The recent evolution of B2B payments has expanded the focus of what it means to add value and combat friction.
Technology no longer has to only be concerned with easing the challenges of accounts payable (AP) departments but should also be able to support suppliers on the receiving end of those transactions.
It may be time for payroll to have a similar shift.
Administrative burdens in the human resources (HR) department have dictated the weekly, biweekly or monthly payroll. But professionals now have far greater choice in how they work, and where — it’s only natural that payroll technology follows suit and explores how to deliver greater choice in how and when talent gets paid.
Speaking with PYMNTS, Lano CEO and Co-Founder Aurel Albrecht discussed how organizations looking to take advantage of the global talent pool can not only ease the biggest pains of cross-border payroll, but also explore tools to deliver a better payment experience for that talent — without compromising efficiency.
Cross-Border Concerns
The global pandemic has undoubtedly gotten more employers to consider the opportunity of looking beyond the immediate geographic vicinity of a business to hire talent. Employing across borders seems less outlandish than ever before, but when it comes to the administrative burden of global payroll, it remains no less daunting.
There is the compliance burden of keeping up to date with local labor laws and regulations, as well as the logistical challenge of actually moving money across borders when it comes to payroll. As Albrecht explained, firms have to consider whether they wish to establish a legal entity in a new market in which they’re hiring, or rely on an employer or record to take ownership of the employment and payroll process.
Outsourcing this burden is a logical choice for many businesses, but that may be a short-lived preference considering the evolution of payroll and the global business landscape overall.
“Businesses are becoming more global from the beginning,” Albrecht said about the industry’s trajectory looking ahead. “You will have international subsidiaries, offices distributed all over the world. Managing global payroll in one platform is the biggest challenge.”
Just as working with an external payroll partner can help organizations overcome the compliance and cross-border payment challenge of global payroll, Lano earlier this month enlisted the support of Rapyd to integrate global payment capabilities and add support for payout within its platform.
Including The Employee Perspective
Easing friction in cross-border payroll undoubtedly involves using technology to ease the administrative burdens in the back office. But global talent has expanded its identity to deliver greater choice for employees. Whether full time or part time, gig worker or contractor, long-term or project-by-project, there are numerous ways talent can deliver value to an employer.
In today’s business ecosystem, elevating the payroll function can no longer only be about solving pain for payers. Rather, it must also include opportunities to ease friction for the payee as well.
Albrecht pointed to a variety of ways payroll innovation has opened up opportunities to achieve this, particularly when it comes to support for early or on-demand earned wage access.
“This is something we see more and more being requested at the beginning,” he said. “Many contractors or freelancers will use this as alternate insurance if they’re working for a new client.”
Particularly when it comes to cross-border payroll, trust is imperative, he added, noting that one bad experience of a professional failing to be paid on time or in their preferred currency can damage an employer-employee relationship for good.
Support for multiple currencies is also a key focus for Lano, which aims to introduce multicurrency wallet services for employees of a distributed workforce. The market may also evolve to pay employees in cryptocurrency should they wish, although Albrecht noted he is a bit more cautious on that front.
What is certain is that the evolution of payroll technology is no longer focused solely on the HR department of employers, but instead is encompassing the needs of employees, which grow more complex as hiring expands internationally. For organizations to truly gain advantage from looking beyond their local borders for talent, they must also pick technology that looks beyond the employer’s back office to add value and ease friction.