How to pay globally distributed teams

One question businesses are starting to ask as they consider scaling their team is how to pay globally distributed teams.

International expansion for businesses is often associated with making international sales. This is a great move, but it is hardly the only opportunity that a global presence can offer. Potentially, your business's more pressing need is talent. 

Is a global talent expansion an opportunity for growth and scale? 

Why businesses are looking global for talent

Well, finding the right people (locally) is a challenge. 

Depending on your location, it can mean that either you don’t have enough access to the expertise you need or that the job market in your area is crazy competitive, and your investment to hire can put extra stress on your budget. 

And you are not alone, over 54% of companies worldwide report having trouble filling positions. 

Fortunately, we live in a global economy. Connecting with talent all over the world is becoming commonplace. With the explosion of remote work, you have various options for overcoming a talent shortage. 

However, international expansion in your team can bring up new challenges – namely, paying your distributed team.

With globally distributed teams, you have to consider fees, exchange rates, and additional payment platforms that allow you to reliably deposit money into your team members' banks. 

The challenges in paying globally distributed teams

Reliable employee pay is the biggest roadblock to building a distributed team. Many businesses, big and small, lack the necessary know-how to implement ‌payroll worldwide. 

These are some of the main hurdles they come across. 

Time-consuming

If you look at commercially available solutions such as PayPal or Skrill, then you quickly realize how inefficient these platforms are for businesses. 

Even though these solutions are very popular and user-friendly, using them for more than a handful of employees is very time-consuming since integrations with automated payroll software are not possible. It's the virtual equivalent of filling and signing checks manually to pay your team. 

This poor integration makes using either of these platforms not practical. The amount of time consumed and potential errors from doing everything manually is not worth the effort for most businesses since it's not a scalable way to grow your team. 

Expensive for everyone

Even if you can get by with the additional work that processing payments with non-enterprise solutions can generate, the expense of processing payments can bring this initiative to a halt. 

Fees can significantly impact how much your employees receive or how much you have to pay them. This is because when transaction and currency conversion fees are combined, they make a significant dent on how much money your employees end up receiving. 

Let's take PayPal’s commission structure, for example. Depending on your region, you can expect to pay USD $5.00 + 3.4% on top of that. Then there’s the currency conversion fee, which varies between 4% and 4.5%. Also, keep in mind that PayPal does not necessarily have the best currency conversion rates since it’s another area where they make a profit. 

This puts you in a difficult position. If you add the fees, your employees will receive a significant pay cut for using these platforms. 

The other option? You absorb the transaction costs and increase your overhead. 

Compliance and reporting

Manually processing payroll is tedious and expensive, but it also makes compliance and reporting time-consuming and error-prone. If you have a streamlined accounting infrastructure, not being able to integrate these payment platforms throws a wrench into your compliance and reporting engine. 

The best solution for paying your globally distributed teams

The previous section isn't suggesting that PayPal, Skrill, and other online payment gateway are without use. 

Their problem is that they have a different purpose. They were not meant for global businesses but rather to cater to the needs of individuals.

Luckily, today there are a variety of financial services, such as Airwallex, that are designed from the ground up to cater to the needs of growing businesses focused on expanding their global footprint. Here are some characteristics a competitive global payment solution must have. 

Competitive fees

As mentioned in this article, fees can make or break the feasibility of using any platform. For this reason, having a competitive fee structure that is easy to understand is key to implementing it in your payroll.

One of the biggest challenges for users is understanding fee structures. They can often be complex and make your employees feel like you are not being transparent with them about their remuneration. 

Accessible and scalable

One reason global teams were only feasible for large enterprises was the infrastructure costs they represent. A high cost of entry made it impossible for smaller businesses to pay employees all around the world. 

Airwallex has solutions that have a much more affordable entry point that can also scale easily. This makes the process of moving to a globally distributed team significantly more cost effective. 

Global coverage

The most critical aspect of a payment solution for a distributed team is its ability to service the countries and currencies in which you’ll be recruiting new team members. 

Equally important are the ways you’ll be able to transfer the funds and additional services, such as Corporate Cards and other financial tools, that make accessing funds more convenient for your team. 

Closing thoughts

At first glance, transitioning to a globally distributed team can seem like a logistical nightmare. 

Many businesses don’t choose this route because the time and resources needed to implement the right solution might seem impractical. But with access to the right tools for the job, there is really no better time to start building a worldwide workforce than today.  

With all this in mind, you’ll find that having access to a worldwide pool of talent far outweighs the cost of the payroll infrastructure that you need to implement to make it all work. 

[Related article: 6 Reasons why your bank transfer might be delayed]