How fintech is overhauling global payroll capabilities

By Alex Hammond | 20 June 2017

bobsguide sat down with Nick Pedersen, Managing Director of EQ Global, and John Pearce, Vice President, Implementation and Payments at ‎CloudPay, to discuss how the two fintechs' partnership is revolutionising global payroll


What does the current state of global payroll look like?

John Pearce: Global payroll is a rapidly growing space and will certainly continue to grow into the future. We are now seeing more and more international companies introducing global payroll and with a much wider variety of payroll solutions available, it’s a case of working with the right partner to suit specific business requirements.

Ultimately the aim is to increase efficiency and improve accuracy of global payroll functions on behalf of organisations, and with ever-advancing technology, that’s becoming more achievable.

In terms of trends, we’re continuing to see larger manufacturing, finance and IT organisations coming on board, representing a natural affinity with our platform and the types of payroll models we have on offer. Our ongoing objective is to position ourselves as the technological leader within the global payroll space, and we continue to see a great deal of success with these types of companies.

Do you feel the economic climate poses threats or opportunities for global payroll?

JP: There are thousands of multinational companies which operate payroll functions in ten or more countries, so inevitably, there are plenty of opportunities out there for global payroll providers.

Part of our ethos at CloudPay is looking to turn threats or challenges into opportunities. With the strengthening of data privacy laws occurring across the globe, there is increasing demand from different governments to ensure that companies abide by their own perpetually changing domestic policies. As such, more and more companies are requiring third-party international payroll providers to ensure full compliance across each transaction.

The issue of data hacking is also a constant threat, and naturally this makes companies nervous about how secure their own data is, especially when outsourcing to a third-party provider. We’ve build a platform and service that provides a robust and market-leading approach to managing global payroll requirements while maximising the safety and security of data management. That really helps us stand out, and it also aligns us with where the market is moving.

Nick Pedersen: If we look at this question on a much larger macro scale, there are inevitable fears over economic uncertainty, but at the same time international trade is still growing at a strong rate and in fact, it has never been easier to trade overseas or open global offices. Despite all the potential worries about data, compliance or local regulation, it is still incredibly easy for companies to expand overseas.

The main challenges for these companies is how they make this happen; not whether they should or shouldn’t, and that’s where you need to have a truly innovative company like CloudPay in place to make it all happen from start to finish. The economic climate actually presents a considerable opportunity for companies such as CloudPay and EQ Global, as we pride ourselves in assisting companies to expand globally.

How is technology affecting the global payroll process, especially in an increasingly globalised business environment?

JP: The most significant recent development in technology that has drawn more customers to a global payroll transformation follows on from the transformation of Human Resource capabilities from domestic to international. This is a considerable investment for any company of any size to undertake. However, once an organisation has established an international HR process with proven success, it is able to further leverage this investment by globalising its payroll procedures.

Fundamentally, once an organisation has a single platform containing the majority of its key employee data, it can source a global payroll provider which can connect to that platform and pull data automatically to a third-party system; and this means that the organisation can get a much better return for investment across the whole HR centralisation project.

We are seeing a lot of our clients making this move now, and with a vast number of companies having centralised their HR systems over the past two to three years, many of them are now looking to take full advantage of these opportunities by incorporating global payroll into their operational processes.

What’s more, the cloud is now more readily accepted as a safe and secure environment for hosting enterprise solutions – we are seeing a growing number of clients moving their HR applications into the cloud and away from the old data-centre heavy solutions.

NP: Linking this back to the payments landscape, one of the key influencing factors is very much around the acceptance of digital payments and how technology is being used to a far greater extent than in previous years. The regulatory environment is also changing, with regulators more accepting of developments in technology and the potential it has around the introduction of PSD2.

Again, greater acceptance of more competent technology makes the global payroll process - from a third-party provider’s perspective - incredibly easy for a customer. It reduces the manual nature of keying in information such as payment details, which can lead to errors and delays to payments being made and received from overseas.

How is the global payroll landscape changing and what future developments do you think the industry will see?

NP: In my view, the regulators’ acceptance of more technology in the international payroll space is vital. Fundamentally, regulators are now accepting the use of technology in payment processing in a way that they have never done before. This therefore creates a wealth of opportunities for non-bank payment providers and creates a potential threat for banks who are used to having traditional processes in place that cannot be easily changed or developed. The larger banks are also too reliant on their customers’ inertia for not moving away from this traditional process.

JP: In terms of our own developments, CloudPay has released new products and features that allow us to take advantage of automation, analytics and robotics in ways that have not typically been available to global payroll. We are looking ahead to introducing more automation across the end-to-end payroll process, and a lot of that is possible because we control our own technology, people and systems.

That allows us to truly optimise delivery by leveraging technology and people in a way that aggregator models, which are still common in payroll, simply cannot. If you’re a global company looking at global payroll providers, you should be looking at the end-to-end process to understand whether your shortlist of possible providers will help you optimise and control as much of that process as possible.

In partnering up with EQ Global, the collaboration means we not only enable customers in the global payroll space to be comfortable from a compliance perspective, but also from a technology perspective. Our aim is to always allow customers to have a seamless flow of data from their HR system to their payroll system, and to their downstream payment system.

I think in the next few years we’ll see more global payroll providers trying to mirror our approach in terms of our payments partnerships, with the desired outcome of allowing customers to have a truly outsourced and automated solution for their payroll on a global scale.

How has working with a payments provider such as EQ Global helped solve certain problems in global payroll?

JP: Using a recent example we have been working on, we’ve been able to remove the manual steps an organisation has had to make around their payroll requirements. As a result, we have successfully increased the efficiency and accuracy of the organisation’s global payments process. At the same time, the organisation was also in the process of opening new offices overseas and therefore we were able to help with issues relating to compliance and currency fluctuations.

What key business plans do you have for the rest of 2017 and beyond?

JP: The key strategy for CloudPay moving forward is to continue to innovate and automate across the end-to-end payroll process to maintain our position as the leading global payroll provider.

More specifically, we’re looking to bring a larger number of our customers under CloudPay’s in-house processing, as opposed to using an in-country partner. We already process 72% of our payrolls in-house, which reduces reliance on in-country providers, creates more efficiencies and controls in delivery, and helps us better control costs for our customers.  Furthermore, we are looking to set up more service centres to support automated data flow for a higher percentage of countries in which we operate.

NP: For EQ Global, making sure we can further support partners such as CloudPay is crucial. As CloudPay plans to develop its services, as a business we need to react and be more proactive in order to ensure we bring new ideas to CloudPay. We have some exciting new technology developments in the pipeline which will further increase our capabilities as a global payments provider, and by default will help benefit partners such as CloudPay. Ultimately we aim to simplify the global payments process and by staying ahead of the curve with technology and innovation, we can make a considerable difference for organisations undergoing global expansion.

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