12 questions to ask when hiring a global payroll provider

This is an important question in an industry where many global payroll providers do not directly process payrolls but instead outsource the work to local providers. While this model can extend geographic reach, it may also create inefficiencies, communication gaps and inconsistent service delivery, including limiting a client’s ability to speak directly with the expert responsible for running the local payroll. 

When evaluating providers, it is important to understand how much of the payroll process is managed in-house versus through third parties. Providers with extensive in-house capabilities can typically offer greater consistency, stronger governance, improved visibility and more streamlined issue resolution across jurisdictions. 

For example, Vistra processes 96% of payrolls in-house through its global network of more than 1,500 payroll professionals. This enables clients to benefit from direct access to local expertise, more consistent service standards and enhanced oversight across their international payroll operations. 

Not all service providers employ advisors with expertise in different countries. Hiring a payroll service provider with global advisory services eliminates the need to vet and manage additional consultants to maintain compliance in all your countries of operation. 

Some payroll providers offer employer of record, or EOR, services. Using an EOR in a country is distinct from establishing and running a traditional payroll. In the case of an EOR, the provider you hire acts as the employer of record (including providing local benefits) for your employees in the country in question, while you direct and control the workers.  

It’s a popular solution that’s appropriate in certain situations, such as when you’re testing a new market or after an M&A carve-out deal. Hiring a global payroll service provider that also provides EOR services can give you flexibility as you grow or wind down parts of your organisation. 

Although many payroll providers claim to be specialists in all areas of international expansion and operations from setting up bank accounts to winding down legal entities; some outsource the work to several suppliers. This can create a complex web of deliverables and potential failure points and can increase costs and risks. It’s beneficial to retain a supplier that can manage all aspects of your international expansion in-house. Vistra's Entity Management is a core pillar (one of three primary solutions). 

Staying updated on all payroll-related regulatory requirements should be a high priority for payroll service providers and their clients. The consequences of noncompliance (such as failing to meet minimum wage requirements for local workers) can include fines and penalties, reputational damage, and reduced worker morale.  

It’s important to hire a firm with experts that continuously monitor payroll-related laws and regulations and notify you when there’s a change in any of your countries of operation. Some providers use systems that automatically notify clients of regulatory changes, payroll reporting and tax filing deadlines, when insurance or other thresholds are reached, and more. 

Know-your-customer (KYC) requirements are now a standard part of onboarding when implementing global payroll services. As regulatory expectations continue to evolve across jurisdictions, organisations should understand how prospective providers manage KYC processes efficiently and consistently. 

The process typically involves identifying the legal entities connected to an organisation, confirming ultimate beneficial ownership (UBO) information, and gathering documentation to verify the identities of relevant individuals and entities. Depending on the number of countries and entities involved, this can require coordination across multiple stakeholders and regulatory frameworks.

A strong global payroll provider should have established processes, technology and entity management capabilities that help streamline KYC requirements and reduce administrative burdens. This may include support with legal entity setup, maintenance of UBO registers, documentation management and coordination across jurisdictions to help accelerate onboarding and minimise delays. 

When evaluating providers, ask for clear guidance on expected timelines, responsibilities, documentation requirements and how they support clients throughout the KYC process. 

It’s essential to understand contract terms because certain conditions may not be obvious. Some contracts stipulate that the same number of countries and employees specified at the start of a project stay unchanged throughout the duration of the payroll engagement. In that case, if one of your organisation’s local offices reduces headcount or closes, you would still be obligated to pay the provider for the terminated employees. 

You might notice this clause and mistakenly assume it won’t affect your organisation. Because of current global economic challenges (such as rising inflation and interest rates), however, corporate strategies may unexpectedly shift, causing your assumptions to backfire. To prevent unexpected charges, negotiate a grace-period clause in the contract that permits scope adjustments without termination fees or other costs. 

Many multinational organisations operate payroll across multiple countries using different local providers, systems and processes. Over time, this fragmented approach can create administrative inefficiencies, inconsistent reporting, limited visibility and increased compliance risks. 

A strong global payroll provider should be able to support payroll consolidation by centralising key aspects of payroll operations, including invoicing, reporting, governance and service delivery. For example, the ability to receive consolidated invoices in a single currency across multiple jurisdictions can significantly reduce administrative complexity and improve cost visibility. 

Beyond invoicing, organisations should evaluate whether a provider can deliver standardised reporting, consistent controls, integrated technology and central oversight across countries while still maintaining local expertise and compliance support. Consolidation can help improve operational efficiency, strengthen governance and provide leadership teams with greater visibility into global workforce costs and payroll performance. 

When evaluating providers, ask how they support multinational payroll consolidation initiatives, including how they manage data consistency, reporting standards, vendor coordination and cross-border service delivery. 

Reviewing an implementation project plan can provide insight into whether a payroll provider follows best practices and whether the plan may require adjustments to meet your own business practices. The implementation plan should include information on transitioning from the current provider, connecting to your human capital management (HCM) system, and how to reduce the risk of losing key personnel during the transition. 

Integrating systems with payroll is an intricate endeavour that demands changes from individuals throughout an organisation. You should consider each integration process from a technological, operational, and service-related standpoint.  

A payroll service provider’s integration plan must ensure that data can be processed securely from different systems and that it is verifiably consistent across systems. Make sure the project plan has clear milestones that don’t jeopardize the payroll's accuracy in favour of all systems going live concurrently. 

To make transitioning to the new payroll service as error-free as possible, negotiate a strong hypercare phase that includes intensive user support. This will increase the likelihood that problems are promptly resolved and maximise the likelihood of a successful transition. Generally speaking, the payroll service provider should have their implementation personnel stay on the project for one to three months. 

Ask payroll service providers to describe their complete service delivery models, including whether they have a global delivery model (GDM) that uses proprietary software and shared services centres (SSCs). They should also provide a list of the local jurisdictions in which they deliver payroll services.  

Having local payroll experts who relay clear instructions and guidance can help you navigate complex regulations and ensure that business processes continue to run smoothly. They should also have processes in place that ensure service problems are addressed promptly, and that service is continuously improved during the length of the engagement. 

Providers with strong global delivery models can also help organisations consolidate fragmented payroll operations into a more standardised and centrally governed framework. 

To learn more about outsourcing payroll services across multiple countries, speak to one of our experts today.

Contact us