Tag Archive: how to


Payroll and HR software specialist Softline Pastel Payroll has a Connected Services division that enables SME companies to extend their desktop payroll with an online solution that will ease the growing burden of HR managers and payroll administrators.

Connected services includes a web-based self-service tool that enables employees to manage and maintain their own information online and thereby carry some of the overall HR administration responsibility as they are able to make on-line applications for leave, loans, bursaries, travel claims, view their payslips and update personal information no matter where they are so long as they have an internet connection.

“The internet is here to stay and its capacity and connectivity have tangibly improved recently, providing an increasingly compelling service at progressively competitive prices although South Africa still has some way to go in terms of truly competitive pricing,” says Philip Meyer, technology director at payroll and HR software specialist Pastel Payroll, part of the Softline and Sage Group plc.

“Generally accepted standard online applications – those which many people are comfortable using on a daily basis such as internet banking and online flight reservations systems, news feeds and social media sites are all being complemented by steady streams of new online business applications and services.”

Meyer says the adoption rate of online business software for new entrants into the market is increasing, posing the question of how to bridge the gap between the growing trend towards online software adoption and the traditional desktop application users in the same market segments.

“The adoption of what many consider to be commoditised uses for the internet is seen as a steady evolutionary process and the switch from legacy desktop applications to the cloud is proving to be a gradual adoption rather than a rush to jump on the bandwagon.”

The advantages and conveniences of connected services can aid and expedite the many benefits of dual-deployment business software models such as client-side hosted applications with significant connected services capabilities and functionality together with a seamless upgrade path to ultimately complete cloud-based models facilitated by vendors.

Connected Services has workflow capabilities based on the organisation chart or a specific workflow order per online form. Once an employee applies for leave online and the manager approves it, the payroll system is automatically updated. The software also provides for leave scheduling, which is particularly practical over traditional December holidays when “skeleton staff” are required. The program helps to manage minimum staff levels by providing system warnings.

Meyer reckons frictionless updates are another example of connected services that enable traditional desktop applications to seamlessly update over the internet with minimal intervention from the end-user of the software. “Customers no longer need to visit a website to download and install updates manually and install CD versions, the software now does it all for them. The days of CD-based updates and disruptive installation and implementation cycles are over.”

Another component of Connected Services allows HR managers and payroll administrators to receive RSS feeds to their desktops notifying them of legislative and tax changes and new system software releases so that the company is always on track and up to date.

“The internet and, more specifically, cloud-based and online business applications constitute some of the most compelling opportunities for streamlining the way business is conducted in the 21st century. It is reassuring that the optimisation of internet capabilities will almost certainly not amount to a one-size fits all models.

“It is rather the incremental evolution of traditional desktop software, leveraging the internet where it is appropriate and business enhancing, that will play an important role in the evolutionary shift to complete cloud-based business software provisioning, billing and deployment. This will provide a flexible and extensible migration path to the cloud taking into account preferences of individual business requirements, as will pure cloud-only offerings,” concludes Meyer

By Rob Cooper, a Payroll Tax Expert at Softline VIP

Rob Cooper

Rob Cooper

Bursaries and scholarships increase value for employers and employees by improving overall skills levels. The South African 2012-2013 Budget made changes to the legislation regarding the taxation of bursaries and scholarships. Bursaries are generally employer deductible and potentially tax free to an employee or their relative.

Bursaries granted by companies can be divided into two groups: Open bursaries are granted to individuals who are not company employees, and closed bursaries are granted to employees or relatives of employees. Open bursaries are not taxable and provide a positive way for companies to make a difference to South Africa’s skills shortage by providing the means for individuals who are not currently employed to gain qualifications and skills.

Closed bursaries, granted to individuals who are employees, or a relative of an employee, can be tax free, partially taxed or fully taxed depending on the bursary amount and the employee’s annual remuneration amount. A closed bursary granted to an employee is exempt from tax if the employee agrees to repay the bursary amount should he/she fail to complete or pass their studies for any reason other than death, illness or injury.

According to the legislation, closed bursaries granted to a relative of an employee are taxable if the employee’s remuneration exceeds R100 000 and if the bursary value exceeds R10 000. To explain:

  • If the employee earns less than R100 000 a year, and the bursary amount is R8 000, then the entire amount is exempt from tax.
  • If the bursary is worth R12 000, then R10 000 of that amount is exempt from taxation while the additional R 2 000 is taxable.
  • If the employee earns more than R100 000 annually, all bursaries or scholarships are taxable.

To calculate the R100 000 limit, the entire income amount must be used and must not be ‘fourth schedule remuneration’.  For example, the income must also include the employee’s full travel allowance.  If remuneration exceeds R100 000 after the bursary is paid, then the untaxed portion of the bursary must be taxed.

From March 2012, the exempt portion of the bursary amount needed to be reported against a new code 3815, and the taxable portion of the bursary as code 3809, which has been re-activated. This enables SARS to see the total value of the bursary on the employee’s tax certificate.

A bona fide bursary may include the costs of tuition fees, registration fees, examination fees, books, equipment required, accommodation, meals or meal vouchers and transport.

The South African legislation regarding the taxation of bursaries and scholarships supports local companies that want to make a positive impact on the South African skills shortage and decrease poverty levels by providing both employees and non-employees with opportunities to study and gain valuable skills. This is an avenue that companies should understand and pursue in order to maximise the impact of their tax deductible contributions.

By Charles Pittaway, Managing Director of Netcash

Charles Pittaway shares his other 5 tips for surviving the entrepreneurial experience.

Charles Pittaway

5. Accountability

I love working in flat organisations without lots of structure and hierarchy – it’s one of the reasons I started Netcash. But it would be naïve to think we could survive without some structures and channels for making decisions.  When people start looking for direction, they need to know where it’s coming from.

6. Isolation at the top

Even if you keep an open door and employees know they can give you honest feedback, sometimes you need a trusted advisor outside the business. Your lawyer or accountant is not necessarily the right person – how many of them run their own businesses?   Find a mentor or peer group of other entrepreneurs who have faced the same issues.

7. Leverage

It’s tempting to fund a business with debt and keep 100% ownership – but very dangerous. Your bank is not your partner and it has no real stake in the success of your business – if things go wrong it’s got your house, your car and everything you own to fall back on.  An equity partner, on the other hand, has got to pitch in to make the business work. As the saying goes, it’s better to have 50% of something than 100% of nothing.

8. Too many eggs in one basket

It’s great to have a bread-and-butter client, a big account that keeps the money rolling in. But if you lose that client, your entire business could be at risk.  Keep your client base as diverse as possible – and if you can’t, make a plan for what you will do if you lose that account.

9. Competitive advantage

One successful product or service doesn’t make a business. If you really have found an attractive market, you can bet there are competitors looking to take a piece of it. Keep on researching, developing, introducing new products and new levels of service.  Make the competition scramble to keep up, rather than digging yourself a static position and defending it with everything you’ve got.

10. Moving on

At some point in the life of almost every business, the original founder needs to step aside and let someone else manage it. The skills and attitudes needed for a successful start up are very different from those needed to manage a stable, mature company.  If you stay on past your sell-by date, you run the risk of poisoning the business.  Rather get out while you’re ahead and either enjoy the rewards of success, or move on to a new challenge. Then read this advice all over again.

By Charles Pittaway, Managing Director of Netcash

Charles Pittaway

Doing business in 2012 is as challenging as ever, especially with the on-going recessionary influences in South Africa and abroad. Added to this, those setting out to start a new business are faced with the ever-rising cost of fuel as well as energy and raw materials and the tightening purse-strings of possible investors.  If one were to review the reasons for a failed business, mistakes in marketing, finance and employment are hardly ever the primary factors. Many companies go under despite a solid product offering, skilled resources and detailed financial plans:

1. Agreeing the terms of engagement

A lot of businesses are started by two friends or colleagues who agree to split the equity and the decision making. Unfortunately, these deals have a history of falling apart, usually painfully and expensively.  Sooner or later one partner begins to feel their own contribution is more valuable than the others.  And if there is no mechanism for handling these differences, you’re in trouble.  It’s a good idea to workout out a buy-sell agreement at the start if the business to govern what will happen in the event of a stalemate. If you can’t agree on the terms of a buyout while you’re still friends, how can you hope to do so when the relationship has soured?

2. Ignoring signs of trouble

Failures of judgment at the top have killed more small businesses than lack of money, talent and information combined. As entrepreneurs we’re often influenced by our sentiments to act in ways that actually put our businesses at risk.  It’s absolutely essential to put aside regular time to step back, take a good cold look at what is going on and check whether it still adds up. When you do that, you need to trust the numbers: don’t let your attachment to the business blind you to warning signs of trouble.

3. No back-up plan

Of course you believe your business will succeed, or you wouldn’t be doing it. But failing to put a backup plan in place is suicidal. What if your product takes twice as long to develop as you thought, or customers buy only half as much?  It often takes twice as much time or three times as much money to get going as you predict.

4. Excess cash

Oddly enough, too much money can be as much of a curse as too little. It can tempt you to hire people you don’t need, approach problems in ways that don’t focus on the value to your customer, take your eye off the market and weave dangerous inefficiencies into your business. Don’t ever get too comfortable.

5. Accountability

I love working in flat organisations without lots of structure and hierarchy – it’s one of the reasons I started Netcash. But it would be naïve to think we could survive without some structures and channels for making decisions.  When people start looking for direction, they need to know where it’s coming from.

By Steven Cohen, managing director, Softline Pastel Accounting

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Steven Cohen, MD Softline Pastel Accounting

Softline Pastel, as I’m sure you know is an ardent supporter of the development of SMEs and like all businesses we started out small. The company, which was founded in 1989 in Johannesburg, is now a leading developer of accounting and business software supplying 52 countries including 18 in Africa. The past 22 years haven’t all been plain sailing and I believe it’s worth sharing some of our mistakes and successes to highlight the fact that entrepreneurship isn’t always easy but it’s certainly rewarding.

We started out as three partners and two employees. Our strategy was to grow the business organically but also incorporate some acquisitive growth by using cash to buy smaller businesses with strong synergies. This way we slowly acquired new customers and from there, more employees.

Organic growth is slower than acquisitive expansion but is less risky in the long term as it comes from within the company and the management team can form strategic goals from which to guide the enterprise. This method also gives the company a chance to test its own business model while relying on independent finances. Purchasing other businesses has its merits, particularly in terms of gaining new customers and revenue quickly but it may come with challenges including shareholders that you don’t want. Integrating two businesses also involves streamlining different cultures, systems and work ethics into one entity with common values and goals – not always an easy task.

Naturally, we’ve made mistakes along the way but what’s important is what we’ve learned from them. During our growth phase we were constantly fraught with anxiety about the next move and about our overheads. We realised early on that running a business is stressful, but it’s imperative not to let this strangle your ideas. Think big, keep your feet on the ground and work on your emotional intelligence to be able to treat mistakes as growth opportunities! At the end of the day you’re an entrepreneur because of your willingness to take risks.

One of the worst mistakes entrepreneurs make is to become so absorbed in their business ideas that they forget to monitor day to day finances. Don’t underestimate the importance of tracking your cash flow and accounting balances all the time; financial statements are going to be your business’s lifeblood and should never be disregarded. In fact, entrepreneurs, it’s imperative that you know your financial terminology to ensure that you understand the nitty gritty of your business. And apart from balancing the books, I really recommend the use of information systems to help you track and report your daily operations – this just gives such insight into the overall state of your business.

When it comes to hiring employees, I’ve learned that it’s better to pay more money for a good person with the right overall fit for your organisation including the appropriate work ethic, rather than a person who is just good on paper. Business owners may be tempted to pay top dollar for the most knowledgeable and skilled employee without taking note of whether their work ethic and other cultural traits fit in with the business.

When managing new recruits, lead by example and let your staff make a few mistakes along the way. Make them love coming to work by giving them responsibility and keeping them informed and educated. It’s also really important to recognise the ones who go the extra mile.

And don’t forget your most valued asset: your customers. Looking after them will build your credibility so keep your promises and always get back to people. But don’t just rely on the customers you have – always work to increase the size of your customer-base.

While addressing your weaknesses is important, don’t forget to remember what you’re doing right. In our start up phase there were a number of things that I can say were right. We managed to sell our value proposition confidently and always remained ahead of our competitors and industry challenges. To do this we read, read and read but always drew our own conclusions and then shared this information with employees.

At the end of the day, invest for sustainability because your business needs to outlive you. Keep on moving forward as procrastination is the enemy of progress and lastly, give back to the community: it makes you feel good and you are growing your future customers.

By Ivan Epstein CEO (and co-founder) of Softline and Sage AAMEA 

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Ivan Epstein

In the lead up to World Entrepreneur Day this Friday, I am constantly inspired by the tremendous entrepreneurial talent in South Africa. The desire to succeed by South Africans has resulted in an entrepreneurial culture which continues to grow at an encouraging rate in our country. This growth will be vital to fuel economic development in South Africa this year, and beyond.

While people can learn the principles of entrepreneurship, I think it’s very hard to train someone to be an entrepreneur. The steps and the risks you have to take to succeed in your own business can’t be taught. Ultimately, building a successful business and constructing a legacy is about passion; having a vision and sticking to it no matter what.

Starting a business and finding the right concept and vision is a gruelling process. Here are some insights that I gained along the way:

Work with people that support your vision

Finding a business partner that you trust and who shares your common interest and a similar drive to succeed is critical to making a business idea work. In many instances you will question your decisions or the direction you are taking, but having partners and staff that support you and share your vision makes the process substantially easier.

Find the right idea

The right idea might not present itself immediately, and is likely to be the result of a lot of investigative work as well as the current situation.  Revisit your initial idea often. Look back at where you’ve come from, and how the concept might have grown, expanded or improved. Be inspired by this, and use it as a learning experience to grow.

Persevere. It just takes one

With no track record, starting a business and selling a service or product can be difficult. A stand-out piece of advice that I received was simply to persevere until you find that one person that will give you a chance. Once you have gained your first customer the second one will follow. The challenges are many to start with, but these decrease as you persevere and focus on steadily moving forward.

Making mistakes is part of the process

With most decisions it takes time to get into a rhythm of knowing what to look for and how to make an informed decision. It is important to recognise that not every decision will be a good one. Entrepreneurs make mistakes; the secret is that they need to be big enough to admit it, learn from it and move on.

Trust your gut

Many entrepreneurs look for mentors to guide them along the process. Mentors are important, but trusting your gut is just as important to succeed. Taking the advice and guidance of others on board is helpful, but most entrepreneurs will also have that basic instinct for their own businesses. It’s important to tap into that instinct.

In closing, continue to look ahead and to see beyond where the business sits today. Your interest should always lie in the future. That is, after all, where you are going to spend the rest of your life.

Of all the elements that need to be considered if a company is to be able to select the best candidate for a specific position, the most difficult to gauge or judge correctly is the culture fit.

“It’s also one of the most important elements in any evaluation of potential employees,” says Grant Lloyd, managing director Softline Pastel Payroll.

Companies need to have a feel for and have an understanding of the company culture. Lloyd says culture is usually driven from the top down and is established by the upper echelons of management. However, it is never cast in stone and can change with the appointment of a new CEO or management team.

“There are many influences on company culture, including the alignment of the company vision, the business objectives and the business ethics,” says Lloyd. “Whoever is conducting the recruitment needs to have a feel for the company vision, objective and ethics because they not only shape the company culture but also the various job descriptions and purposes aligned to them within a specific department.”

Key performance areas (KPAs) and key performance indicators (KPIs) are also important in assessing the culture fit and ensuring the candidate will be able to deliver what the business needs.

“This is complicated by the fact that not all companies have integrated the business culture and the company values with their KPAs. While these historically were used to measure individual performance, the process is now open to much wider interpretation,” adds Lloyd.

“Employers need to clearly understand the purpose behind each individual recruitment and employment process. The information for this understanding must come from the person that the new recruit will be working for.”

People involved in the hiring process often sway towards taking on someone with a similar personality to their own, which is not necessarily the best fit and hence it is important to also involve line managers and team leaders to provide another perspective.

He adds that people often perceive themselves incorrectly and that the characteristics most sought after in recruitment are trust, respect, honesty, accountability, integrity and consistency.

Honesty throughout the recruitment process is paramount because it saves time and money for both parties. The company should state exactly what it is looking for and the applicants need to present themselves honestly. A complication is the fact that divisions within companies tend to develop sub-cultures and the candidate fit has to match.

“Personality traits also need to be examined, and this is a whole science in itself. But it is an important area and it is very useful to know a candidate’s personality as it is invariably a strong indicator of suitability and culture fit,” says Lloyd.