Business - Outsourced Finance

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Companies facing crises such as a coronavirus or other environmental and financial shocks are often being run by managers working with a set of paradigms that no longer apply to the business’s current situation. This inability to acclimate to a changing business environment can spell disaster for a company.

There are several signs of a company in need of restructuring as a result of being in distress, including declining free cash flow, diminishing liquidity, deteriorating industry fundamentals, and disruption in unionized work. In the current COVID-19 pandemic, many businesses are looking to restructure and find new avenues to create profit.

However, crises are also important opportunities for adaptation. Businesses can utilize their strengths to capitalize on opportunities in the changing business environment, while also work on weaknesses to become more resilient to threats.

 

RESTRUCTURING IS A FORM OF CHANGE MANAGEMENT

Reorganizing a well-established company can be difficult. It often involves a lot of emotionally charged conversations and involves cross-examination from a variety of perspectives and stakeholders.

 

TOP TIPS FOR RESTRUCTURING:

  1. COMMUNICATION – change is difficult and can leave an organization feeling uneasy. Ambiguity can lead to fear and uncertainty, and so during times of restructuring, effective communication is important. Take care of talking to staff and answering questions and make announcements to ensure everyone in the organization is on board with key decisions.
  2. PLAN AHEAD – implementing change requires careful planning ahead of time. Taking consideration of not only the benefits of restructuring but also the potential impacts of core processes is vital. Establishing contingency plans, I also wise as unforeseen changes are likely.
  3. MEET IN THE MIDDLE – Talk to various people at various levels of your business to get a varied look at how the business can be restructured. Often, a manager’s vision combined with employee ideas leads to the best solutions, because employees are often able to identify challenges that may be overlooked by upper management.
  4. LOOK FOR NEW AVENUES – In the current pandemic, looking at how to repurpose your current strengths to work around restrictions and cater to current demand can be a viable method of restructuring. This type of expansion requires ingenuity, but businesses can use available assets in new ways to continue making money.
  5. STRUCTURE FOR SUCCESS – The virtue of organizational management is to bring a business more successful. Create specific groups to deal with specific problems like process-based teams as well as product-based teams. The key is finding the sources of weakness and centering effort in addressing them.

Restructuring a business can be daunting. However, in times of crisis, a business must look at their internal strengths so that they can respond to environmental threats and opportunities effectively. This flexibility and willingness to restructure and repurpose can allow a company to not only survive but thrive during turbulent environmental changes.

 

 


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Being able to take control of business decisions anytime anywhere from the cloud has never been more relevant during the COVID-19 pandemic. While the doors of many businesses remained closed during the lockdown, people around the world are finding innovative ways through technology to keep operations up and running. Using cloud computing, businesses can access software programs on the internet as a service, platform, or infrastructure – most importantly it allows for frequent and safe sharing or storing of data. Cloud-based business solutions can be accessed from any device with an internet connection from anywhere in the world – a cost-effective, flexible way to enhance collaborations and business outputs.

 

Highly Affordable 

The benefit of cloud services is the reduction of expensive hardware costs, as hardware needs are left to the vendor. New hardware can be big, expensive, and inconvenient for fast-growing companies. Cloud computing alleviates these challenges as it is possible to rapidly and efficiently access information.

Cloud technologies may also bring about a drastic reduction in labour and maintenance costs. Since the equipment is operated by vendors and stored off-site, there is little need for in-house IT workers. If servers or other equipment need repairs or updates, it is the vendor’s liability and does not cost your firm any time or money. Cloud computing can also increase the productivity of workers and increase output volumes, in addition to the IT labour savings. As cloud-based solutions are faster than traditional means. Cloud-based solutions can cut costs and increase productivity, by enhancing flexibility and collaborations.

 

Increased Flexibility

The other major benefits of cloud-based solutions are flexibility and enhanced mobility. Cloud-based technology allows you and your employees the ability to work from any location in the world with an internet connection. Thus, employees can complete their tasks at home during times when they are unable to make it into the office. With Cloud solutions, you can always monitor the business operations effectively, as it allows real-time access to different business operations, permitting you to make informed and impactful decisions to benefit your business.

 

Scalability 

Traditionally when planning for unexpected growth, a business would need to purchase and store additional servers and licenses – which may take years to make use of reserve resources. However, cloud-based technology makes scaling services easy, allowing you to get additional storage space or features whenever they are actually needed. Upgrading your package is all that is needed, which can be done in minutes with some additional cost.

 

Backup capabilities 

Traditional computing system require back up plans, especially for data storage. As a disaster could lead to permanent data loss if there was no planned backups. However, stored data is automatically saved and backed-up to cloud systems, meaning if something happens to data on your personal device it will still be available in the cloud. Cloud-based systems can ensure your data is secure and accessible at any time or place with an internet connection.

 

Data security

The first concern most individuals have in the cloud-based debate is data protection, however, the cloud is probably one of the safest ways to store your data. The ability to move sensitive information into and throughout the cloud is essential for businesses to function and collaborate efficiently, quickly, and freely. There is also no concern about physical files being damaged or lost with cloud-based systems, as all inputted information is backed up on a virtual system that can be accessed through easily designed search functions.

 To stay competitive a company must be able to respond quickly to changes in the market place. Cloud-based systems can provide many useful advantages due to its customisable and flexible nature, which can aid companies to be more agile and practical in the running of their day to day operations.

These are just a handful of reasons why small and medium-sized businesses are making the switch to cloud-based solutions. The cloud is affordable, scalable, and creates a better end-user experience, making every company an innovative competitor.

 

 

 


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Remote work was once a concept reserved for a handful of professionals, often reserved for those with super-niche skills. Recently, many businesses have been accelerated into the virtual realm due to the COVID-19 pandemic and the resulting lockdown. This large portion of the professional community – now working from home – is steadily showing us that businesses can be run from virtually anywhere. Moreover, small business owners are seeing the benefits of operating virtually, such as eliminating commute times and saving on office rentals.

By turning your company into a ‘virtual business’, you can trim your costs, improve your flexibility and give your team the freedom to work remotely, but this transition does not just “happen.” Adjustments need to be made and you need all of the necessary tools to achieve virtual success. Here are some pointers:

 

Having the right tools

If you’re going to run a virtual business, you need all the same resources used at the office. You also need to be prepared to automate your business processes and invest in cloud-based software.

There are a variety of advanced cloud and software tools that can help you run an efficient business. Here are some examples of tools which will help you optimize your virtual business:

  • File sharing and back-up: GoogleDrive or DropBox
  • Voice and video comms: Zoom, Google Hangouts or Skype for Business
  • Accounting and payroll: Sage Business Cloud or Xero
  • Slack or Microsoft Teams for messaging to make communicating and sharing easier.

 

Prioritizing Communication

Communication is important because it keeps the team in tune with deadlines, schedules, challenges, and expectations. In addition, when working with clients remotely, it is vital to communicate as effectively as possible.

Learn how your clients communicate and try to use the communication methods they use to stay connected. In addition to email, use some of the many online live communication tools

Communication is necessary if you want to build relationships, so establishing open lines of communication across the board is a crucial aspect of a virtual business’ success.

 

Stick to the schedule

Flexibility is great, but to get the most out of your business, you need to have a defined schedule that separates your work time from personal time. Since you work remotely, you may decide you don’t want to be nine-to-five – it’s completely up to you. Regardless of the specifics, stick to it, and be productive in those eight hours.  Working by yourself in a non-office setting requires a great deal of self-discipline. Start your day routinely and end it routinely. Having a cutoff time is important to keep your work life from bleeding into your personal life.

 

Set your goals.

Everyone has very specific goals. We track against those instead of the number of hours worked. Here’s another little-known secret: When people work from home against goals, they work more and are more productive. Having your goals in mind helps keep your business on the right path. You need to know how you want your business to grow and how you want to achieve that growth.

Many analysts believe that virtual businesses will one day be the norm and that traditional brick-and-mortar enterprises will gradually fade in popularity. There are a lot of factors at play with this digital shift, but it mostly comes down to the desire of entrepreneurs wanting to take their business to a global market. After all, technology has made us more connected than ever before. It can be said that with the right tools and self-discipline, you can optimally run your business from virtually anywhere.

 

 

 

 

 

 

 

 


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Cash flow management can be one of the biggest determinants as to whether a company flourishes or fails.

Inadequate cash reserves and forecasting are often a reason why startups and SMMEs do not succeed. Often, Cashflow mismanagement is the main reason why many SMME’s eventually have to shut down.

In a recession, cash flow management becomes even more important, and being prudent may help save a business during tough economic times.

As the saying goes “Cash is king!”. Cash is the lifeblood of an organization, and cash flow management provides a barometer for how likely a business is to survive.

 

Forecast: chance of thunderstorms

Cash flow analysis is often difficult to relate to critical business decisions. At the same time, accurate cash flow prediction may serve as an alarm system for potential future problems, which are rife in an economic downturn.

In periods of economic downturn, it is common for customers to take longer to pay their accounts, as well as for suppliers to tighten their terms. Appropriate forecasting by a business can help reduce shocks to cash flow such as those mentioned above. This means expecting the worst and hoping for the best. Proper forecasting for a recession can be treated similarly to seasonal forecasting, where businesses predict slower sales in certain months (such as coat sales plummeting in the hot summer months). In the current economic climate, businesses should forecast for slower sales, meaning holding less stock, and driving sales through clever marketing techniques to try and counteract consumer’s unwillingness to spend.

 

Analyze the past to predict the future

Effective analysis of financial statements may help to create a better picture of future forecasts.

Understanding industry characteristics and determining the value chain may help a business find areas that can be optimized in order to improve cash flow.

Using these above techniques, businesses are better equipped to make reasonable predictions about future cash flows and funding.

 

Tips to maintain cash flow

  1. Determine your breakeven point. Knowing when your business will become profitable gives you an early goal to strive towards, even if it is not directly linked to cashflow management. This can include a units-based or Rands-based analysis using fixed and moving costs
  2. Focus less on profit and more on cash flow management. Once your breakeven point is known, you can focus on accounts receivable, accounts payable and your shortfalls. If cash flow is getting tight, asking for tighter payment terms from customers may improve your position.
  3. Maintain cash reserves. Especially during a recession, a business’s very survival may depend on having cash on hand to maneuver through shortfalls. Best practice usually means having enough cash reserves to last a 3-6-month period.
  4. Extend payables as long as possible. Another way of mitigating shortfalls would be to extend accounts payable for as long as possible. This means paying suppliers on the longest possible terms without paying late fees.
  5. Boost sales with creative incentives. Coming up with fun ways to drive sales during a recession can not only increase profit through greater sales volume but may also improve reputation and customer relations if done correctly.
  6. Cost cutting- eliminating unnecessary spending e.g. regular employee’s entertainment.

 

We recently launched myMoolaBoard. This specialised software allows businesses to have a real time view on the financial health of their business. Use myMoolaBoard Income and Expense adjustments functionality to assess the impact on your current and projected cash flow if you are planning on making new a purchase or increasing operational expenses.
MyMoolaboard produces useful summaries for Sales, Cash Flow, Profit, Accounts Receivable, Accounts Payable and many more.

https://outsourcedfinance.co.za/mymoolaboard/

 

 

 

 

 

 


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The outbreak of the COVID-19 virus has changed the face of business as we know it. Most countries facing the pandemic have implemented either a complete or partial lockdown, affecting social life and industries across the board. Businesses have been faced with a multitude of problems, namely, how to continue with business, retaining staff and keeping morale high in a time where many are feeling hopeless.

It has been said these types of disasters often do more than simply change the course of history, but rather fast-track changes and innovation. Businesses are forced to adopt digital advancements, even faster than past years.

 

The bottom line: Financial and productivity impacts for SMME’s

Firstly, on a financial level, the lockdown has unavoidably led to slowdown for all businesses, and the economy on a whole. The Organization for Economic Cooperation and Development has warned that the virus poses the biggest risk to the global economy since the 2008 financial crisis.

The South African Reserve bank has predicted a contraction of between 0.2 and 0.3% for the South African Economy in 2020. This does us no favors seeing the recent announcements that the country has entered into a technical recession. South Africa’s largest trading partner happens to be China, and with their predicted GDP growth down 1% since the crisis, our export figures will likely decrease too.

With the current lockdown, South Africa stands to lose about R300 billion in GDP, and, unfortunately, a lot of this falls on SMME’s, which make up a large base in the economy. Small and Medium sized businesses stand to lose the most during this crisis, because of their small capital holdings, and a generally increased vulnerability to changes in the economy. When large economic shocks like the pandemic happens, SMME’s are the first to feel the force of the tidal wave of profit and productivity losses.

Productivity wise, SMME’s will likely face far lower demand for goods and services, as people staying home during the lockdown are forced to cut out any unnecessary spending. The other problem faced by SMME’s is how to keep employees focused on retaining what business they can during the lockdown. This is task is made all the more difficult when employees are working from home, and there is little way to ensure they are working at full potential and engaging properly with clients.

 

Adapt or die

Businesses need to look for innovative ways to continue doing business to mitigate the negative outcomes stemming from the spread of the coronavirus.

They can do this firstly by using digital conferencing tools such as Zoom or Google Hangouts to keep in touch with employees, conduct meetings, and attracting/approaching new clients in an unpragmatic manner. This type of digital interaction may become far more important post the pandemic and so, businesses need to do well to incorporate this type of digital interaction now.

This ever-changing face of technology has enabled businesses to use cloud-based systems to conduct transactions. Companies have no choice but to cross over to cloud-based applications, to keep up with trends.

Businesses also have the opportunity to increase their geographical footprint by going online.

Looking for ways that a business can avoid the onslaught of negative consequences that come from this pandemic may be vital in the future. Unfortunately, the nature of these shocks is usually one of unpredictability and irreverent force. Businesses need to constantly be evaluating and scanning the internal and external environment for these types of weaknesses, to remain relevant in an ever-changing world.

It is an environment that seems unforgiving, those who cannot adapt in time will not survive the pandemic. And those who do manage to survive it, will conduct business in a new era, where things have permanently transformed.

 

The future of business

The face of business may have changed permanently by coronavirus.

Businesses looking to ensure the future of their business should carefully assess what they keep in terms of emergency capital funds, as well as how they can better prepare for such types of shocks in the future. They also need to look at finding ways to create structure around what may be the new norm of work environments, namely working from home and using digital conference and meeting facilities.

The world is being forced towards a digital environment, and this presents a necessity for businesses to survive in the world of tomorrow.

It’s hard to predict how business will be after the pandemic, but we all know it’s going to be different.

If your finance team could not work during lockdown due to Desktop/ Server based System, call us to assist with Cloud Accounting System migration,  fast-tracking your finances into the 4IR.

 


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While worldwide economies are threatened with the possibility of coming to a grinding halt due to the COVID-19 epidemic, small businesses in South Africa face apprehension and uncertainty as they head into the unknown realm of the national shut down.

The question posed is “How will Small, Medium and Micro Enterprise (SMMEs) survive during self-isolation, mandatory work from home policies and the potential loss of suppliers/ buyers in the market?”

Thankfully these questions have been answered at a government level, with the implementation of safety nets for small businesses around the country ensuring that while the country avoids contagions businesses can survive the market slump.

UIF claim for temporary shut down

The department of labour has announced special regulations that will enable the Unemployment Insurance Fund (UIF) to offer relief to companies that find themselves in distress due to the COVID-19 outbreak. If a company is forced to shut down for a limited period due to precautionary health measures in response to COVID-19,  the UIF benefit will apply. This benefit is to prevent layoffs and ensure that employees still receive payments to ensure their livelihoods.

The department of labour has extended benefits for cases where employees have needed to practice self-quarantine for two weeks or longer as a result of exposure to the virus. The time taken off work due to isolation will be recognised by the department as special leave – provided that this leave meets government health guidelines, employees will then receive paid UIF benefits. The department of labour has issued these reprieves for small businesses’ to ensure their survival once the pandemic is over, as well as to reduce layoffs and curb potentially high unemployment rates that will be caused by the COVID-19 pandemic. Other measures will be taken by the South African government to ensure that small businesses survive the market slump caused by the national shut down, to prevent further pressure on the economy once the shutdown is over.

Government SMME support

Small business development minister Khumbudzo Ntshavheni has announced that the South African government will service the debt of small businesses during the COVID-19 pandemic national shutdown. This is a response by the government to the inevitable slowdown of the economy due to suppressed productivity during this period. In an attempt to curb any further adverse effects caused by the national shutdown, the government is giving a lifeline to small businesses that can’t afford the loss of customers and suppliers. The Debt Relief Fund has been created to provide relief on existing debts and repayments, to assist SMMEs during this period. However, there are requirements needed before aid can be given, including the demonstration of a direct link to the impact or potential impact the COVID-19 pandemic had on business operations.

The small business department has also announced relief for small businesses and in some cases, the likes of hawkers and the self-employed, making available a range of funds and mechanisms for survival. Some small businesses will be permitted to receive loans at prime less 5%, which currently means an interest rate of 3.75% per year. However, those that try to miniplate and take advantage of the crisis will be punished with interest rates of prime plus 10 percentage points, meaning chancers caught out will pay 18.75% in interest. The requirements needed for support from the various funds include:

  • The businesses must be 100% South African owned
  • At least 70% of employees must be South Africans
  • Recipients must be tax compliant and registered with the South African Tax Revenue Services (SARS)

The government is not the only organisation that has come to the aid of SMMEs with many banks looking at the role they will play in ensuring the prosperity of the South African economy.

Bank relief for SMMEs 

Along with the government, many other organisations are stepping up to the plate to ensure the survival of SMME’s. Standard Bank has announced the Coronavirus Business Interruption Payment Scheme, which will provide payment relief to SMME’S for 90 days – launching on the 1st of April. To be eligible for this payment relief the following requirements apply:

  • Your business is South African based, with a turnover of no more than R 20 million per year
  • Your Business Current account, Bizlaunch account, and Business Lending accounts are paid up to date
  • Your business is in good standing

The Reserve Bank has also guaranteed help by slashing rates by 100 basis points for the first time in a decade, announcing additional liquidity measures to ease the pressure on the system. First National Bank also jumped on the bandwagon and announced that the company is working with the Reserve Bank and Banking Association SA to find solutions to support consumers and businesses. These banks have recognised the impact the shutdown will have on businesses and the economy as a whole – supporting those that are beating the odds by continuing operations via digital means.

Adapt to digital 

As mandatory work from home policies are implemented, having a digital presence has never been more relevant. The time to adapt to digital is now and each business must take the necessary measures to ensure that operations continue despite the national shut down. The following tips can be followed to ensure that your company can work remotely through the digital realm:

  • Get everyone behind the change – the first step is to ensure that each person in your team is embracing the necessary changes
  • Identify how your business can operate digitally – have a good understanding of how your business is going to operate digitally, whether that means a new website or an overhaul of internal structure to support remote communication.
  • Invest in cloud computing services – by moving to cloud-based solutions, huge savings can be achieved in terms of management and space. Google Drive, Microsoft Box, Dropbox are easy to use and setup takes just a few minutes; you can have your business fully backed up and accessible anywhere in the world.
  • Put more into digital marketing – ensure that you have an online presence, make sure that customers will be able to find your services o Digital assets such as a relevant website and social media presence are vital.

Adapting to digital can be tricky, thus a business must train its employees to use the necessary platforms adequately before making the shift. Many online platforms can also support conversation between your employees such as Skype, Zoom and Google Hangouts – to ensure the effective flow of information in the organisation.

Working as a collective is key to maintaining a healthy economy once the dust settles, this includes governments, corporations, small businesses and individuals alike. Whilst panic incurs worldwide due to the pandemic, businesses should play their part in sticking together to mitigate the negative effects that will arise from the COVID-19 outbreak. It’s time for adaptation to ensure survival.

 

 

 

 


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Small Businesses are the beating heart of South Africa’s economy – with estimations that over 90% of registered businesses in the country fall under this category. These corporations are the lifeline for new job creation in a country rife with unemployment, generating meaningful jobs and fostering the economy – keeping the money close to home while supporting local neighbourhoods and communities.

Due to the importance of business creation as a tool for economic growth, the South African government has incentivised business creation by adding a new corporate classification – Small Business Corporations (SBC).  The pertinent questions that must be asked are “what qualifies a business to be an SBC and how does one benefit and maintain this type of entity?”

 

What is an SBC?

Section 12E of the Income Tax Act, pertaining to SBC’s was created for the specific purpose of encouraging start-ups and job creation by presenting the opportunity for small businesses to benefit from reduced tax rates.

Entities have to meet the following conditions to qualify as a SBC:

  • The business must be registered with the Company and Intellectual Property Commission (CIPC).
  • The business must have a recorded turnover of less than R20 million per year
  • All shareholders in the company must be natural persons.
  • As the business owner, you should only own one entity (although there are certain exceptions, including owning shares in a listed company).
  • Less than 20% of turnover should come from ‘investment’ income and the rendering of ‘personal’ service.

If all these conditions have been met, a business qualifies as an SBC, meeting the requirements to make massive income tax savings.

 

What are the tax benefits of registering as an SBC?

Companies in South Africa (including closed corporations) are generally required to pay a flat rate of 28% income tax. However, SBC’s are subject to reduced rates on income up to R550 000. To qualify for these more favourable tax rates (seen in the table below), a business must mark on their annual company tax return that they are an SBC.

 

SBC tax rates for financial years ending on any date between 1 April 2019 and 31 March 2020

 

Taxable income (R) ​Rate of tax (R)
0 – 79 000 0% of taxable income
79 001 – 365 000 7% of taxable income above 79 000
365 001 – 550 000 20 020 + 21% of taxable income above 365 000
​550 001 and above 58 870 + 28% of the amount above 550 000

 

Besides the reduction of tax rates, these entities can legally depreciate productive assets at an accelerated rate by capturing deprecation as an expense on income statements.  Manufacturing equipment can be deducted fully in the year of its purchase, other business assets can be amortised at a rate of 50% in their year of purchase, 30% in their second year and 20% in their third year. The key outcome of this taxation system is that it decreases taxable income while maintaining accounting profit, meaning lower amounts of payable tax relative to estimated profits of the company.

 

Maintaining your status as an SBC

This classification encourages business creation in South Africa by affording entrepreneurs the chance to watch their small business grow – without the burden of high income tax on initial profits. However, to ensure the maintenance of this classification business owners must keep a delicate balance of the SBC category requirements mentioned above.  SBCs were only created to lessen tax burdens on initial profits for smaller firms, once business growth has exceeded the taxable income required for SBC status, it will then be subjected to the standard flat-rate income tax.

The world of tax can be tricky to navigate for small business owners – which is why the South African government created the SBC classification, simplifying and reducing taxes for promising start-up ventures. Benjamin Franklin was correct in saying “nothing in life can be certain but death and taxes”, however, more favourable tax rates for smaller businesses’ can always be considered a bonus in the South African business landscape.

 


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As a business owner, the strategic importance of building and retaining a competent and reliable work-force can never be overemphasized. Your employees are an extension of your entrepreneurial vision, and in fact, they are often the custodians of the company’s values and culture that you hold so dear.

Business Magnate, philanthropist and investor Sir Richard Branson once stated that “Clients don’t come first, employees come first. By putting the employee first, the customer effectively comes first by default.” We couldn’t agree with this anymore.

The simple fact is that investing in your employees is non-negotiable. Investing in your employees is investing in the future of your business.

 

Client satisfaction

Investing in your employees can have a direct impact on how your clients interact with your company.

Investing in your employees and empowering them with the skills required to do their job,  will result in an increase in your customer satisfaction. Employees who are confident and skilled at their jobs are likely to give your clients the appropriate level of care and attention. In this competitive business landscape, superior customer experience may be the catalyst to turning potential customers into loyal clients.

 

Reduce employee turnover

Your employees are the most important asset of your company. As an entrepreneur employee turnover doesn’t just eat into your time, but also ultimately into your bottom line.

The opportunity cost of going through the recruitment process and onboarding a new hire is considerably higher than putting measures in place to retain the current talent.

Much like anyone else, talented employees have a thirst for growth, both from a professional and personal view.  Investing in your employees is an easy means to ensure that they are fulfilled and see a future for themselves in your business.

 

Improve team morale

Investing in your employees is also a great way to improve the team’s overall outlook on their roles and ultimately, your company. Encouraging employees to gain industry certifications, further their studies or even partake in professional workshops can have a positive impact on their general approach to their jobs. When employees know that their company has an interest in their professional development, they are more likely to start feeling loyal to the company.

 

Attract top talent

The people you choose to hire are ultimately what will either make or break your business.

When your business is known to invest in its employees, you attract and keep the best candidates, and also build a strong work culture that is unafraid of hard-work, innovation, and change.

Investing in your employees is not only great for them, it’s also beneficial for your company at large.

You don’t necessarily have to spend lavishly to achieve this  – we’ve compiled a list of free sites that your employees can access to start upskilling themselves.

Here are the Top 10 Sites for Free Online Education:

  1. Udemy
  2. Codecademy
  3. edX
  4. Coursera
  5. iTunesU Free Courses
  6. MIT OpenCourseWare
  7. Stanford Online
  8. Khan Academy
  9. Open Culture Online Courses

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Small, medium and micro enterprises (SMMEs) are the lifeblood of any bustling economy.

SMMEs are often hailed as the key to achieving economic growth and are globally known to be the mechanism to generate new jobs. The Small Business Institute estimates that approximately 98% of all registered businesses in South Africa are SMMEs.

Despite President Ramaphosa’s assertion that ‘the growth of our economy will be sustained by small businesses’, a lot of entrepreneurs often feel left out of the economy and lament the lack of government support.

According to the Enterprise Observatory of South Africa, an average of 31 companies with taxable income of less than R10 million close down each week, and the number of employees hardly increases as SMMEs grow older. These statistics should be of great concern to a Government that purportedly wants to use SMMEs to drive the much required growth. Could it be that the Government says one thing and then does the opposite in practice?

 

State Capture

The level and extent of state capture continues to unravel, with each new report coming to light making it even more apparent how wide-spread the problem was/is. This is also compounded by the fact that the majority of the State Owned Enterprises (SOE’s)  that were involved in these activities are in bad shape, requiring massive bailouts from the public coffers.

The general focus of the reporting around state capture centres on the wasted resources, crumbling infrastructure and the resulting inability to deliver basic services. The one impact we hardly explore is how state capture has robbed the country of multiple opportunities to empower thousands of local SMMEs, building a capacity for continued economic growth.

 

Wasted opportunity

The Daily Maverick estimates that state capture cost the country roughly R1.5 trillion in the four years preceding 2019. These valuable contracts could have easily been used to stimulate the economy by making use of SMMEs. As opposed to large multinationals, SMMEs typically don’t work in isolation and rely on their networks to deliver their products or solutions. Empowering one SMME could easily result in many other SMMEs around them being introduced to the value chain.

 

Unfriendly Business Practices

For most entrepreneurs, doing business with the Government is a difficult and risky exercise as Cash Flow is critical to the survival of any SMME. We often hear with shock about how SMMEs have to wait for up to 90 days for payment to be processed after services have been rendered. This long turn-around time to process payment is just another example of the difficulties faced by entrepreneurs trying to conduct business with the state.

 

Impact on Innovation

The tendering process is often marred by tender irregularities, political interference, cronyism, and outright bribery. Beyond the obvious financial impact, corruption has a far wider reaching impact on the general business culture of the country. Once critical factors such as, professional competence, a solid track record, and the ability to deliver timeously are trumped by proximity to powerful individuals or groups, entrepreneurs start to become wary. The need to specialise, innovate and offer their unique solutions to the state is then gradually diminished. In an ideal setting, the state should be using SMMEs as a tool to innovate, however, many can argue that wide-scale corruption is a deterrent for honest, hard-working entrepreneurs.

If the Government is indeed serious about reaching its already low forecasted economic growth figures, they need to prioritise creating an environment where SMMEs can compete and take a more active participation in the economy.


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For a business to be successful, keeping accounting and financial records in order is essential. Finance and accounting departments must work together to prepare for tax returns filings and be ready for audit as the calendar year is coming to an end.

Compliance

For tax and other compliance reasons, every entity is required to report its results annually. The South African Revenue Service (SARS) prescribed tax period for individuals usually ends on the last day of February. However, other corporations can select their financial year ends with some exceptions.

According to the Companies and Intellectual Property Commission (CIPC), the compliance checklist is applicable to all companies including, private companies, non- profit companies, public companies, and personal liability companies. Before submitting their yearly returns, companies must complete the compliance checklist.

To ensure a smooth transition into a new fiscal year and to avoid missing any crucial steps, the following are some essential year-end tax, finance and compliance checklist.

  1. Reconciling All Balance Sheet Accounts

You must go through all your business credit and bank accounts and do reconciliation for all the payments and charges made. You must ensure that the statements match with your business records and any discrepancies that occur must be investigated.

  1. Documenting Accounting Transactions

Another crucial step is to document all the accounting system entries and make year-end changes to account for revenue and expenditure in terms of accruals and deferrals.

  1. Reviewing Income Statements Accounts

It is also important to review expense accounts to establish whether there are misclassifications to prepaid expenses, fixed assets or other accounts in the balance sheet. In addition, looking for expenses that might have been charged to the wrong expense account is important because it helps in reclassifying the expenses where necessary.

  1. Creating an Annual Budget

By evaluating the interim financial statements of the current year, you can start to plan an annual budget. This will give you an understanding of the current year expenditures, which drive the budget and financial forecast for the coming year.

  1. Payroll and Vendor Tax Forms

Any non-standard income on employees like taxable reimbursements on education, life insurance or other forms of taxable income that is not processed through the payroll cycle must be included. It is mandatory to submit tax returns to SARs on the given date.

Entrepreneurs whose income is generated from sources than wages such as investments, or trade are needed to give in two provisional tax returns. Additionally, they must ensure payments of two provisional tax are made where applicable in the course of the tax year.

  1. Becoming Audit Ready

You must make sure that your financials are generally accepted accounting principles (GAAP) compliant. This is because when it comes to selling a business or seeking funding, investors require financials that are accurate. As such, working to be compliant means you are audit ready.

7. Reviewing Internal Controls

You should also review your internal controls and processes to ensure they work effectively.  Correct the loopholes that may allow high errors or fraud in the process.

 

Outsourced Finance have qualified accountant that can assist you with your year-end compliance process