Does your Multicurrency HR and Payroll Solution, offer live currency exchange rates?
With the world now being more globalized than ever, we have sales staff, service staff, engineers, programmers, travelling across multiple geographies, for the purpose of delivering various services to their customers, interacting with suppliers, trade shows, seminars, events, and the list goes on.
With this ever increasing travel, comes a new set of challenges, for your organization. How you manage reimbursement of expenses and additional allowances to employees which are applicable in different geographies and multiple currencies, when they are entitled to certain remuneration, which may be based on certain parameters.
We take a look at an example;
- A staff member may be entitled to a per diem expense of CAD 100 per day on business travel to cover food and other related expenses. However base currency as per his employment contract is in USD.
- Well that’s not a problem; Not exactly, lets take a closer look.
- Employee spends CAD 100 on 05-Jan-2018, the employee uses his personal credit card as there is no cash option, we are eventually moving to cashless systems. The employee again spends CAD 100 on Jan-08-2018, on his personal credit card.
- The currency exchange rate for example was 1 CAD = 0.85 on Jan 05-2018, however on Jan-08-2018 the rate was 1 CAD = 0.79 USD for certain expenses.
- If you notice in the above example, there is a difference of approximately 7% on 2 dates, the same value was incurred i.e. CAD 100.00 but completely different currency exchange rates apply.What will complicate this further is, the employee would normally not apply expenses to the organization’s finance department or on Self Service, on the day they incur, this would happen, when they would return from travel or on a weekly or monthly, or at a particular agreed upon interval, or as the circumstances permit. Then the finance would reimburse them accordingly.
- It would be very time consuming for any finance department to check the currency exchange rate for each currency on a particular date and then calculate manually and reimburse, on that basis, what could make things even more time consuming is, that you may have employees whose contracts are in different base currencies, in the same organization, involving extensive travel.