The Green Sheet Online Edition
April 13, 2009 • Issue 09:04:01
Global payroll done with SaaS
For companies with global workforces, the future of payroll management is in third-party software as a service (SaaS) providers, according to Martin Stockton, Global Vice President for Business Development at Patersons HR & Payroll Solutions Ltd.
In the webinar, Global Payroll - Myth or Reality?, Stockton said, "There is no excuse now for why a global payroll solution isn't possible. The technology is there now. Software as a service is definitely driving it, and it isn't going to go away. This is the future."
SaaS is technology that allows for the online outsourcing of important and costly business functions, such as payroll and customer database management. SaaS applications are designed to help streamline businesses by reducing or eliminating the costs associated with paper-based filing systems, mailing paper checks and cutting (or reallocating) the staffing needed to manage those processes.
As applied to global payroll, SaaS solutions should be viable regardless of country, language or currency, Stockton said. Additionally, the solution should reduce costs for multinational companies while allowing payroll service providers to turn a profit. But Stockton noted providers had traditionally been unable to meet that criteria.
"Payroll is currently delivered on a country-by-country basis - no one standard system," he said. "We get the scenario where some systems are in-house, some are outsourced. ... And typically we find there's more dissatisfaction with the external provider outsourcer than there is with anything that is done in-house."
Stockton said the reason for this dissatisfaction is that third-party providers do not integrate efficiently with in-house systems. Organizations want to leverage their existing systems and not incur the costs of upgrading to fit the processes of its payroll providers. Patersons, therefore, tailors its systems to work with the individual systems of its clients, not the other way around.
Additionally, Stockton said organizations that require payroll systems to span geographic regions are looking for solutions that offer "one single, easily maintainable technology platform." That platform must provide processing and accurate, enterprisewide reporting back to organizations about who is getting paid and where. "And, quite simply, this really is totally possible in a global payroll solution now," Stockton said.
As an example, Stockton cited how Patersons integrated its technology into the entire human resources system of one of its Asia-based partners. "We're not providing [just] payroll solutions," he said. "We're providing HR solutions. We're providing the glue that holds the outsourced payroll together with their back office HR and all of their other HR solutions across the organization."
Stockton believes a major benefit to an automated global payroll solution is the reduction in accounting errors due to human error, such as dual entry and other mistakes associated with the manual entry of data. "Typically what we find is that roughly 95 percent of errors that come from payroll are data input errors, not processing errors," he said.
For example, an employee owed 20 hours of overtime in one pay period is only paid for two hours. "If it's a processing error and we've only processed two hours out of the 20, then we are at fault and we've broken our service level agreement and we're liable for retribution at that point," Stockton said. "The reality is that the manager actually signed off on two hours and the 20 hours was never inputted in the first place." By automating payroll, SaaS offers these additional benefits:
- Reduced headcount requirements of approximately 50 percent
- Reduced time on the complexities of new country setup by utilizing global payroll experts
- Reduced reconciliation tasks for general ledger, treasury and payroll administration
And by lessening or easing these burdens on human resource departments, employees can focus their attention on other activities, Stockton said.
The prepaid angle
Stockton also recognizes the role prepaid cards play in global payroll initiatives. General purpose reloadable prepaid cards allow unbanked employees - such as Polish immigrants in the U.K. and Central and South American workers in the United States who do not have traditional demand deposit bank accounts - electronic access to their pay.
But Stockton said prepaid cards can be employed by banked workers as well. "An employee can have 50 percent of his pay going into one bank account and the other 50 percent being allocated to partners, wives, husbands, or whatever" on prepaid cards, he said.
"So prepaid cards are instrumental for organizations that are working way outside the normal ... environment, but also for employees that want to pass payments on to other parts of the family and dependants as well."
Stockton said the electronic outsourcing of international payroll is part of an overall HR transformation. It seems prepaid cards are helping to facilitate that global shift.
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