Companies should analyze their current situation to determine which model will work best for each country in which they have employees. The decision tree framework should look something like this:

What is the strategic vision for this country—e.g., large expansion or just dabbling to test the market?
Employee population—large or small?
Does the country self-generate enough funds to support payroll liability?
Does the business require a local bank account aside from payroll?
Risk analysis: What are the controls necessary to secure funding?
Local regulatory requirements: Do they allow cross-border payment or third-party trust?
What are the local options: Is there a payroll provider that can make third-party payments?
What is the company's global treasury strategy for all payments? Is there an existing treasury strategy for other types of payments, such as accounts payable?
Does the global treasury strategy support the needs of payroll?
Should we handle payroll in-house or outsource?
Do we want to hold local currency for this country, or is it too volatile?

A fully developed global funding strategy should include policies on how to manage the currency fluctuation risk. Finance and treasury must work with payroll to create the optimal solution for payroll funding and re-evaluate periodically as conditions change.

Instant Insights /

Why It Pays to Have a Clear Payroll Payment Strategy

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