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Perspectives

Cash flow strategies for the global mobile workforce

3 ways to optimize mobility and rewards programs in an economic downturn

Organizations are defined not only by how they thrive during strong economic periods, but also how they conquer the uncertainty of challenging ones. Success isn’t a sprint. It’s an endurance event. Streamlining mobility and rewards programs can help address economic downturn and cash flow management concerns as your organization prepares to go the distance.

Bumpy road ahead?

There are times when an economic environment gives us mixed signals. Inflation that had been high starts to subside. Hiring numbers are up, but consumer confidence is down. As a result of these hard-to-read trends, there’s uncertainty for finance leaders over what their companies need to do to persevere through the ensuing months.

Uncertainty, though, shouldn’t lead to unpreparedness.

Organizations are looking to get smarter with their global workforce management and rewards program spend and find new areas for cash flow optimization.

Let’s explore three types of opportunities within your mobility and rewards programs.

Front-end planning

There are several planning areas where fresh eyes and an open mind can find opportunities for increased cash flow.

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Benefits
By analyzing current compensation, benefits, and wellness packages, employers have the potential to assess employee experience, alleviate unnecessary spend, and free up cash.
  • Rewards optimization studies and follow-up benefit customization steps can help ensure employees are provided with the benefits they want and not those they don’t value. For example, offering a workplace flexibility arrangement may cost less than subsidized parking. Or, perhaps in your specific workforce, a student loan matching provision in a 401(k) plan may be appreciated more than certain other benefits.
  • Lump-sum pension payouts and early retirement windows can generate cash flow by accelerating the transition to less expensive and better appreciated defined contribution programs.
  • Employee communication can foster a closer connection between employees and their benefits and wellness opportunities and can potentially reduce turnover. This could, in turn, free up cash that would otherwise go toward hiring and training new employees.
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Mobility tax and compensation
Applying both a short-and long-term lens to your global mobile workforce spend can help find cash that can be repurposed for other priorities.
  • High-level calculations and analytics can model repatriation, localization, and alternative sourcing locations and also help to determine the viability of remote and hybrid work strategies.
  • Mobility tax policy impact analysis can increase cash flow by shifting from tax-equalized to non-equalized mobility packages and revisiting the timing of assignments.
  • Analyzing the accuracy of gross-up calculations can help you avoid overpayments and delayed refunds from tax authorities.
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Equity and incentives
Employer stock and related equity incentives can be used as powerful tools to preserve cash while continuing to incentivize key talent.
  • Accelerating the vesting of outstanding equity awards can help you take advantage of lower taxes on depressed equity prices and free up cash.
  • Shifting future salary, bonus, or cash-based long-term incentive awards into stock-based pay or equity awards can generate cash for your organization today and potentially benefit your employees if and when the market recovers.
  • Shifting award settlement processes from net share settlement procedures to “sell to cover” may result in cash savings.
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    Back-end refunds

    There are opportunities to increase cash flow by getting tax refunds for wage and benefit payments that your organization has already made recently.

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    Employment tax refunds
    It’s possible to identify above-the-line cash tax savings in the employment tax space through a strategic employment tax review (SETR), especially if there has been recent merger or acquisition activity involving the movement of employees. An SETR can determine:
    • Whether or not there have been overpayments of FICA, FUTA, or SUI taxes.
    • If the organization has overpaid tax on compensation items.
    • If opportunities exist to claim employment tax credits.
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    COBRA credit
    The amount companies spent in 2021 on providing “free” COBRA care for employees terminated during the COVID-19 crisis can still be recaptured through quarterly employment tax forms (Forms 941-X). When looking into this potential source of cash:
    • Vendor data reports (provided by a payroll/COBRA administrator) should be analyzed carefully and may need to be supplemented or revised to claim the credit with confidence.
    • Thorough documentation summarizing the company’s processes and determinations should be completed to help ensure easy access and position explanations on hand, ahead of any audit.
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    Employee retention credit
    Though the coverage period for the employee retention credit in the CARES Act ended in 2021, employers may well have paid amounts to employees for which they are still entitled to a credit. Determining your qualification for the credit will require:
    • Validation of applicable governmental orders and calculation of impacts to business segments.
    • Review contemporaneous documentation and/or gathering new survey data to substantiate the time employees were paid during which they were unable to perform services.
    • Compilation of thorough documentation summarizing the company’s processes and determinations.
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      Outsourcing opportunities

      By engaging with third-party service providers to assist with some of your tax technical work, you can take the energy, time, and cash your teams spend on the day-to-day and put it toward a more strategic focus.

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      Talent mobility
      The opportunities of the overall global mobile workforce, as well as its increasing complexity, are putting pressure on mobility teams to do more with less. Mobility-as-a-service can bring digitized, process-driven global workforce management solutions and may bring about greater operational efficiencies through:
      • Assignment administration and case management services.
      • Vendor service order initiations.
      • Compensation and payroll advisory services.
      • Assessment and redesign of service delivery model and vendor scope, including determinations regarding team structure, roles and responsibilities, service delivery, insourcing vs. outsourcing, and use of technology.
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      Benefits tax compliance
      Some organizations may be struggling with the resources and time it takes to manage their benefits tax compliance obligations, including Forms 5500, 1095 (ACA filings), and related filings. Engaging with a third-party service provider can help decrease expenses in the intermediate term through:
      • Assistance with an organization’s team setup, roles and responsibilities, delivery of services, outsourcing model, vendor performance management, and use of technology.
      • Assessment of service delivery model and vendor scope.
      • Process review and digitalization.
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        In it for the long haul

        There’s opportunity in the uncertainty.

        When the economic environment is giving mixed signals, organizations can benefit from optimized mobility and rewards programs that can help address the challenges inherent in an economic downturn. Not only can they help your organization navigate difficult periods, but they can enable it to grow more efficiently during strong ones.

        There are myriad opportunities across your mobility and rewards programs to find new areas for cash flow optimization. A trusted guide to help you identify specific areas where you can make those gains is vital.

        Get in touch

        Michael Haberman Michael Haberman
        Senior Manager
        Deloitte Tax LLP
        +1 973 602 6646
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