Mid-Year Payroll Review in Africa: How can it help your business course-adjust?

It is June already, a halfway point that allows you to analyse what is working for your business, what isn’t, and how to correct it. From employee performance reviews to supplier assessments, all aspects of your business get reviewed and readjusted – so why leave payroll out?

A mid-year payroll review in Africa is perfect to detect any anomalies, discrepancies, overpayments, and money-wasters before they snowball into large issues that your payroll team must deal with at the end of the year. They also help you spot areas for improvement and adjust accordingly, allowing you to curb losses and amp up efficiency.

In this article, we look into how mid-year payroll reviews can help your business, with insights from Eddie Van Zyl, our Africa payroll specialist.

Why conduct a mid-year payroll review?

1. Accuracy 
   A payroll review helps you ensure that your payroll data is up-to-date and accurate. This includes employee information, pay rates, deductions, and tax withholdings. If, for example, an employee is entitled to receiving new allowances or extra leave or sick days depending on how long they’ve been in employment, this should reflect in the payroll at the earliest possible.
2. Compliance
   Non-compliance carries risks and sanctions: from fines to employee mistrust, the risk of litigation, and even the loss of your reputation as a company. A mid-year payroll review allows you to catch these inconsistencies in legal compliance, and helps you verify adherence to national, state, and local payroll regulations. 
3. Efficiency
   A mid-year payroll review helps to identify opportunities to streamline payroll processes either by reducing manual work, or by optimising technology usage. 

The practical advantages of a mid-year payroll review

A mid-year payroll review helps through its early detection and correction of errors. You can address minor issues promptly, preventing larger problems later. 

“For example, if you have a fine of $100/month to pay for non-compliance or miscalculation, and you take it over 6 months, $600 is not as big an impact as $1200.” Explains Eddie Van Zyl.

“Now imagine if there are several errors being made at the same time, each costing you $100/month in fines. The total can reach high numbers in little time.”

What is reviewed during a mid-year payroll review?

1. Employee data

We verify accuracy of employee information, including names, addresses, social security numbers, and other relevant details. Any changes can then be confirmed, and errors can be rectified.

2. Pay rates and deductions

You can confirm accurate pay rates, deductions (which include taxes, insurance, retirement contributions, allowances and more), as well as any recent changes such as promotions.

3. Tax withholdings

Through this, you cross-verify compliance with tax regulations and correct tax withholding amounts if the law happens to have changed.

4. Payroll processes

In this way, you can evaluate the efficiency and accuracy of payroll processing steps, including manual steps like data entry, timekeeping, and payment methods.

5. Technology and software

This is done to assess the effectiveness of payroll software, hardware, and other technology used for payroll management. This helps detect errors and inconsistencies in your payroll.

6. Compliance with regulations

This helps you verify whether you currently adhere to all applicable payroll laws, regulations, and reporting requirements, as these are also prone to changing.

How mid-year payroll reviews are conducted:

1. Gather data
   Our payroll consultants collect relevant payroll data, including employee records, pay stubs, tax forms, and monthly payroll software reports.

1. Review processes
   We then analyse payroll processes, identifying areas for improvement and potential inefficiencies and inconsistencies.

3. Identify and address issues
   Our team then documents any inconsistencies or problems and finds solutions to them
   
   
4. Communicate with stakeholders
   Share findings and corrective actions with relevant personnel. 

Are mid-year payroll reviews mandatory in Africa?

In most African countries, mid-year payroll reviews are not mandatory, with the exception of a few countries like South Africa where it is obligatory by law.

Why are mid-year payroll reviews especially useful in Africa?

“A major stumbling block in Africa is a lot of the filings to revenue authorities are still being done manually, so there is so there is room for a lot of mistakes.” Shares Eddie Van Zyl.

“There are a lot of countries where you still need to physically fill in a document using pen and paper and then hand over a cheque for the payment. There are only a few countries that allow you to do electronic submissions. South Africa, Botswana, and Kenya allow for electronic submissions, but a good number of other African countries don’t.”

Since a lot of filing must be done manually across Africa, the potential for making errors grows in consequence, making mid-year payroll reviews an essential tool to catch any anomalies before they can deteriorate into serious problems or heavy fines.