Turning payroll global – Tel Aviv startup is changing the game
Israeli startup Papaya Global has developed a totally new, cutting-edge system that promises to revolutionize cross-border payroll. The innovative approach they have taken, borne of the frustration that founder and CEO Eynat Guez had with existing systems has seen the company grow 300% year on year. In this article, we look at Papaya and the reasons for its remarkable rise.
Getting away from the old payroll paradigm
For many years payroll systems seemed to have been stuck in a kind of 1990s limbo that really didn’t reflect the changing nature of work in the 21st century. Systems seemed to be purely location-specific, had trouble coping with paying employees working in different countries and didn’t tie up the hiring, onboarding, and compliance ecosystem that goes along with payroll.
There can’t be many payrolls and HR managers in businesses that engage workers overseas that haven’t experienced the frustrations of needing several systems to do what is essentially the same job but in a separate series of jurisdictions.
The need for a system that was able to cope with payroll, whether it be employees or contractors, domestically or internationally was clear and Papaya set out to deliver.
Payroll for the way that companies evolve
Back in the day companies would hire people that lived nearby. Many employees didn’t own cars and transport was poor, so it made sense to live near your work. And to a large extent that is how payroll systems evolved. They developed assuming that everyone would be traditionally employed and would live and work in the same jurisdiction.
The problem is that the world has moved on and now it is much more usual for a start-up to run lean and get in expertise from around the world.
What Papaya Global has specifically developed is a multi-country payroll software helping companies manage this process and get away from needing location-specific payroll operations and often, local teams to go with them.
The global pandemic has accelerated the move towards home working and this means that companies that were previously reluctant to embrace the principle of having permanent remote workers are more open to the idea.
One of the last remaining barriers to executives adopting a fully remote approach is the difficulty of paying overseas employees and complying with local rules and regulations. Papaya removes that objection.
The way to understand fast growth start-ups is to be one
The rise of Papaya has certainly been meteoric. From its inception in 2016, the company had developed a best-in-class system and attracted some hyper-growth internet companies.
Companies like Wix, Fiverr, and Deezer have seen the benefits of using a payroll system that can cope with all eventualities and it is the fast-growing nature of a globally located workforce that makes Papaya so attractive.
Born from the frustrations that founder and CEO Eynat Guez experienced in her work in the HR sector, the flexibility of Papaya has also proved exceptionally useful during COVID-19.
As Guez notes, “Payroll continuity is like IT continuity, and so all of a sudden when COVID started its march, we had prospects calling us saying they didn’t have data on, for example, their Italian employees, and the office they were using wasn’t answering the phone.”
But it is not just fast-moving start-ups that have seen the benefit, longer-established businesses like Johnson & Johnson, Toyota and Microsoft have all made the move to Papaya.
The company has proved to be so successful that it now boasts more than 300 company customers, $1.3bn payrolls being processed, and a remarkable customer retention rate of 99%.
Global investors show faith in a global system
Papaya raised some $45 million in a Series A funding round from co-investors Insight, Bessemer Venture Partners, New Era Ventures, and Dynamic Loop back in November 2019.
This was proof that the management team of co-founders Ofer Herman, Eynat Guez, and Ruben Drong was on the right track.
Appearances in Tech Aviv’s top start-ups, CTech’s 50 most promising startups, and the Business Insider list of 72 start-ups that will bloom in 2020 showed that the company had a potentially glittering future.
So it came as no surprise that the Series B funding round completed quickly and previous investors Insight Partners, Bessemer Venture Partners, New Era Ventures, Group 11 and Dynamic Loop were all part of the funding consortium.
What was perhaps more interesting was the involvement of global HR group Workday Venture, the corporate investment arm of the HR company, and Access Industries (via its Israeli vehicle Caltech), showing that the HR and global investment industry was really starting to take note.
A system designed to cope with the evolution of work
As Eynat Guez said in a speech at Noah18 in Berlin, “40% of companies’ workforce is located outside their headquarters” this means that a flexible and responsive system is a must.
With a single dashboard to monitor global payrolls, Papaya provides instant access to information that traditional systems simply cannot manage, and it is the information provision aspect that makes the Papaya approach so refreshing.
It is also true to say that when it comes to payroll, executives are always searching for more ways to ensure that their company remains compliant, and in these days of ever-increasing tax-avoidance legislation that is becoming harder than ever.
The success of Papaya can arguably put down to the fact that it combines business intelligence with compliance security that other systems simply can’t match.
The rapid growth of Papaya Global has been remarkable and with the quality of its system, it is certainly one to watch as the global workforce evolves over the next few years.