Why payroll is a function all SMEs should outsource


Regardless of your area of business activity or company size, dealing with employment issues may prove to be demanding task that requires ongoing attention and additional internal resources according to Sandra Crous, managing director of PaySpace, a provider of cloud-based payroll software in South-Africa.

Many small to medium-sized enterprise (SME) owners are looking for easier ways to manage their finances, and a good place to start is through managing their payroll.

As a non-core, non-profitable function, you can gain access to all the necessary resources, know how, or the latest technology through our Outsourced service. Our service is designed to take the administrative burden of your shoulder, offer secure employee information exchange and accurate data processing.

She says by outsourcing, instead of having a specialist individual handling the payroll function, the company now has a team of experts who will ensure the payroll is processed on time and will scale as your business grows without adding additional headcount to your business.

It will simplify your life as a business owner and take the hassle out of this important function. Allowing employees to access their electronic payslips through employee Self-service.

“Essentially, outsourcing helps SMEs to achieve three goals. Firstly, it frees up resources to help them focus on their core business activities that help to boost the bottom line. It gives these smaller entities access to the latest technologies as well as the expertise that comes with having specialists managing this function. It also lowers risk by helping them remain compliant, and in the long run, helps them save money on expensive resources as well.”

If it is not done properly, payroll can land businesses in a lot of hot water, says Crous. “Organisations of every type and size need to comply with numerous laws when it comes to their employees, and this takes a significant amount of time and effort. If you consider the number of declarations that payroll administrators need to manage, including tax, statutory deductions, deductions for medical aid or medical insurance, contributions towards an unemployment fund such as UIF in South Africa, or social security and other important statutory contributions for those in Africa, many companies might find it too time consuming. These contributions and declarations are not only time consuming but also challenging to comply with all these different rules and declaration deadlines to do themselves.”

Crous explains that payroll is a function that demands time and attention to detail. “There are legal requirements in terms of remittance and tax reporting, managing pro-rata payments and bonuses, as well making sure the payroll is processed in time. Payroll administrators also need to be up to date with the local labour laws and be able to know how much leave is due and under what circumstances, as well as whether they are obliged to pay out leave or not. In most countries, wage and working hours legislation is complex or not readily available like in Africa, and there is no room for error.”

Then there’s the question of access to specialist skills and the latest technologies. “All companies depend on technology to operate more efficiently, and as the organisation grows, there are more staff records to be kept, more reporting to be done, more forms to be completed, and with this, a greater need to keep all that data safe,” she explains.

Today’s employees also want technology to make their lives easier. “A business’s employees are essentially its internal customers and delivering a good experience to them is as important as servicing external customers well. They want to have the option of self-service access to their payroll data and companies who don’t offer that could find themselves at a disadvantage.”

The final benefit of outsourcing payroll is lowering costs and reducing risks, she says. “In an increasingly stringent regulatory environment, businesses large and small need comply with a slew of rules and regulations to remain compliant.

“When it comes to SMEs, this would include the data of past and present employees and third-party suppliers, as well as customers, and any other individual’s data, including the way it is processed, collected, stored and used. “Outsourcing this function would mean that the provider, who has both the tools and expertise, manages this function to ensure the business remains fully compliant and that all the different declarations are completed, compiled and declared in time.”

In terms of risk, all areas of the business carry a certain amount of risk – competitors, regulations, financial environment, and technologies all evolve constantly and can change very rapidly. Crous says outsourcing providers take on, and manage this risk for the business, and understand how to avoid danger in their specific areas of skill.

The bottom line: As Payroll specialists we guide you through all the compliance requirements with a simple process that will fit your business.