Lack of local knowledge is the biggest challenge for the global payroll industry

Wed | 17.01.2018

Accounting/audit/tax

Latest survey shows increase in number of payroll professionals struggling due to knowledge gaps in local legislation and requirements. Inadequate internal systems also posing significant challenge.


A lack of knowledge of local regulations is the biggest challenge faced by global and in-country payroll professionals, according to the latest industry trends report by TMF Group and the Global Payroll Association.

41% of global and in-country payroll professionals surveyed reported a ‘lack of knowledge of local payroll legislation and requirements’ – an increase of 6% compared to 2016.

The most common reason given for payroll errors – cited by 30.2% of those surveyed - was a failure of in-house professionals to understand local rules and regulations. This is understandable, given just under a third of respondents (29.6%) said they were responsible for sourcing local payroll compliance information, but were often unaware of where to find it.

Darren Beal, HR & Payroll Portfolio Director at TMF Group said: “The payroll industry is doing remarkable work despite facing increasingly complex rules and regulations. Nonetheless, the lack of local knowledge is of concern, as it has potential repercussions on compliance. Ultimately, it can affect the payment of staff and the performance of the business.”

“It is encouraging to see that four out of five (79.3%) payroll professionals value having an in-country contact – such as ourselves – who speaks the local language to help them communicate more effectively.”

Other survey results include a shockingly high seven out of 10 (69.4%) payroll professionals reporting to have no, or fewer than 50% of global policies that apply to all payrolls.
A similar pattern emerged in the case of processes. 

Darren Beal added: “The lack of consistency and control that results from not having robust payroll policies and processes in place should be of concern to organisations operating in multiple jurisdictions as this leads to errors in payroll processing and increases risk of non-compliance.”
 
“Our report with GPA also shows that many organisations are yet to adopt appropriate technology to support their payroll operations at an international scale. This contributes to the failure of policies and processes.”

“There is a growing trend among organisations towards the adoption of middleware to solve the problem of trying to deal with a multitude of systems and suppliers across different territories. We now see many organisations turning to payroll outsourcing to fulfil these needs.”

Melanie Pizzey, CEO of the Global Payroll Association commented: “Our second annual survey with TMF Group indicates that professionals responsible for multi-country payroll delivery are facing increased complexities on many fronts. As a result, global payroll transformation is – or will become – a priority for employers so they can achieve consistency in their global operations, and maximise the return on their investments.”

The top four challenges faced by global and in-country payroll professionals

Challenge - Lack of knowledge of local payroll legislation and requirements 
2017 result    -  41%  
2016 result -    35%

Challenge -  Vendor management    
2017 result  - 37.1%    
2016 result  - 25%

Challenge - Ability to find information on legislation and compliance    
2017 result  - 36.4%  
2016 result - 36%

Challenge - Lack of consistency in policies and processes    
2017 result  - 36.4%    
2016 result - 34%

The full report can be downloaded at: tmf-group.com/globalpayrollsurvey

For further information, please contact: Carlie Bonavia, PR & Communications Executive: Carlie.Bonavia@tmf-group.com

*Notes to Editors
138 payroll professionals took part in the Global Payroll Association and TMF Group’s 2017 annual industry trends survey. Roughly three quarters of respondents worked for organisations operating in each of the areas of Europe, the Middle East and Africa or Asia Pacific and the Americas respectively, with the majority having 500 or more staff in each region.
 

ABOUT TMF GROUP


TMF Group is a leading global provider of high value business services to clients operating and investing globally. It focuses on providing highly specialised and business-critical financial, legal and human resource administrative services that allow clients to operate their corporate structures, finance vehicles and investment funds in different geographical locations. TMF Group has operations in more than 80 countries across the Americas, Asia Pacific, Europe and the Middle East. 
 

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