For all the harm caused by the pandemic, one bright spot is its impact on hiring, as remote work is now as accepted — if not encouraged — over being in a central office setting.
This is especially applicable when it comes to companies expanding into new geographies, as being able to hire locally has proven advantages, from language to relationships to the finer points and nuances of doing business that can vary greatly from region to region.
Employing workers across borders also presents a variety of problems, however. As we find in The Cross-Border Payroll And Contractor Payments Report, a PYMNTS and Nium collaboration, “paying and managing international workers, in particular, represents a diverse array of challenges. Firms especially struggle with handling taxes, financial data security, fluctuating exchange rates and legal or regulatory issues when paying international workers.”
Based on a survey of 250 executives with leadership roles in accounts payable, payroll or payments at U.S.- and U.K-based companies with over $100 million in revenue, the study zeroes in on the top pressures of handling payroll and related compliance for a growing number of remote workers operating in countries where their employers lack a corporate presence.
Get Your Copy: The Cross-Border Payroll And Contractor Payments Report
Our research found that tax management is the most cited struggle for firms hiring workers in foreign markets, often pushing these firms to use private employment agencies in those markets. But 67% of those that do report struggling with local payroll issues as a result.
It makes a powerful case for platforming international payroll and tax compliance.
U.S. firms report having a tougher time with this than U.K. counterparts, as 18% of U.S.-based firms call taxes their biggest international payment snag, while just 9% of U.K. firms said the same. Additionally, 20% of firms with revenues of $500 million or above said taxes are their biggest international payment challenge, or twice the share of firms doing under $500 million.
With nearly 95% of cross-border workers paid by bank transfer today, more companies are taking a serious look at payments platforms that are less costly, full-featured, and faster.
Among U.S. companies, 19% are relying chiefly on wire transfers to pay their international workers today, compared to just 3% of U.K. firms, which we found “more likely to use regular ACH and same-day ACH to pay both domestic and international workers.”
The benefits of trading out these legacy methods and platforming international payments is gaining serious traction now, as 63% of companies surveyed are “slightly” or “somewhat” interested, and nearly 25% are “very” to “extremely” interested. The most aggressive players plan to move on this initiative ASAP, with 69% now innovating payment methods “or planning to do so within six months of being surveyed,” and 87% currently innovating or planning to do so within a year.
Nearly 7 in 10 (67%) of companies we surveyed are interested in hiring more workers in foreign markets, 33% said global expansion is their most important reason for hiring internationally.
Somewhat ironically, the pandemic opened the floodgates on cross-border hiring payments even amid supply chain disruptions and whole countries being closed off to travelers. But that’s the point: restrictions exposed both weaknesses and opportunities when it comes to having boots on the ground in international markets to mitigate unforeseeable catastrophes.
Get Your Copy: The Cross-Border Payroll And Contractor Payments Report
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