Finding the Right Payment Solution for Your International Expansion
You’ve set up your international payroll and have a system in place for compensating your employees – but you’re still not off the hook. Arranging your international payroll is only part of the story during international expansion, as you’ll also need to determine the best method of making payments such as taxes, social security contributions and beyond. So, what are your options for ensuring compliance in these payments, and which is right for your company? Here, we explore your payment options and help determine the best course for your business.
Laying the Groundwork
First, have a chat with your chosen international payroll providers and ask them about the laws of your target market and how they apply to your payments. As experts in international payroll services, they should be able to help you with many of the complexities in these matters. Not sure if your payroll provider has the local knowledge you need? Companies like Galvin International, an international business concierge service, can connect you with local specialists in your target market who can walk you through the intricacies of law and compliance.
Once you have an understanding of your target market’s requirements, you can work through your payment options:
Option 1: Direct from HQ
Making payments straight from your HQ accounts by wire or other means is ideal for some businesses because it allows them to keep full control: your team is in charge of the payments, and you use your own systems. However, there are likely to be transaction and FX fees involved, you’ll need to track missing payments yourself and you’ll need to work out if your methods are compliant for tax and social security payments in your target market. Obviously, this method also requires you to have your own systems in place, which could be time-consuming to set up.
Option 2: Money Movement
The option of using money movement services from your payroll provider, bank or FX provider is an appealing one because it is quick and efficient to set up. It can be a good solution for a limited number of payments, but you must consider the transaction charges and FX rates involved and whether you can use this method for tax and social security.
Option 3: Own Bank Account
Of course, you can always set up your own local bank account for these payments. The benefit of this method is that it’s fully compliant for all payments, can be used to pay suppliers overseas and is completely trackable. Still, you have to account for setup time, transaction costs and whether your team can manage the account remotely.
Making Payments Work for You
There are a few key points to remember when setting up a payment method. You must ensure that all payments are authorised by your company, even if a provider carries them out for you. In addition, you’ll need to carry out a ‘penny test’ to confirm that your payment method works. This involves transferring a small amount of money through your chosen process, before any payments are actually due, so that you know everything is running smoothly.
With a multitude of moving parts like arranging payroll and determining payment methods, international market expansion is a complex process – but by developing an understanding of your options, you can ensure that your payments are completed seamlessly.
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