Why Even International Businesses Need to Think Local when it Comes to Payroll

11 August 2015

Even for smaller companies, going international can be advantageous. Different countries can offer different benefits. Whether it be gaining access to a new market, taking advantage of special tax rates or benefiting from a skilled labour force, spreading a company's global footprint is often advantageous.

At the same time, establishing an outpost in a new country is not without its challenges. Different languages, customs, laws, business practices, resources and infrastructure mean that it is important to know the lay of the land.

Working with local businesses and experts is an effective means of adapting to a new business environment. Payroll is an area of business that is particularly affected by regional variations. That is why it makes sense for businesses to think locally when it comes to managing international payroll.

Compliance

The factor that most affects the local operations of international businesses is compliance with the differing legislations and tax codes of various regions. While many aspects of the company and business legislation are becoming more harmonized globally, particularly within areas such as the EU, there are still many regional nuances that can create challenges for compliance.

Issues such as employee payment can differ substantially even between member countries of the EU and compliance is strictly enforced. This has many consequences for business operations, in payroll in particular. For international businesses, this not only creates difficulty in terms of compliance but also in terms of efficiency. Understanding the optimal means of managing requirements such as payroll processing can make a big difference to the success of regional operations.

The value of local knowledge also extends to understanding how compliance works in practice. In the transition from written legislation to the implementation of administrative and auditing bodies, there are inevitably ambiguous guidelines that need practical solutions. Local accounting or payroll firms have deeper understanding of these practical nuances of local systems through years of experience.

Networking

The experience of a local payroll provider or any other locally outsourced service does not stop at making relationships and interactions run more smoothly. They also give ready access to a broad network of potential business partners. An outsourced service provider such as a payroll service provider has a diverse portfolio of clients, any of whom could be the ideal fit for a forthcoming project that an international organisation might not otherwise know about.

Presence

One of the key value propositions of any outsourced service provider is assurance. The assurance that the service will be carried out competently, efficiently and diligently gives business owners the confidence to focus on other areas of their business with the knowledge that the outsourced provider has everything taken care of.

With a local provider, that assurance extends to the availability of personnel on the ground; be it meeting with creditors, government auditors or legal professionals. A local representative, physically present in that high level meeting, giving accurate information and expert advice makes an enormous difference.