A recent Payroll and Reward Insights Series session explored where organisations are struggling today and what practitioners are seeing across the market. The conversation highlighted that while payroll itself is highly accurate, the real complexity sits in the systems, processes and organisational structures surrounding it.

Vickie Graham, Managing Director of Reward Strategy, sat down with Michael MacHale, Payments Solution Architect at UKG, and Neil McAllister, Global Payroll Sales Specialist at UKG, to pick apart the intricacies of cross-border payroll. The discussion revealed several themes around data quality, governance, technology adoption and payment innovation that are shaping the future of cross-border payroll.

Cross-border payroll challenges rarely exist in isolation

Participants were asked which area of cross-border payroll currently creates the most uncertainty in their organisations. The results reflected how interconnected these challenges are.

The spread of responses reflects the reality that cross-border payroll rarely presents a single problem. Instead, organisations often face a combination of tax, compliance, payment and operational challenges at the same time.

Payroll accuracy does not equal payroll efficiency. Payroll is frequently judged by accuracy metrics. Most providers and organisations report payroll accuracy rates of around 99%.

However, this statistic can be misleading.

Accuracy simply means employees are ultimately paid correctly. It does not reflect how much manual effort, data chasing or recalculation was required to reach that point.

A more meaningful measure of payroll performance is first-time-right (FTR), the proportion of payroll calculations completed without corrections or reprocessing. In some shared service environments, FTR rates can be significantly lower than expected. When this happens, payroll teams can spend days chasing data, correcting inputs and rerunning calculations before payroll is finalised.

This highlights a key insight: many payroll teams achieve high accuracy only through intensive manual effort.

Vendor consolidation is not the same as transformation

Another common misconception is that reducing the number of payroll vendors automatically improves efficiency.

While consolidating vendors can simplify procurement and contract management, it does not necessarily change how payroll operates day-to-day. Organisations may still be running multiple local payroll engines, each with different processes, reporting formats and data requirements.

Without standardised data structures and integrated systems, vendor consolidation can simply mask underlying complexity rather than removing it. True payroll transformation requires improvements across the entire process, from HR data capture to reporting and compliance.

Data quality remains the biggest operational risk

Throughout the discussion, one point consistently emerged: payroll can only perform as well as the data it receives.

Many inefficiencies originate outside the payroll function itself. HR systems may not contain the fields needed to support local payroll requirements, onboarding processes may bypass central systems, and time and attendance data may arrive in inconsistent formats.

Large HRIS implementations often prioritise the biggest countries and entities, while smaller markets are left operating local systems that sit outside central governance.

This fragmented approach creates data integrity risks and increases the manual work required within payroll teams.

Remote working is reshaping compliance risk

The growth of remote and mobile working has introduced new challenges for payroll compliance.

One of the most difficult issues is the disconnect between where employees are employed and where they actually perform their work. In practice, employees may live in one country, hold an employment contract in another and temporarily work from a third.

These scenarios can trigger a range of risks, including double taxation, social security liabilities and permanent establishment exposure. Managing these situations requires coordination across payroll, HR, global mobility and tax teams. Without clear governance, payroll teams may only discover the issue after it has already created compliance implications.

Confidence in cross-border compliance remains limited

Participants were also asked how confident they were that their organisation’s approach to mobile and remote workers was fully compliant.

The results suggest that many organisations recognise the risks but may not yet have a fully structured approach to managing them.

Cross-border worker compliance is complex and often sits across multiple departments, which can make ownership and accountability difficult to define.

Ownership gaps create operational failures

When cross-border payroll issues occur, the root cause is often unclear ownership.

Decisions about international assignments or remote working arrangements may happen within HR, line management or mobility teams without full visibility for payroll. Payroll then becomes responsible for implementing changes that have already been agreed elsewhere in the business.

This can result in late payroll registrations, incorrect withholding, misaligned social security contributions and retrospective payroll corrections. Effective governance requires clearer collaboration between payroll, HR, finance, tax and global mobility functions.

Technology still requires human oversight

The conversation also addressed the growing interest in automation and artificial intelligence within payroll.

While technology has advanced significantly in recent years, there remains a misconception that it can solve payroll challenges independently.

Automation can improve efficiency by identifying anomalies, reducing manual calculations and improving reporting capabilities. However, payroll remains a compliance-driven function where human judgement and oversight remain critical.

Technology can support payroll professionals, but it cannot replace the need for strong processes, reliable data and experienced practitioners.

Payment innovation is evolving

The discussion also explored how emerging payment technologies may influence cross-border payroll in the future.

Employees increasingly expect fast, flexible and digital payment options. Innovations such as instant payments, digital wallets and cryptocurrency-based payments are beginning to appear in payroll discussions. However, adoption remains uneven. Regulatory frameworks differ widely between countries and the tax treatment of digital assets is still evolving.

For many employees, the most important factor remains consistency. As long as salary arrives reliably on the agreed date, the underlying payment method is often less important.

Payment challenges remain operational rather than technical

Participants were also asked about the biggest challenges when paying workers across borders.

The results suggest that operational complexity within organisations is often a bigger barrier than the payment technology itself. Internal approval chains, treasury processes and fragmented payment responsibilities can create delays and operational risk.

Start with internal clarity

One of the most practical conclusions from the session was the importance of understanding current processes before introducing new solutions. Organisations often look to technology or outsourcing to solve payroll challenges. However, without a clear view of how payroll currently operates, new solutions can introduce additional complexity.

The most effective approach begins with an honest assessment of current processes, pain points and responsibilities. Local teams should be involved early in discussions about any new payroll or payment solutions to ensure that proposed changes are practical and sustainable.

In many cases, the best approach is not a single global model but a combination of solutions tailored to different countries and organisational needs.

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