Cut Global Payroll Costs Fast by Consolidating Vendors & Systems (Part 1)Cut Global Payroll Costs Fast by Consolidating Vendors & Systems (Part 1)
As many organizations begin a new financial year, the strategizing is complete and a budget set. Those involved with Global Payroll are busy dealing with Year End and may be working with multiple systems, local payroll vendors, and compliance requirements in one of the most fragmented and costly organizational functions. Our experience across private and public sectors shows that for payroll and most other business processes, major savings and transformations occur at the implementation and operational levels.
This two-part article explains how you can cut costs quickly with an immediate and substantial effect on an organization’s profit within existing budgets. We then set the stage for further transformational changes for the future.
Key Takeaways
Consolidation reduces vendor management overheads and complexity, cutting costs
One platform reduces manual re-entry and reconciliation work
Automation reduces errors and compliance risk exposure and increases efficiency
A single dashboard improves forecasting and decision-making
While we use Global Payroll as an example, these concepts apply to most business processes across an organization, enabling value creation many times the surplus of initial savings. Often, the biggest challenge is understanding the scale of savings and the leadership to make these changes.
Identifying Payroll Costs
We start with a process at the Discovery and Implementation phases where the aims and costs of payroll are identified and importantly, so are the supporting functions within the organization. The act of reviewing and consolidation not only simplifies processes but can cut immediate costs. Many international organizations turn to global payroll providers to help unify their payroll operations under a first-party platform (a single provider-owned platform rather than multiple third-party platforms); otherwise, you are just adding an additional layer.
Organizations need to bring simplicity, compliance, and cost-effectiveness to complex and multi-jurisdictional requirements. During the Discovery phase, we look at a number of areas within the organization which impact Global Payroll. These include administrative costs, automation and standardization, risk and errors, global visibility, and analytics which are covered below, plus many others. This is of critical importance especially in times where more is needed for less, and technology is rapidly changing.
Administrative Costs
We eliminate the need to manage multiple vendors and pricing structures. Consolidation with a global payroll provider should streamline everything into one relationship and one system. It is clearly less costly and complex to operationally manage a single system compared to managing fragmented local systems.
Using a single global payroll provider means you can use economics of scale to negotiate better rates. However, the greatest cost savings are achieved across the broader business support functions.
Automation and Standardization
Using a single system means that teams do not need to manually enter, manage, and reconcile data (approx. 40% of data) across multiple local systems and prevents the creation of additional time-consuming data sources. Globalise eliminates many of these invisible inefficiencies.
Time and effort on manual and repetitive tasks can be reduced by automating payroll processes. As a simple example:
Each payroll run takes ~20 hours to prepare and consolidation cuts that by ~50%
With 10 countries and an average cost of $40/hr for payroll staff, the annual saving would be:
10 (countries) * 10 (hours saved) * 12 (payroll cycles) * $40/hr (staff cost)
= $48,000 per year
This is only one minor part of the payroll process - by extrapolating further to include supporting functions, the value gained can easily exceed hundreds of thousands to millions of dollars per year.
Standardization of processes and reports also leads to fewer errors, greater awareness, and improved operational efficiency. The time saved can be used for strategic efforts and creates more value for other areas of the organization.
Minimize Risk and Errors
Using a consolidated system and automation reduces payroll errors, enables validation engines to clean data, and provides clear visibility of all payrolls in one place. As a global payroll provider, compliance and accuracy are built into processes for each country. This also brings reduced risk and avoidance of fines/penalties.
Global Visibility and Analytics
With a consolidated platform, all payroll data for every country feeds into one global dashboard. This dashboard allows for a better overview, forecasting, process analysis, and information for comprehensive decision-making.
Conclusion
Organizations are increasingly expected to do more with less. The Discovery Phase allows us to review areas within an organization that support Global Payroll and bring the greatest reduction in costs. This process looks at administrative costs, automation and standardization, risk and errors, global visibility and analytics plus more. It is significantly less costly and complex to operationally manage a single first-party platform rather than fragmented local systems.
Teams do not need to manually enter data and automation reduces time and effort potentially saving millions of dollars per year. Globalise can reduce errors with inbuilt data validation and a consolidated system which provide comprehensive global visibility and analytics. There are many areas in an organization which are sometimes invisible where savings can be made e.g. security, employee experience, and scalability which will be discussed in our next article. In the meantime, contact us to learn more about our specialist skills and how Globalise can cut your expenditure.