The global economy has had sweeping effects on the interconnectivity of workers around the globe. One of the effects is that large businesses and enterprises with worldwide operations have been able to assemble and maintain their remote global workforce.
Some of these international businesses don’t have regional headquarters or branch offices in some of the countries where their remote workers reside. Most have opted to pay their workers through commercial payout apps.
The downside is that most of these commercial apps charge processing and transaction fees that add to the cost of doing international business. If you want to look for the best way to pay global teams, you may have to consider alternative payment facilities or solutions other than the commercially available payout apps.
Here are some of the real costs of doing international business, especially for enterprises that run and manage a remote global workforce.
Payment Solutions for Global Businesses
One of the most recurring and pressing concerns of international businesses is how to pay their employees who are part of their remote global teams. There are highly popular money transfer and payment apps, but there are quite a number of issues hounding them. Most of these payment and fund transfer apps weren’t designed for businesses with a global workforce. For one, there are many businesses that don’t know how to implement a worldwide payroll for their remote global workforce.
The main shortcoming of commercial fund transfer services or payment apps is that they’re so inefficient and time consuming. These payment solutions work great if you just need to pay out salaries for a handful of people. But they won’t work well if you need to pay out salaries and wages for nearly a hundred or even several hundred employees.
None of the commercially available payment solutions can be integrated into any workforce management or automated payroll administration software system. As a result, accounting staff will have to prepare the payout for each and every employee through these payment solutions. It’s like having to sort out and prepare all the vouchers and checks to pay for your workers. The only difference is you can do it digitally.
This makes it very time consuming for your human resources (HR) and accounting staff. The poor integration capabilities and vast amounts of company time they have to spend preparing payouts through these commercially available apps make these payout options impractical for enterprises and businesses with 50-100 or more employees.
Resorting to these commercially available online payout tools has other disadvantages, even if a company could afford to let its accounting team do all the work on company time. For one, they’ll have to do it without using the enterprise solutions platform because the commercial app couldn’t be integrated with it. This would require the double entry of data in the worksheets for the payout solutions and in the enterprise solutions platform.
Doing your payroll transfers through these commercial payout solutions typically entails having to pay substantial processing fees. The exact amount of money that your employees will receive could be affected by the processing fees charged by commercial payout solutions. The fees are usually based on the amount of money that you’re wiring to them.
Currency Conversion Fees
On top of these processing fees, the currency conversion fees could also have an impact on the actual amount of payout that your employees would receive. These things combined—processing fees plus transaction and foreign exchange conversion fees—could shave off a considerable amount from the payout to your employees. Some of them might even feel that part of their lunch money was taken from them because of the processing and currency conversion fees.
As an employer, your options would be either to pass on the fees to your employees or your company would shoulder the processing, transaction, and currency conversion fees. The first option would leave you with slightly disgruntled workers who might put up with it for a little while until they think that it’s too much for deductions.
The other option would be for your company to shoulder all the processing, transaction, and currency conversion fees. But this would add to your overhead expenses, and these expenses wouldn’t contribute to your asset capability, operational capacity, or capability to create added value for the company. They’re just additional administrative and processing expenses.
These things are some of the challenges besetting enterprises that have a remote global workforce. Collectively, they represent a critical issue underpinning the real cost of doing international business. Most enterprises that have a workforce spread out throughout the world with no regional headquarters or satellite offices where their workers are located have to face these challenges. By far, the most common concern is how to find the best and most cost-effective way of paying salaries to their global workforce.
Compliance and Reporting Requirements
Another disadvantage of manually preparing the payouts for their remote global workforce is that it will also be cumbersome and tedious to meet the compliance and reporting requirements. On top of that, it takes a lot of time and effort as well as involves considerable and recurring processing, transaction, and currency conversion fees.
Businesses that use enterprise solutions platforms with streamlined accounting systems would be affected in terms of their processes and workflow for meeting compliance and reporting requirements. They would have to manually input data on the payout worksheets and vouchers prepared for the salaries of the remote global workforce since these payment solutions can’t be integrated into their payment app.
Managing remote global workforce teams has given numerous enterprises the enormous advantage of tapping into talent beyond their borders and often at rates that are relatively affordable and cost-effective. But one of the challenges that have confounded them is how to pay out the salaries of their remote global teams.
Many of them resort to the apparent convenience of commercial payout apps. But these apps involve costs such as company time spent on manually preparing timesheets and vouchers, payment of processing, transaction, and currency conversion fees.