In organizations of varying sizes, invoicing and payroll are often detail-ridden, time consuming and highly specialized processes that are handled by specific people. These tasks are delegated and outsourced and whenever possible, streamlined and automated. There’s an entire industry around accounting and payroll services that have household names (ADP, Intuit, Paychex) among their ranks, but blockchain technology has shown potential to transform the market. For many of the reasons why blockchain technology is such a strong solution for cross-border remittances, it can be used with equal or more effectiveness in overseas payroll processes as well.
International Payroll Is Slow and Expensive
Unlike sending out payroll electronically in a domestic setting, sending fiat to fiat overseas is consistently expensive for businesses and can take a long time to process due to multiple intermediary banks and third parties. With volatile world currencies changing dramatically over the course of hours, exchange rates are consistently taken advantage of by these intermediaries. As currency volatility can have an immediate negative effect on both the employer and employee/contractor, the long-term inefficiencies of consistent overseas payroll payments can really add up. So really, time is money and an international payroll blockchain solution simply offers a faster solution than existing models.
Fast Money Makes Happy Workers
In addition to the cost associated with currency discrepancies, there’s also the matter of having disgruntled employees and contractors. In an age of hyper-competition between businesses for the best and brightest talent, it’s just a defacto requirement to be reliable when it comes to payment. When people provide hard work for a company, they expect to be paid accurately and on-time, regardless of systems and established institutions holding much of the international payroll marketshare.
There’s also the matter of how much money the employees/contractors save to receive their funds and have access to them. Companies like PayPal will take a percentage from what is sent through them, which is almost never a pleasant realization for people who look at their payment statement through them for the first time. The Blockchains built in efficiencies in international payroll would allow for less overall fees for the employer and little to no fees for the receiver.
How Companies Manage Risk
Some traditionally used international payroll providers and services might advertise some hedge against currency value inflation or deflation, however, their ultimate ability to change or insure against this risk is limited. The current inefficiencies and third party systems are slow by design and while they have been relatively consistent partners for multi-national businesses in their payroll needs for decades, their ability to add value in the age of real-time, lightning fast and hyper-transparent technology is limited. Additionally, this hedge against currency fluctuations may temporarily solve the short term monetary loss, however it’s usually a costly feature in a payroll automation solution and nets out to more money being spent on getting employees and contractors paid.
Blockchain based international payroll has AML/KYC regulation protocols automatically built into their systems and because of the immutable nature of how blockchains store data, the process of making sure money is moved safely and legally and can be effectively audited is far more efficient than traditional systems which have multiple human and process based bottlenecks.
While some matters of market liquidity and extreme currency volatility could be challenges for a blockchain based international payroll system, they would be mitigated by the overall speed, reliability, security and auditability of the technology. The benefits of using such a technology to disrupt a space that hasn’t changed much in the past 10 years has far too many up-sides to be ignored.
Disclaimer: Views and opinions in this article are those of the author and do not necessarily represent the views of, and should not be attributed to Blockchain Tech Ltd.