Making a success of business in normal circumstances is difficult enough, let alone under the shadow of the current international economic crisis with reduced spending power impacting adversely on sales.
SMEs should use technology to ensure that they can deal effectively with the legislative requirements attached to financial, tax and labour matters -- one of the main factors behind business failure.
Grant Lloyd, managing director of the payroll software specialist in the Softline Group, Pastel Payroll, says another factor is that SMEs, especially start-ups, often lack understanding of the basic principles and tend not to pay enough attention to having the right systems and technology in place.
“The current economic situation is placing greater pressure on small businesses and suppliers of goods and services are feeling the pinch of cutbacks. Technology helps to deal with that pressure and enables companies to operate more efficiently and cost effectively.”
Outsourcing the payroll function is a very cost-effective option for SMEs and Lloyd says running a legally compliant payroll department is an increasingly difficult and time-consuming task for SME companies.
“Mushrooming legislation has resulted in a confusing glut of legal requirements across six Acts governing tax and payroll. Hence outsourcing payroll administration is a solution we introduced to offer SME businesses choices, creating options for them to achieve compliant payroll administration without diverting resources and focus away from their core business in the tough economy.”
Pastel Payroll studied the needs of start-up businesses with up to 5 employees and introduced a simplified payroll software solution, Pastel MicrOpay that is easy to set up and operate.
Lloyd says fast-growing SMEs need to consider automated payroll solutions or outsourcing because of the complexity of the legislation governing tax, statutory returns, levies and conditions of employment and the fact that such solutions are updated immediately if there is any change in legislation.
“An outsourced payroll or automated payroll solution ensures that all calculations are accurate and that reconciliation submissions to SARS via the e@syFile PAYE system which is replacing the online eFiling system for 2009 submissions for PAYE, SDL and UIF, are efficiently and conveniently completed.
“Efficiency is critical for SMEs in the current difficult economic situation and software, technology and compliance with legislative requirements are key to survival in a downturn economy.”
Other factors include the ongoing merging of the functions of human resources departments (HR) and payroll administrations in SME businesses where Lloyd says the barriers between the two continue to fall away as payroll software undergoes radical development to cater for changing demands.
New legislation and more expansive SA Revenue Services requirements have led to payroll administration taking on data capture and complex reporting functions that were previously the domain of HR.
“Features and functionality that simplify the process of legislative compliance have already been incorporated into payroll packages and this has alleviated much of the burden that used to be the responsibility of HR, now carried by payroll.”
There is no exclusive HR focus any more and in these circumstances, Lloyd says more companies are automating their payroll processes. SME companies in particular are making a quantum leap from having no payroll system, to full automation through payroll software.
HR functionality has been developed by Pastel Payroll in the form of an employee self-service (ESS) module using web technology. It makes life easier for management, payroll administrators and HR departments, streamlining payroll and HR administration and at the same time improving staff communications with department heads, administrators and management.
“The ESS module is a communication solution for companies operating with remote branches or those that have sales representatives out on the road. It also offers control features that allow management to define staff access according to status and needs. It is another step towards the paperless office, enabling staff to make on-line applications for leave, travel claims, salary advances, loans, sponsorships, bursaries or other financial assistance,” says Lloyd.
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