The Easiest Ways to Safely Pay Remote Workers

In the modern working age, companies continue to get more efficient means of completing tasks. In a fast-paced international business community, it seems unlikely that any system has not been optimised.  While most processes continue to stay on the cutting edge of technology, sometimes it seems that payroll has been left behind.

Today, an organisation is no longer limited to simply the people who are in the local community. A company which is central in Madrid, Spain can now work with the perfect employee somewhere as far as Alaska, USA, and everywhere in between.

With remote employees all across the globe, office environments have progressively improved in being interconnected. Improved communications systems, remote check-ins, and work boards have made it easy for companies to connect with employees regardless of their location.

Except for payroll. While all these processes have improved, international banking has changed at a snail’s pace. If a company is currently relying on the standard banking system to pay its remote employees, this company is being left behind when it comes to technology.

There are numerous issues organisations face when it comes to paying remote workers, which we will delve deeper into. Plus, we will explore proven solutions for how to pay remote employees. Companies seek simple, cost-wise, and efficient solutions to pay remote employees. 

The biggest challenges to paying remote workers

1. The Classic Cheque

There are numerous challenges companies are facing when it comes to paying remote workers in an increasingly international and interconnected workplace. Companies must keep a close eye on problems like processing and wait times, fear of fraud, high costs, taxation issues, compliance issues, and more.

The classic office that our parents would know used to have the incredible ability to pay a worker by way of a cheque. After hours served, and services rendered, a sheet of paper was created to be brought to a bank which initiated the transfer. Money was moved from one bank account to another, and the cheque acted as the order of operations.

Eventually, this process moved to digital means. The company could issue a directive to move money from their bank account to an employee’s bank account behind the scenes, called direct deposit. Then, it was as simple as giving their employee a receipt for the transaction. 

Either way, an order was placed to move money from one bank account to another. While it sounds simple, it took decades of progress to optimise the system. It is easy to use only if workers are in the same jurisdiction as their company. This system will not work for various employees all across the globe.

2. Could I use a wire transfer?

Now that we are moving money across international borders, monetary systems have increased in complexity tenfold. The various digits that make up a person’s bank account will no longer be enough.

If a company were to use a standard wire transfer from their bank — likely through the international SWIFT banking system —to pay international employees, they will run into two major issues on this front. Anyone who has ever sent an international wire transfer knows that time cannot be a factor. International wire transfers will typically take a minimum of 10 working days. 

In addition to the large time lag, international wire transfers also come with a hefty fee. Every bank will vary in how much it charges but could be anywhere from £15 to £50, or 4%-5% of the amount sent. This is a perfectly suitable system to pay a vendor one-time, but not a regular employee. With the time and cost combined, a wire transfer is not an efficient means to pay remote workers.

3.  Fear of Fraud

Companies and employees both have a healthy fear of fraud. Imagine an employee stationed in Rio de Janeiro, Brazil, who failed to receive payment from a company in Warsaw, Poland. There are no international means for the Brazilian worker to seek justice if they happened to be ripped off from the company on another continent.

Businesses are also fearful of sending their money into the international ether. There is little tracking data available once the money has been sent. If there was wrong information given between the Polish company when they sent the money to their Brazilian employee, and the pay accidentally ended up in Sri Lanka, there’s not much the Polish company can do to make up for the loss.

4. What about PayPal?

PayPal is commonly used as a payment intermediary in multinational transactions as it is quick and accessible. However, many people don’t know that even PayPal suffers from all of the above issues. While it can be quick, it can also be riddled with fraudulent users. Money sent to an incorrect person may never be recovered due to exceptionally sluggish customer service.

Merchant Fees and commercial transaction rates can run up the cost of using PayPal. Fees can range as high as 3% of the transaction and sometimes will even have a flat fee on top. Your remote workers won’t be happy if their pay comes in less, and your organisation won’t be pleased when you have to pay more fees.

It is a platform that will simply follow orders, even if they are incorrect instructions. It offers no legal or tax advice.

Additionally, it is not a great platform to manage one’s pay overall as it is simply not a payroll system. It was designed not with B2Bs in mind but meant for small one-time transactions between users.

5. Compliance and Tax

In the traditional office, it required a set team of people to manage tax and compliance for employees who were central in the local jurisdiction. A modern company could work across dozens of countries, languages, and tax systems.

It is highly unrealistic that a business would hire a legal team for each country they work in to manage contracts for each jurisdiction. Plus, hiring an accounting firm for every individual nation is not a reasonable use of money. However, while it may seem costly and a time-sink, each company must follow the local rules when it comes to paying employees.

The best solution to pay remote employees

Some multinational companies who are going borderless are doing so with much rush and are leaving gaps in their knowledge. Some organisations are avoiding local taxes and laws to leave it up to their local employee to deal with. While tempting, this strategy will not work long term. It is a good way to lose good remote workers.

The easiest way to pay remote workers safely is to use proven and safe methods administered by experts. There are entire firms dedicated to working with international businesses to find solutions to these exact pay and contract issues.

On how to pay remote employees, it is easiest and safest to work with WhiteFin Contracting Solutions. This company has solidified itself as a leader in the international payroll space. WhiteFin offers payroll expertise which is entirely and reliably compliant across many jurisdictions. It is constantly studying and updating its policies on local registrations, tax regulations, and social security deductions. To pay remote employees, it is paramount and essential to stay both efficient and legal, which is exactly what this company is focused on.

When it comes to payroll, remote workers and businesses value honest and transparent advice and must be accurate. It is important to not work with an order-taking mechanism, such as a cheque, but instead speak with experts who can guide the operation in the right direction. A company must be understood inside and out first before advice is given. This way, we stay on the correct side of the law.

Many businesses in this space will simply follow any orders given to pay remote workers. However, it is more important to learn a company thoroughly first to ensure that the correct systems are in place.

WhiteFin has over sixteen years of combined expertise in the competitive sector of international payroll. But they also offer legal advice, record management, and contract compliance for individuals, contractors,  businesses and recruiters.

It is a stressful undertaking to try and navigate the highly complex facet of international business as it relates to how to pay remote employees. Instead of adding anxiety, add an expert in your corner.

Conclusion

International business will continue to grow. The globe continues to get smaller as borderless businesses become more efficient and interconnected than ever before. Companies can now recruit thousands of various employees to find the perfect fit for their business no matter where in the world this person may be based.

With an increasingly global network of remote workers, it is important that companies stay on the cutting edge of technology. We all wish it was as simple as printing a cheque for a worker to walk to the bank. These days are long gone. A bank’s direct deposit has been helpful for the past twenty years but doesn’t work in international jurisdictions. Wire Transfers are slow and costly, plus they offer very little tracking or fraud protection. PayPal simply has too high of costs to be helpful when operating a successful business. 

While some companies simply throw money at their employees to deal with the legal fallout, this is not the wisest move. There are smart and efficient ways to avoid fees and slow processing times for paying remote workers. Working with experts will alleviate unforeseen issues.  Compliance, tax, payroll, legal, and contracts can all be dealt with adequately. 

For a company to be successful, it must be legal and compliant in every territory they work in. International businesses will find it to be a massive undertaking to understand tax in every nation, state, province, and so on. The wisest solution to pay remote employees is to have a team of experts on your side.