Latin America Embraces Digital Payroll Systems

A growing number of Latin American companies are adopting digital payroll and invoice processing systems.

A Global Market Report recently published by Billentis estimated that 42 billion bills and invoices will be digitally distributed and archived in 2015. Some 25 billion of these will be processed in Latin America, according to TMF Group.

In addition to simplifying administrative processes and increasing the transparency of pay information for employees, digitizing payroll and invoices can save companies money. Billentis reported that electronic processes lower costs by 50 to 80 percent, compared to paper-based processes.

Country regulations
Mexico and Brazil are two of the most advanced adopters of electronic processing methods, TMF Group reported.

In Mexico, companies are required to issue electronic payslips to their employees, which they must distribute in coordination with an authorized certification vendor to ensure accuracy and government compliance.

Starting in September 2016, all Brazilian companies must comply with new reporting regulations under an eSocial digital platform, which will be overseen and enforced by the Ministry of Labor. The new eSocial platform is designed to streamline the government collection of records, provide employees more transparent and easier access to records and improve reporting accuracy.

TMF Group reported that other Latin American countries are also growing their digital payroll and processing systems. Though it is not mandatory, the government of Uruguay now allows companies to distribute digital payslips to employees, and must ensure that employees can remotely access their payslips.

In Colombia, it is mandatory that Social Security payments are submitted electronically via an Integrated Social Security Contribution Form.

Benefits of e-payroll
ISG attributed the increase in e-payment adoption by Latin American countries to several factors. Companies are shifting away from using multiple low-cost payroll systems to instead implementing a single automated e-payroll system designed by big-name providers, as these large, established software companies can develop advanced systems faster than in-house teams can.

There have also been complex developments in payroll, data security, human resources administration and reporting laws in Latin American countries, particularly in Mexico, Brazil and Argentina, which is causing more companies to turn to specialized e-payroll firms to update their existing systems. Another reason for the growth in e-payroll is that digital systems make it easier for global companies with offices around the world to keep track of and manage their payroll and HR data.

In its report, Billentis affirmed that an innovative new era of e-invoicing for the public and private sectors is beginning, and that digital payroll will significantly affect future government legislature and auditing and compliance measures.

Some analysts believe that digitizing payroll and other payments will bring about major improvements to government efficiency. A report by the Gates Foundation stated that: “Digitizing has the potential to dramatically reduce costs, increase efficiency and transparency, help build the infrastructure, and broaden familiarity with digital payments.”

Latin American companies are embracing the transparency, simplicity and efficiency of digital payroll and HR services.