Archive for October, 2012


By Keith Fenner, Senior Vice President of Sales for Africa at Softline Accpac, part of the Sage Group plc.

Keith Fenner

Keith Fenner

Labour issues recently made headlines as one of the major challenges facing the South African mining landscape.  Rising labour costs as well as increasing electricity costs are just some of the obstacles facing the sector.

Many operators in the industry are currently focusing their efforts internally to stabilise the business, with a very strong emphasis on cost.  Effective cost management can however create opportunities for growth when armed with tried and tested business processes and a business software solution such as Sage ERP X3.

During 2011 Deloitte embarked on a partnership with Sage ERP X3 that was aimed at the delivery of a cost efficient Enterprise Resource Planning (ERP) solution to its Mining Shared Services Division.  Sage ERP X3 effectively forms part of a Deloitte service delivery model that allows mining companies to co-source and/or outsource transactional and knowledge processes and take advantage of the cost benefits offered by consolidating and streamlining back office processes.  Deloitte’s mining industry expertise coupled with Sage ERP X3’s sector specific software capabilities are the two core ingredients to a winning recipe.

Organisations within the mining sector utilise ERP solutions for a diverse number of reasons.  Smaller companies may only utilise an ERP solution to manage its finance and purchasing, whereas bigger operators need to structure their business solutions around a more complex collection of needs.  A scalable ERP solution is therefore essential to adapt to the business’ needs however they may expand or change.

Sage ERP X3 was designed with the mid-to-upper end business in mind, which makes it a great match for the mining industry, among others.  The ERP solution excels at streamlining all operating and processing aspects of single or multiple business operations.

The product is essentially a complete web-based integrated management suite that covers all operational needs in terms of production management, distribution, logistics, asset maintenance, finance and human resources.  It is a multi-legislative, multi-lingual and multi-currency solution that can be seamlessly integrated on both a national and international level.

One of Deloitte’s first major clients recently went live on Sage ERP X3 with a further three mines showing satisfactory results being very comfortable with the product.  Sage ERP X3 does not come with the hefty price tag that some of its bigger counterparts presents, which makes it the ideal solution in a tough economy.

Cost of ownership is a focal point and with that in mind Deloitte introduced a software finance plan option, to stagger the initial implementation cost.  The return on investment makes the implementation of a Deloitte Mining Shared Services offering well worth it. The package comprises of an ERP solution, financial co-and outsourcing services in addition to information technology outsourcing services.

The ability of Deloitte’s Mining Shared Services Division to drive the back office productivity levels of its clients, delivers tangible results.  It is not just a system, but a comprehensive solution that leverages the industry expertise provided by Deloitte and the robust applications delivered through Sage ERP X3.

A new remuneration limit published in the Government Gazette after being approved by Finance Minister Pravin Gordhan directs employers to adjust their UIF contribution calculations to comply with the new limit from 01 October 2012.

From now on employers must apply a new annual remuneration limit of R174 464 when calculating the 1% contribution deducted from employees and the 1% contributed by employers.

“As a result, employees earning R14 872 or more a month (R178 464 a year) will now contribute a maximum of R148.72 and their employers will contribute an equal amount,” says Philip Meyer, technology director of payroll and HR software specialist Pastel Payroll, part of the Softline Group and Sage Group plc.

“At the moment the earnings limit is set at R12 478 a month or R149 736 a year. The new limit means that employees whose earnings exceed the current limit will see a reduction in their net pay from October 2012 as their UIF contribution deduction will be slightly higher to accommodate the remuneration limit increase.

“Employers will see a similar effect as their portion of the UIF contribution increases to ultimately result in an increase in salary related expenses.”

Meyer adds that companies without payroll software solutions will have to manually change or update their payslip calculations to apply the new UIF limit before processing any salaries or wages for October.

“For our Pastel Partner Payroll software users a ‘frictionless’ update is being released to ensure users of the software can process their payrolls using the latest UIF remuneration limits, therefore no CD installations are required.”

By Rob Wilkie, CFO Softline and Sage AAMEA

Rob Wilkie

The 3 weeks long strike in the transport sector has come to an end, but at an enormous cost to business.  The Road Freight Employers Association has estimated a cost of R1.2 billion per week.

With supplier deliveries late and transportation of their goods delayed, small businesses are fighting for their survival. A disruption to their trade means lower turnover, less cash generation and unpaid expenses.  Unfortunately job losses are a casualty.

My concern is that strikes will spread to other sectors. They are becoming part of a broader social movement taking the form of ill-disciplined and often violent protests.  The common underlying thread in all these demonstrations is poor service delivery, poor living conditions and growing inequality.

Without fast and effective government intervention to strike action, small businesses will have to be more agile and flexible than ever if they are to sustain themselves in this existing climate. Moreover, small businesses need to plan for a trade disruption so as not to be caught flat footed. A plan should consider the following:

  • What can you depend on from your banker during this time – borrowing capacity?
  • What monthly overhead expenses are unavoidable to stay in business?
  • What is your estimated monthly cash income?
  • Can you cancel or place orders on hold if supplies cannot be received?
  • Could you negotiate a payment plan with your major creditors?
  • What is the minimum inventory level necessary?
  • Do you have a communication plan to keep suppliers and customers fully informed?
  • Are you able to use sub-contractors if necessary?
  • Do you have access to replacement workers?

We live in very volatile times making planning difficult yet critical in survival of the fittest.

The end of the year is in sight and companies face the administrative burden of making the complex calculations related to determining the correct leave pay due to individual employees.

The process is governed by the Basic Conditions of Employment Act (BCEA) which sets out the legal structure of all employment contracts and the rights of employees to ensure they are fairly treated in terms of annual leave and severance or notice pay.

Many of the calculations for leave pay are quite complex and arriving at the correct allocations manually or on spreadsheets is a time consuming exercise.

“All of these calculations have to be correct or the company will breach the provisions of the BCEA,” says Phil Meyer, technology director of payroll and HR software specialist Pastel Payroll, part of the Softline Group and Sage Group plc.

The BCEA aims to ensure that leave pay is fully representative of individual employees’ actual earnings and Meyer says the calculations have to take into account variable income types and must be based on the average earnings of each employee over the 13 weeks preceding the date upon which leave becomes effective.

“There are many elements that affect the calculations such as overtime, commissions, allowances and other payments. The bottom line is that they lead to fluctuating income so each employee’s income has to be calculated individually. It can be a nightmare to execute this manually or on spreadsheets.”

Automated payroll and HR software retains detail of all of the variable income paid to each employee so that the calculation for the average income over the 13 weeks preceding the leave is not only accurate but is available immediately with a few key strokes.

Circumstances may lead to some employees benefiting from higher variable earnings during the three months prior to the leave date. For example accounting staff may take leave when company financial year-end audits are completed, thereby benefiting from the overtime payments they may have received during the preceding 13 weeks.

Similarly, people employed in the construction industry which usually shuts down in mid-December, are also likely to have worked overtime to ensure contracts are completed before shut-down and therefore their leave pay calculations will be affected.

“In consultation with management, payroll administrators can establish parameters that the software will automatically follow so that calculations of average earnings are always consistent with the requirements of the BCEA and fair to all concerned,” said Meyer.

Users of automated payroll and HR software also benefit from the fact that the software developers monitor amendments to the BCEA and provide updated versions whenever new legal requirements are promulgated. “The automated payroll and HR software therefore always operates in full compliance with the Act, ensuring also that the BCEA leave payments are not subject to basic finger trouble, interpretation or even fraud.”

In addition, automated payroll and HR software solutions offer functionality that enables the user to give the entire company an increase, based on either a set value or a specific percentage as well as process a production bonus or commission using only one screen. This not only saves time, it allows global changes to be made to any transaction within the payroll system for all, or a selection of employees.

Employee Self Service (ESS) is a web-based self-service tool that enables employees to manage and maintain their own information online as well as submit leave online to carry some of the overall HR administration burden. This saves the Payroll Administrators time and eliminates manual leave applications and capturing. In addition, companies can view a leave summary of their teams according to leave types (annual, sick, family, unpaid) and leave status (approved, applied, declined) for easy leave management and skeleton staff planning over December holiday times.

The submission for manual tax returns has now passed. The deadlines for efiling submissions is the 23rd of November 2012 and in this post we’ll be exploring why it is sometimes necessary to seek out professional advice with your tax return.

There are many examples of incorrect tax returns which have ended in large sums of money being owed to the South African Revenue Service, and even court proceedings.  A recent article on the Moneyweb news website states that in one such case, the tax court in Pretoria had to consider an objection by a tax paying company against assessments issues by a SARS auditor. Of course, SARS had issued this assessment based on the tax return submitted by the company and their accompanying financial statements.

Despite many arguments from the company on if they were suitably qualified to be submitting tax returns on behalf of the business, and other issues, SARS won the case. The court ultimately found that the company had underpaid tax on several fronts and was now liable to pay the outstanding tax as well as the interest on the aforementioned amount.

This is just further proof as to why businesses, large and small, should seek the assistance of professional tax consultants when it comes to that time of the year. The help of a professional might cost far less that the penalties involved in an incorrect tax return.

By Anja Hartman-Weitz, Softline VIP HR Director

Anja Hartman-Weitz

Anja Hartman-Weitz

Softline VIP placed first in the recent Deloitte Best Company to Work For Survey’s business and professional services category for a second year running in addition to clinching second place in the medium company category (301-2,500 full time employees) for the third year running.

Celebrating success is one of the elements that underpins the work culture at Softline VIP and we firmly believe that celebration sparks a passion to succeed in our employees.

The annual ‘Deloitte Best Company to Work for Survey’ continually provides unbiased insight as to what employees think of their employer.  The survey is conducted by a third party that provides an opportunity for employees to anonymously rate their employer, effectively acting as an annual dipstick to identify practices and strategies that will ensure continued improvement.

The feedback that we receive from the survey forms a crucial part of our human capital strategy that aims to channel its energy and efforts in the right direction. At Softline VIP we pride ourselves on our strong ‘people focus’ in addition to our relentless ‘client focus’ that is centred around the delivery of extraordinary customer service.  These two aspects have a strong link and are two of the six critical success factors that underpin our strategy.

Maintaining a strong employee brand is of paramount importance as it inevitably shines through to Softline VIP’s clients who love our employees.  We participate in the annual survey, not to compare ourselves to others, but to identify and address areas where we can improve.  It ultimately places Softline VIP in a position where we can attract and retain scarce human resources in a very competitive market.

Participating in the survey for the fourth year running has provided the company with some invaluable input that underscores our commitment to a comprehensive human capital strategy.  We strive to create happy, loyal and motivated employees who celebrate the success of our business and that is why the Deloitte Best Company to Work for Survey forms part of our strategy.

By Gerhard Hartman, Head of the Africa Division at Softline VIP, part of the Sage Group plc.

Gerhard Hartman

Gerhard Hartman

The African continent has enjoyed its best growth decade on record and is currently one of the world’s fastest growing regions, with six of the ten fastest growing economies in the world. It therefore makes business sense for South African firms to look at expanding into Africa and opening branches in other parts of the continent.

Companies expanding into Africa either need to send South African staff into these countries as expatriates or need to open an operating entity in that country that comprises of local staff members. Either way, companies face challenges in expanding into Africa, especially in setting up their auditing, taxation, accounting and payroll systems that are accurate and compliant with the local legislation of that African country.

In response to this trend, and in an attempt to aid local companies with their expansion plans into Africa, Sage VIP Payroll has partnered with BDO Audit – Advisory and Tax services – and Sage Pastel Evaluation to provide local companies with everything they may need to enter a new country of operation, with confidence.

One of Sage VIP Payroll’s main strategic goals is focused around expansion into Africa with the company currently being operational in 24 African countries. The VIP Payroll Africa Division holds offices in Gaborone, Windhoek and Nairobi; with active alliance partnerships in Zimbabwe, Zambia, Malawi, Nigeria, Ghana, DRC, Kenya, Tanzania, Uganda, Angola, Mozambique and Rwanda.

Companies in Africa are starting to realise the importance of automation and how VIP Payroll can help them make more informed decisions, creating more efficient environments for company growth and return on investment. Salaries continue to be one of the biggest expenses in any organisation while the market for employment is becoming more competitive, making HR an essential part of any company’s strategic advantage. VIP Payroll provides an integrated solution for any size business to manage salary payments and HR strategies effectively. The system enables statutory compliance with authorities in African countries and local support is provided through alliance partners in the country of operation.

BDO has a large amount of experience servicing multi-national companies from across the globe. The organisation aids companies to build a country specific business model for operations in Africa. BDO also has contacts and alliance partners in every country in Africa, except Somalia, making it the best business to partner with when expanding into Africa. BDO’s three phase process includes advising companies on the implications of doing business in another African country, implementation of licensing, permits, registrations and applications in that country, and setting up compliance and business controls for payroll, auditing and accounting.

Common mistakes that companies make when expanding into Africa include not having sufficient knowledge of the country and a lack of operational planning. Preparation is essential as is a solid understanding of the local tax laws and company legislation. Companies also need to educate themselves on the foreign exchange regime, economic environment, legal system and the foreign company processes in each country.  This is where BDO is able to aid companies with relevant information that will adequately prepare them for their new venture.

Pastel Evolution has been operational in Africa since 2001 and has offices in South Africa and Kenya. The organisation has over 2500 corporate customers in Africa and over 70 business partners on the continent, as well as 15 project implementation consultants and 50 call centre support staff. Pastel Evolution empowers business management through finance, inventory management, relationship management, payroll and business intelligence. These systems streamline business processes and enable employees to make informed decisions.

Many companies make the mistake of purchasing systems for accounting, HR, payroll and auditing to be used in their new African venture, that do not offer the in-country support that is needed to implement the software, nor is it compliant with the local legislation.

VIP, BDO and Pastel have a support base of local partners that are more than able to provide tried and tested advice in addition to on-site support to African businesses. All VIP, BDO and Pastel software is customised to comply with local legislation, which effectively takes the hassle out of setting up branches in other countries.

Hard Facts about Africa

  • The 1 billion people that live on the African continent comprises 14% of the global population, half of which are under the age of 35 and nearly half live in cities.
  • The African economy of $1,6-trillion is expected to grow to 2,6-trillion by 2020.
  • Since 2009, Angola, Nigeria, Ghana, Zambia and DRC have been top investment destinations.
  • In 2012 Ghana is expected to show the strongest GDP growth, with Nigeria in fourth position.
  • New investment destinations also include Equatorial Guinea, Guinea, Madagascar, Gabon, Cameroon, Mozambique, Liberia and the Congo.
  • The main sectors for investment in Africa include mining, construction, property development, retail, supplier services to the oil, gas and mobile telephone industries, ICT, security, agriculture, tourism and hospitality.

Doesn’t it make absolute sense to invest in Africa?

In September 2011, Softline launched the Sage Business Index in South Africa. Softline joined the Sage Group plc eight years ago and while the group had run the Index a year prior, South Africa did not participate. The Sage Business Index surveys small businesses across Europe, North America, South Africa and Asia, aims to reveal a definitive landscape for small businesses confidence, concerns and challenges on a bi-annual basis.

With the 2012 annual Sage Business Index fast approaching, we took a quick step back to review the results of the half year research conducted in March this year. Polling over 10 000 businesses across four continents, the Index showed that while confidence in the global economic outlook continued to decline, the outlook for local market conditions and businesses was improving. Interestingly, South Africans were slightly more pessimistic than their global counterparts about the outlook for the global economy, with a 1.21 decrease in the Index score, compared to the .52 decrease of the global sample at the time.

In March, CEO of Softline and Sage AAMEA (Africa, Asia, Middle East and Australia), Ivan Epstein said that it was encouraging to see that once again, businesses in South Africa were more confident about their own prospects. He went on to say that companies are focussed on the day-to-day challenge of maintaining and improving their businesses, and Government should do all they can to harness and help the entrepreneurial spirit that already exists.

Epstein said that he was interested in researching the impact of increasing fuel prices on local sentiment. With this week’s additional price hike, it’s clear that business and consumers alike are facing challenges.

The Index scores in March 2012 and September 2011 were as follows:

March ’12 September 11
Index Scores Global SA Global SA
Global economic confidence 43.95 44.71 44.47 45.92
Country Economic Confidence 47.26 46.11 47.11 44.10
Business Outlook 58.86 64.44 57.88 62.58

(Below 50 is decline/less confident above 50 is improvement/more confident, 50 is no different)*

The results in March 2012 also outlined that while local confidence was increasing and the rate of decline in global confidence slowing, there were still a number of challenges facing businesses. Rising inflation and the increasing cost of fuel, energy and raw materials topped the list with all countries citing this as their top concern – with 58% of local businesses listing this as their number one concern. Over a third of South African businesses noted instability or uncertainty in the local economic market as a worry, and a similar proportion (34%) said the same of reduced cash flow in the supply chain.

In anticipation of the upcoming Index, Epstein says that the Index has proven itself as a vital tool for Softline and Sage in the region to take stock of the challenges and worries affecting customers. “I hope that the upcoming results show us that the sentiment amongst businesses remain stable given the current economic climate.”

SARS - SME companies should brace themselves for the interim PAYE reconciliation that is due from 01 September 2012 to 31 October 2012. Employers are required to fully reconcile and submit their employee tax certificates and EMP501 reconciliation for the period 01 March to 31 August 2012, by the end of October 2012.

Employers need to make use of the new SARS e@syFile software release, e@syFile V 6.1.0. to successfully submit their interim PAYE reconciliations. If they don’t, they will not be able to transfer their data electronically as the new software release will not recognise the old format.

“Companies have no choice,” says Philip Meyer, technology director of payroll and HR software developer Softline Pastel Payroll, part of the Softline Group and Sage Group plc.

Legislation dictates that each and every employee in a company must be registered on the SARS database with their own tax number. Therefore individual income tax reference numbers must be reflected in the interim PAYE reconciliation. If one or more tax certificates do not include the tax reference number, companies will receive an error notification in e@syFile and with effect from 01 September 2012 companies will be penalised.

“New legislation that took effect in March this year means that medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with Medical Aid tax credits. If companies did not make use of the medical aid tax credit method, their submission will be rejected and they will be required to manually recapture the details on e@syFile”, adds Meyer.

A new IT3(a) reason code for tax certificates has been introduced by SARS for non-deduction of PAYE  and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied. There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year. Most automated payroll software systems already cater for these codes.

Companies can receive step-by-step assistance from a SARS Contact Centre agent with Help-You-eFile. Help-You-eFile is a new service innovation from SARS which gives companies access to SARS Contact Centre agents online.

For a smooth interim PAYE reconciliation, opt for a reputable payroll software solution that can automate the reconciliation process for the company. Some automated payroll software providers require that users only load their employees’ information and payslips. Therefore no manual calculations are requires and companies can simply upload the file to e@syFile.

For further assistance with the interim PAYE reconciliation season, companies can attend the SARS interim submissions seminar, hosted by Softline Pastel Payroll.  Make contact on +27 11 304 4390 or go to seminars@pastel.co.za