How we pre-vet payroll providers at Lano

Finding reliable payroll ICPs (in-country partners) is one of the biggest challenges businesses face when managing a multi-country payroll. Without the right expertise, assessing and selecting payroll partners for different geographies can quickly become overwhelming.

At Lano, we’ve developed a structured approach to take this challenge off the shoulders of our clients. Our global network of thoroughly pre-vetted ICPs ensures that our customers have access to seasoned payroll providers that combine in-depth local knowledge and excellent service quality standards.

Accurate and compliant payroll processing is essential for maintaining employee trust, avoiding compliance risks, and ensuring smooth operations. That’s why our pre-vetting process focuses on identifying partners who consistently deliver timely and accurate payroll and meet the highest standards.

To create more transparency on how we select our payroll partners, we talked to Rashid Quddus, Business Development Manager at Lano and one of our in-house payroll experts. He shared insights into our rigorous vetting methodology and what makes our network of ICPs a dependable choice for global businesses.

Before being added to Lano’s global partner network, payroll providers need to go through a thorough evaluation process to ensure that they meet all the requirements and will provide outstanding global payroll services to our clients.

For our clients, this rigorous selection process holds several advantages, including:

• Quality assurance: Pre-vetting ICPs ensures that the payroll provider meets high standards of service.

• Enhanced compliance: Our detailed evaluation process verifies that providers are compliant with local and international payroll regulations, safeguarding our clients from legal risks.

• Reliability: The checks we carry out confirm that providers can deliver accurate payroll services on time, which is critical for maintaining employee trust.

• Transparency: Thanks to our in-depth evaluation processes, clients can be confident that providers have undergone thorough background checks, which increases trust in the partnership.

• Data security: Clients can be assured that providers have been assessed for their ability to handle sensitive employee and financial data securely to minimize the risk of data breaches.

• Cost effectiveness: Pricing is one of the key criteria we assess when selecting new ICPs for our network so that our clients can be assured to get the best possible service at a competitive rate.

• Expertise validation: Our pre-vetting process ensures that providers have the necessary expertise in specific industries or countries, catering to unique client needs.

"Already during the first call, we check whether or not the provider actually has an office in the respective country. Many providers consolidate all of their payroll services for a specific geographic region in a central hub which often results in them not having the local expertise we require.”

Rashid Quddus

Business Development Manager at Lano

At Lano, we follow a structured three-step process when pre-vetting new payroll providers for our partner network. The three process steps are: sourcing, evaluation, and onboarding.

• Sourcing: Multiple providers are contacted in the target country to establish initial communication and outline Lano’s business model. Their openness to collaboration and understanding of the approach are assessed. Providers meeting initial requirements are advanced to the next phase.

• Evaluation: Selected providers’ expertise, experience, scope of work, and pricing are reviewed based on data gathered during the sourcing stage. A detailed due diligence check is conducted, covering internal operations, invoicing, compliance with data security standards, and alignment of their reporting capabilities with Lano’s client standards.

• Onboarding: Providers that have passed the evaluation process undergo legal finalization, including the completion of a data privacy agreement and a master services agreement. These documents formalize the partnership and ensure alignment on expectations and terms.

Let’s look at each of these different steps in more detail.

When sourcing potential new ICPs, we use various channels. This helps us ensure that we check all the possible options and get a better understanding of the local provider landscape and common pricing and service standards.

“We reach out to multiple providers in the target country, set up introductory calls, and outline Lano’s business model. We assess whether they’re open to working with us and understand our approach. If they meet our initial requirements, we move them to the next phase,” Rashid says.

Non-negotiables

During the sourcing process, we already apply two fundamental criteria which potential new partners have to meet. These two non-negotiables are:

• Local office in the target country: We don’t work with providers who operate through regional hubs and have no real local presence. Potential ICPs must have a local office and a local team in order to be taken into consideration.

• Experience with multinational enterprise clients: Being able to cater to big multinationals with a headcount of between 1,000 and 2,000 employees is the second key requirement potential ICPs have to meet. We need partners who can support large employee populations and respond to international payroll requests.

“Already during the first call, we check whether or not the provider actually has an office in the respective country. Many providers consolidate all of their payroll services for a specific geographic region in a central hub which often results in them not having the local expertise we require,” Rashid says.

The evaluation process is a series of different steps. After a thorough background and reliability check, we assess if the provider’s services match our clients’ needs, if their way of operating is compatible with Lano’s business model, and if their pricing fits.

If these conditions are met, we proceed with our due diligence questionnaire which collects detailed information about the provider and their operating model, including company and contact information, existing clients, processing capacity, data needed for payroll, and invoicing.

Selection criteria

Our payroll partner evaluation process is based on a detailed list of requirements that comprises five different categories with a total of 16 different criteria based on which we assign scores. The five categories of our Lano Payroll Provider Evaluation Index are:

• Expertise: When pre-vetting potential new partners, we check how many years of experience they have and whether they are part of a wider network. In this context, we also run a thorough background check on the ICP during which we look at their reviews and contact their current clients to verify their expertise levels and the credibility of their brand. ICPs that want to work with Lano further need to have experience with international enterprise organizations so that they are able to provide high-quality services to our clients and cater to complex payroll requests. This includes checking their certifications, such as SOC II, the official qualifications of their staff, and the payroll software they use to ensure that they use a system that meets modern standards and is able to integrate with Lano’s platform.

• Scope of work: In this category, we carry out a thorough assessment of the services the ICP can provide us with to see if they are able and willing to go beyond the standard offering and assist with additional services our clients might require.

• Compliance: Our compliance assessment involves both legal compliance as well as compliance with our internal process requirements. ICPs need to be compliant with GDPR and other legislative frameworks and also be able to provide the data and reports that we need in a format that we can work with.

• Pricing: Competitive pricing is another important criteria we assess when sourcing new ICPs for our global partner network. This means going through their entire pricing structure and analyzing their monthly payroll fees, their one-time payroll fees, and on-top payroll fees for additional services they offer.

• Service levels: During the exchanges with potential new partners, we pay close attention to how responsive they are in order to assess their reliability and get a first impression of how quick they will be to respond to payroll-related questions during the partnership and whether they will be able to meet our SLAs.

“The evaluation of the ICP’s ability to meet our SLA requirements is based on our subjective impression of how excited the provider is about the partnership and how long it takes them to provide required documentation. If it takes them a long time to fill out very basic requirements and documents, then they are also going to be slow to respond when it comes to servicing our clients,” Rashid says.

“If it takes the ICP a long time to fill out very basic requirements and documents, then they are also going to be slow to respond when it comes to servicing our clients.”

Rashid Quddus

Business Development Manager at Lano

ICPs that have successfully passed our multi-layered service quality and business model compatibility checks are suitable to be added to the Lano network. However, before they start working with us, they must complete the legal onboarding process during which we define the payroll SLAs and other agreements that will govern the partnership with Lano.

“Once ICPs pass the evaluation, we work through legal requirements, such as finalizing a data privacy agreement and a master services agreement. These documents set the terms for our partnership and ensure that both parties are aligned," Rashid says.

Even after a provider has been added to our network, we continuously check and evaluate their services and performance. Our team monitors several performance and service level KPIs for each active payroll provider, such as error frequency and average response time for payroll-related queries, which are reviewed every month.

“If an ICP is taking too long to reply to queries, invoicing us wrong items, or not providing us the quality of service that we expect, then we flag this to the provider, remind them of the agreed SLAs, and escalate the issues to the director level with a plan to resolve the existing issues. If the situation doesn’t improve, we replace the provider,” Rashid says.

How does Lano ensure competitive pricing when sourcing new providers?

“In the pre-vetting phase, we’re transparent from the start. We share Lano’s pricing structure and expectations and ask the provider to complete our rate card which collects all the necessary information about fees, including set-up and additional charges. This initial step standardizes pricing information, making it easy to compare providers directly. We also adapt our model to integrate any unique pricing models from the provider," Rashid explains.

Which criteria does Lano apply when evaluating new IPCs for their partner network?

“In the evaluation phase, we conduct a thorough review of their scope of work and pricing, based on the data gathered in the sourcing phase. If these meet our criteria, we proceed with a detailed due diligence check. This includes assessing the provider’s internal operations, invoicing, and compliance with data security requirements. We also verify their ability to generate reports that align with Lano’s reporting standards for clients,” Rashid says.

Finding a reliable service provider for payroll outsourcing can be a challenge—but it doesn’t have to be. Lano gives businesses access to a global network of thoroughly pre-vetted in-country payroll partners across a range of more than 170 countries. Book a demo with one of our payroll experts today to explore how Lano can support you with your global payroll needs.