There were 1,415 IPOs in 2020, and according to research, 2021 looks like another bumper year with billion dollar deals expected in technology, healthcare, and eCommerce. While this is excellent news for the relevant stakeholders involved, it does mean that we can expect to see massive growth and expansion into new markets for these enterprises.
These organizations will face new challenges as they scale and permeate new territories. And key among these obstacles will be how to ensure that global payroll meets the increased control and reporting requirements.
Having spent time working with companies who have experienced an IPO, here are some of the top lessons they learned around managing global payroll during this process.
#1 Be prepared with lots of reports
There are greater demands and pressure to produce more accurate reporting with reduced turnaround times. To ensure you can meet these deadlines, it is essential that you implement reporting measures and are operating with a full GL integration. One of the benefits of working with a global payroll solution like Immedis is that you can generate reports that give a clear picture of your workforce costs, which means potential investors have the information they require to assess current business modeling and influence future planning.
#2 Having accurate data is essential
Maintaining and providing correct information is now more critical than ever because of public reporting requirements. Any future restatement must be disclosed in the accounts, leading to the loss of investor trust and reputational damage that can negatively impact the share price. The Immedis Platform utilizes Perpetual Validation, a tech-enabled compliance module to ensure that organizations are aware of any employee data that is incorrect or missing. Customers can attain confidence and peace of mind that any gaps are quickly identified, and measures can be taken to rectify them.
#3 Implement measures to control your framework
All listed companies must implement a robust control framework per the Sarbanes-Oxley Act. Consequently, payroll leaders must review and document their internal controls around payroll and implement measures like segregation of duties and documented sign-off procedures. Be sure to consider have you recorded the onboarding process for new employees, and are sign-off logs documented and readily available?
I have developed an internal control evaluation template that you can use to review your existing internal controls and document improvements. Feel free to reach out to me to have a discussion and get a copy.
#4 Facilitate compliance monitoring and accountability
Regulatory compliance is paramount as negative stories or fines will negatively impact the share price. Payroll leaders should put in a robust framework for monitoring compliance globally and have designated responsibility in each region. Some questions to consider in advance of going to the market include is your current payroll vendor providing sufficient ownership for regulatory changes? How are you staying current with new legislation?
#5 Prioritize access to real-time data
Senior executives must provide detailed quarterly and annual reports, explain variances and provide forward-looking guidance. This increases the demand for real-time access to accurate data on global payroll costs. CFOs need to access data that will give them a better understanding of the company’s trends and variances and a true picture of company performance.
#6 Enhance your security measures
The publicity around an IPO may attract a higher risk of cyber-attack, and a data breach will negatively impact price and confidence. Using disparate systems with a lack of HCM or ERP integration is a serious risk and a reason why centralizing your payroll with a consolidated payroll solution reduces your vulnerability. Take the time to analyze your payroll processes and highlight any data security weaknesses.
#7 Be audit-ready
As companies go to an IPO, their business accounts and processes will come under intense scrutiny from auditors. Are you able to meet this? How will you demonstrate a robust control framework without consuming significant internal resources? Do you have audit trails? What protocols have you implemented to protect against fraud? Global payroll by its nature can leave companies at risk, especially when they are paying employees in less regulated territories. Do not let a country’s instability and weak banking structure threaten your IPO.
The prospect of an IPO is exciting and is a transformational event for your company and career. The key for payroll is preparation and having the right systems and governance model in place. Consolidating your global payroll can prepare you as it not only strengthens your control framework but also improves data security, reporting, and accuracy. Immedis ensures that you have the best-in-class data security controls to your data is always protected, and you are compliant.
Additional Resource:
Sign up to get employment and taxation legislation country updates.
