Published by Gbaf News
Posted on September 26, 2018
4 min readLast updated: January 21, 2026
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By Bruce van Wyk, Director, PaySpace
There are many good business reasons to outsource your payroll. The most well-known are increased efficiency and reduced costs, but these are just the tip of the iceberg. With so many benefits on offer, the only real concern holding businesses back is figuring out how to choose the best provider. The list of payroll outsourcing providers is long, and most seem to offer a very similar solution.
To help you identify the best supplier for your needs, here’s what you need to keep in mind when sourcing and short-listing payroll providers.
Data management legislation is getting stricter around the world. The GDPR came into effect earlier this year and affects any business that gathers, stores or uses information relating to EU citizens. It doesn’t matter if your company is based in Parys or Paris – if it deals with EU citizens either as employees or customers, then it needs to adhere to the new regulations.
In South Africa, the Protection of Personal Information (POPI) Act comes into effect this year. [i]This relates specifically to local businesses and will transform how they capture, store and use personal information. Companies have a grace period of 12 months to prepare their processes but once up, they will have to adhere to the Act or suffer penalties.
Adjusting to new legislation is always a potential minefield. Working out the new requirements and implementing them in the most efficient way possible, takes time and adds an enormous amount of work onto your payroll team. Partnering with a payroll provider that is already compliant keeps your in-house resources free to focus on what they do best.
Ideally, it makes sense to choose a payroll provider that develops its own payroll software. This ensures a greater level of control, accuracy and compliance as it’s all managed under one roof. It also provides enhanced security. Your payroll manager and the payroll provider can work together to make sure that employee data is encrypted and protected. Data security is a serious issue for companies of all sizes. Which means the provider you choose to work with needs to be serious about it too.
Clyde van Wyk
International businesses have to make sure that their payroll functions operate seamlessly across all territories and are fully compliant with local legislation. Once again, working with a payroll provider that is already legislatively compliant in all these countries makes this much easier.
In some African countries, achieving and maintaining legislative compliance is especially demanding. It’s not uncommon for legislation to change almost overnight and come into effect without any warning. Without the right processes in place, it will take some time for your business to adjust and in the interim, you could face a severe penalty for non-compliance.
Legal misinterpretation is another all too common mishap. No matter how innocent the oversight, misinterpreting just one regulatory clause will create problems and count against you. To keep your expansion plans as on track as possible, your operations need to remain 100% compliant at all times – legal dramas just aren’t worth the time, cost or hassle.
Before you sign with a payroll provider, check that there is no conflict of interest. What looks like the perfect partnership may not be so great in the near future if, for example, you outsource your payroll to a supplier that also ends up auditing your business.Section 90 of the Companies Act states on page six that: “the independent review of the company’s financial statements must not be carried out by the independent accounting professional who was involved in the preparation of the financial statements.”
The Companies Act goes onto explain that the classification of financial records includes assisting clients with outsourced payroll systems. So, should the financial services company in question be tasked with auditing your business, you could be forced to look for another payroll provider – and be required to change your suppliers quickly.
It takes more than good chemistry to make a truly successful partnership. The payroll provider you choose needs to understand your business challenges as well as the countries in which you operate. Their legislative knowledge, process and skills need to be fully compliant to ensure best payroll practice and help you scale your business successfully as you expand into new territories.
The demands of global payroll require a solid infrastructure to deliver a robust, cross-border solution from one centralised location. Outsourcing your payroll can seem like an overwhelming challenge but with the right support, you’ll benefit from a partnership that takes the stress out of international expansion and adds real value to your business.
[i]https://www.seifsa.co.za/the-popi-act-comes-into-effect-in-2018/
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