International payroll is like a complex dance that requires precision and synchronization across multiple borders.
This is why countless organizations often stumble over unexpected complications that arise when managing payroll globally.
In order to better deal with these issues, we have compiled a list of the top 10 most common issues related to international payroll along with solutions on how to solve them.
Let's dive in.
1. Compliance with Local Laws
Meeting the compliance requirements of each country, state, and municipality is one of the greatest challenges involved in international payroll.
Companies must constantly navigate a complex maze of regulations worldwide.
Furthermore, these regulations change quite frequently, making consistent compliance a moving target.
Dealing with taxes, currency exchanges, service agreements, and benefits can vary dramatically.
Therefore, an organization's payroll team must possess a deep understanding of local labor laws, tax codes, and reporting requirements to remain compliant.
Yet, the cost of non-compliance can be severe: from hefty fines to potential legal actions. Global businesses must invest in staying informed and proactive with regulation changes.
How to Solve This
With Rise all of your international contractors verify their identities and pass KYC (Know Your Customer) measures before any payouts are made, ensuring that your business is compliant and protected no matter where your team members are located.
2. Currency Exchange Issues
Managing international payroll introduces the substantial challenge of currency exchange rates that fluctuate unpredictably, adding another layer of complexity.
Fluctuations in exchange rates can significantly impact payroll calculations, leading to a potential increase in costs or discrepancies in payments.
Payroll teams must navigate an intricate web of constantly changing exchange rates to ensure accurate payments, budgeting, and financial forecasting.
It is critical for organizations to keep a finger on the pulse of global financial markets to mitigate these risks.
How to Solve This
With Rise your company simply funds payroll in the currency of your choice (USD, EUR, USDT, etc) and then your contractors have the flexibility to choose which currency they want to withdraw in (fiat or crypto).
Since Rise offers payouts in 90+ local fiat currencies along with 100+ cryptocurrencies, you don't have to worry about currency exchange issues at all.
3. Variations in Tax Regulations
Navigating the world of international tax regulations can pose a significant challenge for payroll management teams.
In 2016, for instance, India's implementation of the Goods and Services Tax (GST) significantly overhauled the existing tax framework, compelling organizations to rapidly adjust to the new system.
Similarly, it's not uncommon for nations to frequently amend specific provisions of their tax codes or introduce entirely new taxes, requiring payroll teams to stay perpetually informed and adaptable.
Understanding the nuances of each country's tax regulations, including tax brackets, social contributions, and expatriate tax rules, is crucial for compliance.
How to Solve This
On Rise your global contractors are given filled-out tax forms with their information and earnings that they can easily download, print, and submit for their local taxes.
All transactions are also recorded for the employer so that you can file and submit without headaches.
4. Different Payroll Cycles
The challenge of payroll cycles is immense.
Different countries adhere to various payroll cycles. Some may require weekly or bi-weekly disbursements, while others mandate monthly or semi-monthly payments.
This diversity can lead to substantial complexities for organizations managing multinational teams, necessitating robust systems to ensure accurate and timely payments.
Consistency becomes difficult to achieve.
For those tasked with overseeing global payroll, not only must they navigate the intricacies of local compliance - they also need to synchronize disbursement schedules across varying timeframes.
How to Solve This
With Rise you are able to pay your international contractors on any timeline you have agreed upon, and since they are 1099 contractors and not W2 employees your company is not subject to the same mandated schedules.
5. Paying in Cryptocurrency
Navigating the dual realms of paying in crypto and fiat brings unique challenges and opportunities.
Firstly, integrating cryptocurrency payments into a traditional fiat system requires careful planning, foresight, and comprehensive technology.
This integration is indispensable for companies aiming to offer varied compensation modes. These organizations must address issues like fluctuating exchange rates and regulatory inconsistencies to ensure seamless transactions.
Moreover, offering salaries in a hybrid of crypto and fiat is becoming increasingly popular.
Some employees, particularly in tech sectors, appreciate the flexibility and potential financial benefits offered by cryptocurrencies.
Conversely, traditional fiat currency provides stability and familiarity, necessitating a balanced approach to payroll structures.
How to Solve This
At Rise we specialize in hybrid payroll (fiat and crypto) allowing worldwide employers to pay their team members in whichever currency they prefer.
As an employer you can fund your payroll in the fiat or crypto of your choice and your staff can also choose to withdraw in the fiat or crypto of their choice, even if it's different from the currency you used to fund payroll.
Because of this, companies don't need to worry about exchange rates or setting up crypto integrations.
6. Managing Payment Delays
When handling payroll on a completely internal level, all questions about payments are directed to the finance department, and this can be quite overwhelming when employing large teams.
Global team members understandably want their earnings deposited to their bank accounts as soon as possible and when there are delays, these employees can get frustrated.
How to Solve This
Instead of overloading your finance department with all of these issues, using Rise's 24/7 in-app support chat allows your team members to get the answers they need immediately.
7. Handling Confidential Data
In today's global workforce, handling confidential data within payroll systems is paramount to preserving trust and compliance.
Whether managing payroll for a single country or multiple regions, safeguarding employees' personal and financial information from breaches requires rigorous security protocols and continual vigilance.
Encryption technologies, stringent access controls, and regular audits are non-negotiable measures that organizations must implement to protect sensitive payroll data.
Moreover, data privacy laws vary significantly across jurisdictions.
Compliance with regulations like GDPR in Europe or CCPA in California necessitates that companies stay abreast of evolving legal landscapes to avoid punitive penalties and reputational damage.
How to Solve This
Rise is proud to say that we have achieved SOC 2 Type I compliance in accordance with American Institute of Certified Public Accountants (AICPA) standards for SOC for Service Organizations also known as SSAE 18.
Achieving this standard with an unqualified opinion serves as third-party industry validation that Rise provides enterprise-level security for customer’s data secured in the Rise System.
8. Cross-Border Payments
Navigating cross-border payments often emerges as a significant challenge for international payroll management.
Companies distributing salaries to employees across various jurisdictions encounter complex regulations.
Currency fluctuations and varying taxation rules impede smooth transactions. This underscores the necessity for meticulous planning and precise execution.
Organizations might face difficulties ensuring timely payments and avoiding costly errors.
Establishing a streamlined process for managing cross-border payments is essential to mitigate these hurdles while ensuring compliance with international standards.
How to Solve This
Simply fund your payroll on Rise in the fiat (USD, EUR, etc.) or crypto (USDT, USDC) of your choice.
Once payroll is funded, your contractors can choose to withdraw in the fiat or crypto of their choice as well.
This solves any problems that may arise with cross-border payments.
9. Professional Service Agreements
Professional service agreements (PSAs) are integral when employing international contractors, outlining the terms and responsibilities of both parties.
However, drafting and managing these contracts can sometimes be an issue.
Each country may have its own set of legal requirements and expectations for service agreements, which adds complexity and requires local legal knowledge.
Furthermore, language barriers and cultural differences can create misunderstandings or misinterpretations about the agreement itself.
Misaligned expectations and vague terms in PSAs can lead to disputes, delays in project execution, and payroll complications.
How to Solve This
Rise automatically generates professional service agreements that are in compliance with local labor laws and standards.
This ensures that all parties are protected and clearly understand the terms of engagement.
By leveraging Rise's platform, companies can streamline contractual processes, reducing the potential for misunderstandings and disputes.
10. Integration with Local Banking Systems
The integration with local banking systems can also pose a challenge in international payroll.
Each country may have different banking protocols and regulations that companies must navigate to ensure seamless transactions.
Different banking infrastructures can result in delays, increased transaction costs, and potential errors in payroll disbursement.
For companies managing a global workforce, the efficiency of payroll processes is critically dependent on smooth bank integrations.
How to Solve This
With Rise there is no need to integrate with local banking systems since each international contractor is able to link their own individual bank account or crypto wallet in order to receive their earnings.
If there are ever issues on either the employer's or employee's side Rise has a 24/7 support chat that can help solve any request.
Solve All International Payroll Issues
As you can see, partnering with Rise allows you to handle each and every one of these issues listed above, as well as some other features offered such as:
- Global compliance in 190+ countries
- Hybrid payroll (fiat or crypto)
- Automated onboarding
- Professional Service Agreements and Statements of Work
- Secure on-chain professional IDs
- Health and travel benefits
- Instant mass payouts
- Flexible pay schedules
- Handling tax forms
Get started and learn more by booking a demo today.
