This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our PRIVACY POLICY for more information on the cookies we use and how to delete or block them.
  • Accounting and Payroll won’t fall

Accounting and Payroll won’t fall

17 February 2016

By Phillip Joubert, Manager, BDO Business Services & Advisory

The #feesmustfall campaign has become one of the most talk about issues to date, having spilled over into various issues such as #zumamustfall and #outsourcingmustfall. But what would happen to the thousands of consultants and companies, if #outsourcingmust fall becomes reality? I will take you through the pros of outsourcing though, as we experience with many of our clients.

Firstly, in terms of foreign investment into South Africa, multinational companies without local experience and advice cannot fight the red tape, rules and regulations alone which means that many of the executives of these companies would rather outsource these functions to the local market. At the same time, and taking into account the current global and local economic outlook, these multinational companies want to test the waters before committing long term resources into a new venture.

Then locally, our own bright-spark entrepreneurs (the employers of the future, the driving force behind the country’s employment and economic growth) are getting their new business ventures under way (South Africa needs over 49,000 scalable Small and Medium Enterprises (SMEs), growing at a rate of 20% per annum, to create 11 million jobs by 2030 to meet the National Development Plan (NDP) target), with one of the latest entrepreneur trends being a completely mobile workforce. This brings up a conundrum for these ventures. “How can I comply with all the legislative requirements? How can I make sure my staff get paid their salaries, and how can I ensure my money is coming in?” Having an accountant or bookkeeper would mean an employee with no space in which to work, or having to rent expensive office space – which they are trying to avoid by having a mobile workforce.

Both these types of entities makes use of outsourced functions such as payroll, bookkeeping and accounting. Considering the continuous changes in legislation and reporting requirements, having a specialist on board is the right approach to take, especially as many accounting firms, which provide outsourced services such as bookkeeping and payroll, are at the forefront of technological enhancements such as cloud based accounting packages, which assist both accountants and businesses with compliance.

One of the most popular cloud based accounting packages currently is Xero™, which allows for a completely mobile sales force with apps and mobile web access. These apps will enable a salesman to check inventory levels, prepare a quotation for customers and even allow him/her to invoice customers while in a meeting with them. Following on Xero™, competitor SAGE recently released their VIP Payroll as a cloud-based server and made major enhancements to their Sage One Online Accounting package.

Gone are the days of a bookkeeper being merely a data capturer, providing historical information long past its useful date. With the outsourced accountant making use of software such as Xero™, data links can interface with banking institutions in a secure fashion, just extracting (and processing) raw information that, in the past, would have been captured by hand.

This enables accountants and businesses to view current, up-to-date information and analyse it in such a way that business decisions can be simplified and based on relevant information. Historical information becomes, well, history.

Another one of the key benefits in making use of outsourced service providers, is that you don’t need to invest in expensive and sometimes overcomplicated and cumbersome infrastructure and software.

Outsourcing provides gainful employment through all sectors, and yes, with every industry there is probably a bad egg somewhere, but it does not take away employment from somebody else. You may decide to end your outsourced services, employ someone full time, but there are risks in that too. You may suddenly realise that your bookkeeping and payroll service provider, provided much more than just the little bit you paid attention to. Now you are running around trying to ensure that your returns are filed, payments are made on time, ensuring that SARS doesn’t come knocking at your doorstep.