Closing global payroll each month: funding, reconciliation and the general ledger

One payroll is a monthly routine. Five payrolls in five countries are five routines with different pay dates, currencies, providers and deadlines, all landing on the same finance team at month end. The work that keeps them under control is not the calculation, which local rules mostly decide, but what happens around it: getting money to the right place in time, and proving afterwards that every rupee, euro and peso went where the register said it would.

Funding each country in time

• Work back from each pay date. Local providers and employers of record usually want funds a few working days before pay day, and an international transfer adds its own time.
• Agree when currency is bought. Converting when the register is approved fixes the cost; converting on the funding date leaves it to the market.
• Keep a small buffer in each local account for corrections and off cycle payments, so a missed payment does not wait for the next transfer.
• Fund tax and social security separately from net pay where their deadlines differ, as they do in most countries.

One chart of accounts for every country

Each country's payroll has its own pay elements, but the general ledger should not. Map every element to a shared set of accounts before the first run in a new country: gross salary, overtime, bonuses, employer social security, employee deductions held as liabilities by authority, and a net pay clearing account. Employer PF in India and employer social security in Germany should land in the same line, so that group payroll cost can be read without a spreadsheet.

The reconciliations to insist on

1. 1.Register to bank: total net pay in the register equals the payments that left the bank, person by person where the bank allows.
2. 2.Register to authorities: each tax and social security liability equals what was paid to that authority, and the balance on each liability account goes back to zero once paid.
3. 3.Register to ledger: gross, employer costs and deductions in the journal equal the register, by entity and cost centre.
4. 4.Month to month: headcount and cost movements explained by joiners, leavers, raises and one off payments.

Reporting in one currency

Group reporting needs one currency, which means choosing which rate to convert at. Using the rate on the pay date gives the true cost of each payment; using a monthly average rate matches how most groups translate the rest of the profit and loss. Pick one, apply it to every country, and show the local currency figures beside it so country managers recognise their own numbers.

Where it usually goes wrong

• Each country mapping pay elements to its own accounts, so group cost has to be rebuilt by hand every month.
• Net pay clearing accounts that never return to zero because corrections are paid outside the run.
• Funding the provider late because their deadline was taken to be the pay date.
• Comparing this month with last month in group currency, so exchange rate movements look like cost increases.

How PayLoom does it

PayLoom runs every country from one employee record, with bank files in the format each country needs and statutory returns and contribution reports generated at close. Nothing posts until each variance against last period is acknowledged, and reporting consolidates to your base currency by entity, country and team, with payroll cost by cost centre on the dashboards.