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Paying people is a demanding task. It requires financial planning, input from different parts of the organisation, complying with legislation, and of course paying a valuable workforce on time. Then there are the ongoing demands of accurate reporting, improving payroll processes and protecting all the related data.

All the these issues apply to payroll for a single region or jurisdiction. Once the activity extends across several countries, it is exponentially more challenging.

A number of issues become much more complex with global payroll, says Heinrich Swanepoel, head of sales at cloud payroll platform PaySpace. The four biggest ones we encounter are compliance, security, integration and support. These factors are important for any payroll environment, but they become particularly tough when you cover multiple regions.

Cloud-based payroll systems successfully counter such challenges, and companies recognise the advantage. According to the Chartered Institute of Payroll Professionals, by 2019, 38% of companies used cloud-based payroll software, 37% used on-premise solutions, and 25% opted for licensing hosted single-tenant products.

In other words, the cloud is already leading the payroll world. But why, and what should organisations know about the advantages? Global payroll demonstrates why cloud payroll services are so successful.

The problem with paying people

Global payroll amplifies the technical challenges and shortcomings of a payroll system. Compliance is the most obvious example. Local and global laws create a minefield for administrators. On the local level, they must comply with legislation that varies from country to country and is always subject to changes. Globally, they must keep an eye on legal demands such as financial reporting standards.

The big problem with legislation is that it can change, but you can miss something crucial and get hit with penalties if you dont have enough local exposure, says Swanepoel. Most of the time, youll only discover the problem when there is an employee complaint or an inspection.

Traditional payroll systems dont cover such nuances or do so at very high costs. Alternatively, a company would need to use internal or outsourced staff to make manual updates. In contrast, global cloud payroll systems continually update legislative rules for the regions they cover. Cloud systems update universally, so all the users benefit from changes. If you wake up on a Monday and there are new payroll laws, you can expect them to reflect on your system.

Integration is the second significant barrier that on-premise and single-tenant systems struggle to overcome. Managing payroll requires information from different parts of the business, such as HR databases and department invoices. Administrators must wait for data from these areas, which can be messy (spreadsheets) or exposed to security risks (emails). If youre sitting at HQ in Nairobi and waiting for local payment data from Dar es Salaam, such issues compound very quickly. Again, cloud platforms provide an alternative.

If you use an integrated payroll system, you receive data continuously and automatically, explains Sandra Crous, MD of PaySpace. That helps stop the habit of drop everything payroll windows. It can also radically improve reporting, payroll processes, and makes payroll transactions more secure. Integration between different regional banks and currency systems saves an enormous amount of time while providing significant transparency.

Every business essentially wants a centre of record for payroll one stop which provides the data needed to process payments or create reports. Cloud platforms are very good at creating that.

Keep payroll safe and sound

Security and support are particularly crucial when working across multiple regions. Payroll data constitute among the most sensitive, critical and legally-protected information in a business. Sending payroll data manually across email and mobile messages is risky and could contravene data privacy laws.

On-premise payroll systems come from an era where such concerns barely registered. But the world has changed, and cloud payroll platforms have security in their DNA.

Good cloud platforms have to put security as a core part of their business, Swanepoel notes. We host customer data, so we must invest in good security and data practices. That means several things: using reputable cloud hosts that also invest a lot in security, employing internal security engineers, and getting the right certification. For example, we are certified ISO 27001, which is a rigorous standard ensuring we handle data correctly and securely.

Such characteristics are pillars of the best cloud hosting models and apply to every territory where the provider makes their services available. This philosophy also extends to support, says Swanepoel. You have to have local support for your customers, not just support for the software elements but also support for the business teams using the services.

Crous concludes: The impact of cloud technology on payroll systems is incredible. I have been in the payroll space for decades, yet Ive never seen this dramatic jump in what the software can do today. If youre still running payroll on older systems, especially across multiple countries, you need to look at what cloud payroll systems do differently.

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Fixing global payroll with cloud services - IT-Online