Accountants face significant challenges when managing global shadow payroll. At Certino, we recently carried out research to gauge accountants’ perceptions of the Global Mobility (GM) ecosystem and assess their pain points. Keep reading to discover our biggest takeaways from this research.
Businesses with incorrect shadow payroll are missing out on cost savings
Shadow payroll is a key mechanism that allows the employer to meet their local payroll tax payments and reporting obligations by replicating or “shadowing” the home payroll compensation reporting.
Getting this wrong can be costly and damaging to businesses. Accountants working with globally mobile companies have an extremely challenging role to ensure their clients remain compliant with tax laws across multiple jurisdictions.
With our research finding that 93% of accountants believe their clients have paid more tax than they need to when processing shadow payroll each month, there are clearly severe difficulties to overcome in managing global shadow payroll.
Of course, overpayment may represent a financial loss for businesses or at the very least a cash flow issue, but this is by no means the most damaging result of inaccuracies in shadow payroll calculations. 43% of the accountants we surveyed have clients who have been fined due to shadow payroll miscalculations, which can amount, in some cases, to several thousands of pounds.
In ‘worst case’ scenarios, incorrect payments could also lead authorities to launch audits on an organisation’s whole payroll in that country, including local employees. These fines and audits can cause significant reputational damage and disrupt life for employees, and the scale and regularity with which they have been proven to occur is staggering.
This data should be a clear wake up call to globally mobile companies to invest in shadow payroll partners who can accurately calculate their payments, to ensure they remain compliant, no matter where they have employees.
Shadow payroll calculations are difficult, even for expert accountants
Our data also underscores the challenges accountants face with accurately calculating shadow payroll. 69% of those surveyed said that keeping abreast of constantly changing legislation on a global basis and complex international tax was a big shadow payroll pain point.
A similar proportion - 67% - said that their biggest pain point was making sure calculations are accurate, while 58% cited the amount of time it takes together with the manpower required.
Shadow payroll is a complex, time-consuming task, and many accountants clearly need support from outside their organisations to resolve this. This is why technology providers, such as Certino, exist. A partnership with our team of international tax experts, and the use of our easy-to-integrate platform, can automate the unwieldy process of managing payroll on a global scale to give your business a competitive advantage.
Shadow payroll is an ongoing and evolving challenge for businesses
In our new, post-pandemic world, workers are choosing to assessing their work/life balance. One result of this is that remote work is becoming increasingly common. 49% of the accountants we surveyed agreed that organisations are becoming more global and are now more often moving employees between markets, while 47% anticipate that shadow payroll will become an increasing challenge for their clients over the next three years.
This paints the picture of an ecosystem in flux, and these changes aren’t going to slow down any time soon as working remotely becomes increasingly accepted and feasible. Indeed, 38% of the accountants we surveyed have more clients looking for assistance with their shadow payroll, and more than 4 in 10 were targeting this as a key area for business growth in the next 12 months.
At Certino, we’re hugely encouraged by this willingness from businesses to improve their shadow payroll offerings, and play a part in helping globally mobile employees achieve their ideal work life balance without unwelcome tax surprises.
Technology is the solution to accountants’ shadow payroll woes (competitive advantage + data security)
From our data, it’s clear that traditional ways of working with data and payroll compliance are time-consuming and inaccurate, and accountants need support with managing global shadow payroll. These results couldn’t have been clearer in highlighting a need for technology assistance to support these accountants in delivering the high quality, accurate services that clients want and need.
Partnerships with technology firms needn’t disrupt any existing workflows, but can provide organisations with enormous advantages and allow them to offer their clients different, higher quality services. At Certino, our shadow payroll platform is API-based, meaning it plugs into your existing tech stack, and automates shadow payroll calculations for multiple countries in a scalable manner, with no upward limit. This ensures accountants are able to focus on the value add tasks and foster growth both at a personal and company level within their organisation.