Methods, systems and functionality
Jonathan Rees, UK Managing director of Western Union Business Solutions, which runs online payment platform GlobalPay, explains the intricacies of international payments in an increasingly globalised working world
T
he act of sending international payments can be a daunting prospect for employers and pensions providers that need to send net pay abroad. Not only are there legislative and legal issues to overcome, but this headache is only added to by the pressure placed on departments to reduce the liability and costs associated with multiple decentralised in-house payroll systems. As a result, there is a growing trend for companies to manage payroll services centrally.
Multi-country payroll is still a relatively immature market, and it is for this reason that companies are increasingly implementing global payroll services designed to standardise processes and reduce overheads.
Using a dedicated payments provider is the most effective way to access over 200 countries through 135 different currencies, and the best option is to consider using the provider’s single payments platform. Such a platform can be regarded as a panacea for international payments issues; it is a holistic, streamlined method that offers the ability to standardise payroll processes. A single payments platform has the obvious benefit of being wholly transparent; a finance officer will be able to see all beneficiary details, current exchange rates accepted and all fees are presented clearly. The beauty of such a platform is that no added fees or amended rates after the trades have been made, enabling the provider to have complete confidence and certainty about their risk exposure, which is turn helps to manage costs.
As with all areas of financial services, there are pitfalls within the payroll sector that organisations need to be aware of when making international payments. The key issues fall into three categories – control, compliance and cost management – and each have individual considerations to minimise their potential impact.
34 PayrollProfessional
First to be considered is a worry for many in the payroll sector when making international payments to employees or retired staff overseas: relinquishing control. Cautious payroll teams can often be put off by the prospect of having to use multiple points of contact in order to send payments over numerous time- zones, across different languages and often with conflicting cultural customs. Such variables could potentially lead to delayed payments, errors and difficulties in managing suppliers and having to deal with unaccustomed systems and processes. Through using a single payments platform, organisations in the UK can send a single file for all payments settlements in almost any country in the developed world. This greatly reduces the risk of delayed payments whilst ensuring that costs are secured through fixing exchange rates.
...PITFALLS WITHIN THE PAYROLL SECTOR THAT ORGANISATIONS NEED TO BE AWARE OF...
As is often the case dealing with global finances, a big challenge can be ensuring the operation is fully compliant with internal regulation and regional law. Payroll managers will be concerned about any discrepancies that may occur through making international payments. Legislation, corporate policy and, above all, maintaining the security of payroll data during the transfer process are all important issues that can make legal and compliance teams nervous. The benefit of using a single payments platform is that such fears are eliminated through its transparent nature;
payments are tracked whilst in transit and are highly secure. Payments are managed as a separate part of the payroll process, which means that discretion, and therefore security, is assured. For example, it is possible for organisations to settle via a single wire transfer and therefore individual payments do not need to be identified. With the right payments platform, the organisation will receive full notification of transaction details and reports once the funds have been received by the intended recipient.
Cost management is perhaps the most
important concern (or at least causes most anxiety) for payroll professionals, particularly after years of uncertainty in the financial markets. When dealing with foreign exchange transactions, volatile currency markets can cause huge disparity in payments and can be extremely difficult to manage costs consistently and sticking to budgets. Often it is the case of inconsistent payroll reporting, with organisations dealing with counterparts overseas that do not have consolidated employee headcount and accurate salary reporting, having a further impact on management time and, therefore, cost. With intelligent routing of funds across the global network, using a single payroll platform from a dedicated payments provider will often result in substantially cheaper foreign exchange conversions. It is possible to implement a cost management plan in order to lock in rates and, therefore, reduce the payment’s exposure to FX (foreign exchange) market volatility. In short, the payroll professional would be wise to consider the merits of a single payments platform as a simple and effective means of reducing costs, minimising errors and implementing risk management tools whilst keeping in control of all payments that are made overseas.
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