Third party payroll reconciliations are about to become a touch more complicated
in South Africa next year, when a provident fund for domestic and farm workers go
into effect in March. According to budget documents that were recently tabled by
Finance Minister Pravin Gordhan, the labour department is also considering a medical
aid scheme for the private security sector. All relevant employers will then have to
comply with these new pension and medical aid and submit payment on behalf of
Such changes to legislation tend to make complex payroll processes, such as
these third party payments and reconciliations, even more difficult. Business owners
in South Africa already have to contend with and keep track of the pay-as-you-earn
(PAYE) tax, the Unemployment Insurance Fund (UIF), garnishee orders, retirement
annuities, and so on.
"Payroll and especially third party payments are among the biggest headaches
that companies of any size face,' says David Brown, Managing Director of Profile
Integrate, a company that develops payroll payments systems and associated
"Whether you employ ten people, a hundred, or a few thousand, with ever-
changing laws to keep track of as well, payroll and particularly third-party payments
and recons have become cumbersome, complicated and incredibly time consuming for
all business owners.'
The problem, Brown says, is that many companies still process these systems
manually, since they might not have money to invest in expensive software and pay
the annual licensing fees.
"The information required by the third party is usually manually and inefficiently
produced on spreadsheets, which is when human error and inaccuracies inevitably
Manual processing amounts to too much work that has to be done in too little
time. Oftentimes when third party statements are compared to payroll, the amounts
do not correspond. Such errors cause delays and can subsequently also leave the
finance and accounting departments with an increased workload.'
Brown says that it is time for companies to look beyond these traditional
approaches and to the Internet.
"An Internet-based software solution, such as Profile Integrate?s Third Party
payment and reconciliation tool, automates complex third party data and allows it to
be processed accurately and quickly.
It requires much less work, with payroll managers processing the data with just a
few clicks of the mouse, freeing up the employees in the finance and accounting
departments to do other work.'
Companies need not switch over to other payroll systems to be able to use
Profile Integrate?s third party recon tool, says Brown.
"The other benefit of Profile?s third party system is that it works hand in hand
with your company?s current payroll software to make the monthly reconciliation of
medical aid, pension fund, and any other electronic statements from a third party
simple, fast and efficient. Data is recorded in real-time and automatically populated,'
Apart from saving time, it saves users money as well. "It makes detailed
comparisons between the third party statement and the payroll, both pre- and post-
payroll run, thereby saving time and money.
It also has the functionality to compare different databases, highlighting any
variances in seconds, indicating what is on payroll and not on statement and vice
versa - something which usually takes hours when the reconciliation process is being
It ensures that all the data is 100%. "One of our clients has informed us that
since using the reconciliation function on Profile, the queries from both employees
and third parties have reduced from 70% per month to no more than two.'
Another major benefit of Profile Integrate?s third party reconciliation tool is that it
can be used from anywhere, since it is internet-based. "It requires no software
installations, licensing fees or support costs.'
What do you think?
Should all companies look to invest in using
the reconciliation tool and should innovation be used more to finding business