karthikeyarayan, Global Payroll Director at Multiplier.
Global payroll management vs payroll management
Global means handling different tax laws, currencies, and benefits across multiple countries… And this means that what initially seems simple can quickly become a balancing act. As Karthikeyarayan says, “It’s difficult enough for companies to comply with different regulations in different states, let alone different countries.”
HR tasks like entering timesheets and calculating pay are time-consuming and often tricky. At the best of times, errors can slip in. And one simple mistake, like forgetting to update an employee’s tax code, can snowball and lead to an error which takes time to fix and makes your employee feel irritated and unimportant.
Throw in new and evolving international laws, different tax systems, compensation requirements, and a host of payroll vendors each with different processes and points of contact, and it’s easy to lose oversight. The risk of mistakes increases and, in an international context where you could face fines and legal issues for non-compliance, the stakes increase too.
Read on to find out how to avoid these common global payroll management challenges.
Methods of global payroll management
So how can you manage these challenges? If you want to hire your staff directly rather than using the (sometimes expensive) support of a global staffing agency, you have three options… Let’s use the example of a China-based marketing company expanding into the UK to explore each method of paying international employees, looking at the pros and cons of each.
1. Employer of Record (EOR)
An Employer Of Record is a third-party service that legally hires and onboards workers on your behalf in different countries.
So, using our China-based marketing company example, instead of researching employment laws and setting up a legal entity in the UK, the company partners with an EOR to hire and onboard UK-based employees. The EOR then handles all payments for them, ensuring compliance with local laws and paying international employees in their currency of choice.
Pro-tip: Depending which EOR you choose, you can also get support with other time-consuming HR tasks. Multiplier also handles benefits administration and IT asset distribution for example.
Pros
- Fast and easy way to hire and pay staff globally without setting up legal entities.
- The EOR handles compliance with local labor laws.
- Ensures payments are made on time and in the right currency.
- Reduces the administrative effort on your HR team.
Cons
- You have less direct control over payments.
2. Setting up a local entity and outsourcing to local vendors
With this model, our example company establishes legal entities where they operate (China and the UK) but partners with local payroll providers to outsource payroll. This means they have to register as a business, open a local bank account, and appoint directors, but they can outsource payment processing and compliance.
Pros
- Gives your business a legal presence, allowing for long-term hiring and growth.
- Local vendors should understand country-specific payroll laws.
Cons
- Setting up and maintaining legal entities is expensive and takes a lot of time.
- You need to manage relationships with different vendors in each country.
- Local vendors may use inconsistent payroll processes or aggregator models.
3. Setting up a local entity and managing payroll in-house
If companies are hiring a significant number of staff in a particular country, they might set up a local office and employ local payroll specialists. This would mean the Chinese marketing company setting up an office in the UK and directly handling payroll with a UK-based team. They would be directly responsible for handling tax withholdings, managing payments, and ensuring compliance with local labor laws.
Pros
- Maximum responsibility for payroll processes and compliance.
Cons
- Requires deep expertise in each country’s payroll laws.
- High administrative burden if data is not centralized.
Managing the challenges of global payroll
The right solution for managing payroll will differ from company to company. And some companies may end up using one or more, or even all three — opting for an EOR to hire employees where they don’t have local offices, hiring and paying others in-house, and using local vendors in regions where they haven’t got access to local payroll specialists.
The problem that arises here is that, as businesses grow, payroll teams end up losing oversight of important data as they spend hours navigating between different local vendors. As Karthikeyarayan says, “When you’re using local vendors with different systems, it’s hard to get a centralized view. And this can cause major problems at audit.”
A global payroll solution, which we’ll explore more in the next section, helps them overcome these issues by automating calculations and compliance and centralizing important data in one location. With a solution like Multiplier, companies can access local expertise without paying for a payroll manager in every region.
What is global payroll software?
Global payroll software helps you calculate multi-country tax, benefits, and compensation, keep to strict deadlines, and centralize important data. In a single dashboard, you can view and approve automatic calculations, make payments in several currencies, and generate payslips in local languages.
This removes the need for you to pay and navigate between several local vendors; instead, you can bring information about EOR-managed and regular employees into one location, gaining full visibility into payroll processes and the ability to take control of issues before they become bigger problems.
The most effective global payroll solutions update records in real time. If tax rates, benefits, or employee details change, the system updates everything instantly, keeping you compliant and reducing errors and mistakes.
Of course, it is as Giles describes, “Payroll isn’t just about paying employees. It’s about building trust, ensuring compliance, and supporting the overall health of your organization.” By making sure you meet compliance and adhere to policies, global payroll software helps build trust with your workers and contractors.
How to set up a global payroll management system
So now you know how key global payroll software is to payroll management… How should you implement it? Here are the best practices our experts suggest.
Step 1: Choose the right payroll management solution
Choose a global payroll system that can grow with your business by considering these key features:
- Payroll processing and salary payouts. Look for a solution that allows you to make payments in the same dashboard for ease and efficiency. In Multiplier’s global payroll solution, for example, you can make payments via direct debit (US), wire transfers, and Automated Clearing House (ACH).
- Support. Look for reliable 24/5 support. If there’s an issue, you’ll need quick access to someone who can help, especially since missed paydays can hurt employee trust.
- Employee self-service. Self-service portals save time by letting employees access their own information, which is especially helpful for global teams in different time zones. Plus, as Giles says, “Employees now expect streamlined processes.”
Step 2: Integrate with your existing tech stack
You should aim to integrate your global payroll solution with your existing HR systems, such as time-tracking tools and employee databases from day one. This will 1) ensure information flows easily, 2) reduce human error, and 3) support data management.
With an integrated tech stack, your payroll function can also work more strategically. “Data is what can make a payroll team strategic,” Giles identifies, “But the more geographically dispersed a team gets the more often data is siloed and not integrated with other systems.”
Multiplier is built to solve this issue, centralizing employee information from across locations and allowing you to build efficient processes. For example, it integrates with HRIS platforms like Bamboo HR and Personio for seamless access to payroll and employee benefits. It also connects with time-tracking tools to streamline adjustments and Enterprise Resource Planning (ERP) systems to generate General Ledger reports.
Step 3: Automate reporting and compliance
Set up automated reporting features to generate payroll reports for tax filings, internal audits, or compliance checks. Make sure your system updates in real time to follow local laws and automatically calculate taxes, deductions, and benefits correctly.
Multiplier has a suite of global payroll reporting features to help you make the right decisions and maintain compliance. For example:
- Bank summary reports payroll payments processed through a specific account, including total credits and debits–ensuring transparency and compliance with financial regulations.
- Variance reports that show the differences in pay cycles and help identify trends, unusual changes in salaries, and potential compliance risks in salary ranges.
- Cost center reports that give you financial summaries during a specific period or department while complying with local rules and regulations.
Step 4: Train your HR team and employees
A global payroll system is only as effective as the people using it; your team should understand how to make adjustments, review payroll reports, and respond to employee questions efficiently. The more confident they are, the smoother payroll operations will be and the more easily you’ll be able to stay on top of evolving payroll trends such as pay transparency and earned wage access.
Develop clear operating procedures for different employee groups, such as full-time staff, contractors, and remote teams, so everyone knows what to expect when it comes to payments, deductions, and compliance requirements.
Gather feedback from those who will use the software daily and integrate these into your procedures. This will make sure procedures are practical and user-friendly.
Step 5: Test and launch
Run a test payroll cycle to ensure everything works as expected. Once you’re confident, start processing actual payroll through the system. Monitor the first few cycles closely to catch any issues early.
Pro-tip: Use Multiplier for in-built fraud detection. Our system flags unusual activity so you don’t have to.
Step 6: Monitor and optimize
As your company expands and regulations change, your payroll system should adapt to meet new needs. Monitor what’s working and what needs improvement. Regular updates and tweaks will help you stay compliant and efficient.
Take control of global payroll with Multiplier
When you’re managing payroll for a global team, you need solid frameworks, time-saving processes, and, most importantly, the right software.
From managing currencies to understanding local laws, Multiplier makes global payroll management a breeze.
Our system calculates multi-country tax, benefits, and compensation automatically in line with local laws, staying on top of updates and centralizing all important information. This eliminates the need for multiple vendors so you can say goodbye to time-consuming admin and hello to one efficient global solution.
With 99.95% accuracy in every cycle and support for 100+ currencies, you can be sure your employees get paid on time, every time. No delays, no headaches—just smooth, consistently reliable payments and automated compliance
We have payroll experts around the globe, fluent in multiple languages and armed with local knowledge; you’ll also get world-class support from a real person, anytime Monday to Friday.
Ready to simplify global payroll management? Book a demo.
