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Small Business Funding Available to Entrepreneurs

One of the biggest challenges facing entrepreneurs in South Africa is getting access to funding or capital.

A great idea remains a great idea until the entrepreneurial business gets off the ground and that usually requires some form of third party funding either through private individuals / companies, banking institutions or through the funding programmes offered by the government.

Below is a summary of some of the small business funding mechanisms (certainly not exhaustive) used by entrepreneurs to convert a great idea into a great business. Before applying for any type of financing, it is advisable that the small business owner consults a reputable and experienced financial expert that can assist and guide them in order to achieve their goal of acquiring the appropriate funding.

Government Grants

The government does award funds to entrepreneurial endeavours that meet certain criteria. These grants do not need to be repaid and do not accrue interest but do have strict qualification criteria as mentioned above. These grants are typically available to companies that support and encourage the government’s stated economic policies and deliverables such as black economic empowerment, job creation and economic growth.

There are 14 grants available to small businesses that are used by top entrepreneurs. These are:

Aqua-culture Development and Enhancement Programme (ADEP)
Automotive Investment Scheme (AIS)
Black Business Supplier Development Programme (BBSDP)
Business Process Services (BPS)
Capital Projects Feasibility Programme (CPFP)
Critical Infrastructure Programme (CIP)
The Co-operative Incentive Scheme (CIS)
Incubation Support Programme (ISP)
The Manufacturing Competitive Enhancement Programme (MCEP)
Manufacturing Investment Programme (MIP)
National Youth Development Agency (NYDA)
People-carrier Automotive Investment Scheme (P-AIS)
The Sector Specific Assistance Scheme (SSAS)
Support Programme for Industrial Innovation (SPII)

Criteria for qualification of grants:

Due to the number of grants available we recommend that each grant be thoroughly researched to ascertain if your small business qualifies for any of those listed above. We further recommended that you make use of the services of an experienced and qualified professional (such as a part-time financial manager) to help you navigate these waters. Below are a few of the most important criteria that your business will need to comply with in order to qualify:

The business needs to conform to the applicable BBBEE Codes.
Minimum and maximum turnovers vary from grant to grant.
The business must have been trading for a minimum of one year.
The business must be a registered entity with a tax clearance certificate, VAT number, etc.
The business must comply with all applicable regulations such as CIPRO etc.

Transformation and Entrepreneurship Scheme from the DTI

The Transformation and Entrepreneurship Scheme was developed to provide finance to marginalised groups in South Africa. The scheme was put in place to stimulate and develop largely entrepreneurial ventures by making the mainstream economy accessible to women, people with disabilities, workers and communities. The Transformation and Entrepreneurship Scheme is designed to help entrepreneurs access finance to develop and grow their businesses. It is important to note that these are funds that we are talking about here, not grants. As a result, these monies would typically need to be repaid with interest.

The scheme provides funding for start-up businesses, expansions or expansionary acquisitions and comprises the following broad funds:

Women Entrepreneurial Fund;
People with Disabilities Fund;
Equity Contribution Fund;
Development Fund for Workers; and
Community Fund.

There are general criteria set out for all of these funds:

Applicants must be able to demonstrate that their business is economically viable and financially sustainable.
The business must be in one of the IDC’s mandated sectors.
Provision must be made for the employment of people with disabilities.
Funding provided will generally not be less than R1-million.

Debt Finance

Debt finance is small business funding that is borrowed to run a business. In exchange for lending the money, the individuals or institutions that have loaned the money to the business become creditors of the business and are entitled to the payment of interest on the money borrowed and to have their loan repaid at the end of a given time period or over a pre determined time period. The big banks are usually the providers of this type of small business funding but typically require guarantees and sureties prior to disbursing funds and take little (or no) risk in the event of default.

Venture Capital (VC)

Venture capital finance is provided by outside investors into early stage businesses with high growth potential accompanied by high risk in return for above market returns. The venture capital funds obtain these returns by owning equity in the companies they invest in. VC is attractive for new companies with a limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or qualify for typical debt finance. It must be kept in mind that equity finance is a lot more expensive in the long run than debt finance as the Entrepreneur is giving away future cash flows and profits when he / she sells equity.

Private Equity (PE)

Private Equity companies are similar to Venture Capital companies but would typically only invest in larger and more established companies. Private equity funders can usually commit large sums of money for longer periods of time. In the current market, private equity companies are mostly investing in medium to large businesses, but there are a number of boutique PE firms that have found a niche market servicing smaller companies requiring smaller investments. If you intend approaching a VC or PE firm you must be prepared for a full due diligence exercise on your business. Make sure your audited accounts are up to date and that you have adequate income and cash projections into the future that can demonstrate the ability to provide an investor a return on his investment.

Asset Finance

Asset finance is provided by most, if not all, banking institutions in South Africa. Asset finance refers to providing small business funding for the business to buy movable assets and equipment in a way that makes it easier to manage cash flow in the business. The banks can finance capital equipment such as transport vehicles or fleets, mining equipment, materials, networks, mainframes and medical equipment just to name a few. This type of small business funding is probably the easiest form of financing obtainable as the provider typically retains ownership of these assets until paid for in full. This lowers the risk, which in turn lowers the cost and barriers to entry. A company needs to consider it’s Debt / Equity ratio carefully but where possible should finance these types of assets instead of utilising cash. The asset qualifies for wear and tear allowances against normal income tax and the interest incurred on the asset finance is also tax deductible. Most Entrepreneurs should leave their hard earned cash in the bank and use it as a buffer against seasonality and unforseen downturns.

At most you only get one shot at obtaining early stage small business funding so, as discussed earlier, make sure you have all the supporting documentation, financials, certifications, records and a sound business plan with realistic forecasts – some good financial advice that you can acquire from a part-time financial consultant can often make the difference between success and failure.

February 12, 2014 / No Comments /

Why Top Executives are Utilising the Part Time Chartered Accountant

Any business owner with a Chartered Accountant on their team is already at a competitive advantage to other small businesses. Why? Many small business owners make use of either book keepers and clerical staff or they run the company financials themselves. Whilst this may provide monthly financial statements, what is missing is sufficient insight into the financial well-being of the business overall. Historically, the only time small business owners engage an accountant of any form is once a year at financial year end when their tax return and potentially audit needs to be done.

There is a growing trend worldwide where top executives are utilising part time chartered accountants on a regular basis. These chartered accountants can prove to be an extremely valuable asset for small business owners to help them grow their business, without depleting the companies financial resources. They are used part time, which means they are an affordable resource to the business. Chartered Accountants, by their very nature, are experienced and highly qualified financial experts and business practitioners. They are able to provide advice and guide company owners and management on how best to grow their business and place them on a sustainable growth path.

Essentially, by utilising part time Chartered Accountants, small business owners can focus on ‘the business of business’. As an owner of a small business knows, budgets are usually tight and due to the constraints of that tight budget many small business owners assume the role of financial manager, sales manager, HR manager, procurement manager and marketing manager. By outsourcing the financial aspect of the business to a trusted and reputable part time Chartered Accountant, small business owners are able to free up valuable time so they can focus on making sales which in turn generates earnings for the business. There are a few highly regarded companies in South Africa that specialise in outsourcing financial talent on a part time or interim basis.

What benefit does a part time Chartered Accountant bring to a small business?

1. Experience:

Chartered accountants have come through a rigorous regime of training and examinations, followed with significant practical experience, upon which they draw for your benefit. Part-time chartered accountants have years of experience from which to draw and are able to provide companies with valuable advice and insights and can provide a platform that escalates business potential.

2. Operational efficiencies

CA’s have experience with regards to working capital management, margin improvement, Systems/Staffing/Controls and reporting quality.

3. Strategic Input

CA’s are able to undertake financial forecasting, financial modelling, scenario planning and sensitivity analysis for a small business. They able to advise on risk assessment, mitigation and issues surrounding capital structure, the overall cost of capital and investment strategies.

4. Taxation

Chartered accountants have a good understanding of tax frameworks and are able to provide support in determining and saving on tax for the company.

5. Company Law

Chartered Accountants, have a deep and thorough understanding of mercantile and company law. They are able to handle the legal aspects of contracts, viability of new projects and investor relations.

6. Cost saving

Why employ a full time Chartered Accountant when they are only needed three days a week? Engaging a part time Chartered Accountant enables top management and business executives to get the best possible financial advice at a fraction of the cost of employing a full time Chartered Accountant.

7. Flexibility

Part-time Chartered Accountants are able to tailor-make a solution that suits your company’s needs and budget. They are able to effectively assess a company’s financial status and have a deep understanding of the value and need of fractionalised expertise.

February 11, 2014 / No Comments /

What to include in your Financial Manager job description

The role of the financial manager (FM) varies according to the size of the company involved. In general, they oversee most of the financial aspects of the company and are responsible for the flow of accurate and timeous financial data to the company stake holders. Financial managers need to be able to provide accurate and relevant information for internal purposes for use by the CEO and CFO in order to make informed decisions or be communicated to external parties such as shareholders, investors, banks or financing / lending institutions.

It is the responsibility of financial managers to surround themselves with the right teams and implement systems that get the job done. To get this right they needs a sound knowledge of the day-to-day operational areas that are critical in all businesses, such as working capital management, margin improvement, controls, systems and reporting. The financial manager’s role is essentially “hands on” in nature and should not be confused with the Financial Director role which is more strategic in nature. Having said that, no Financial Director role can be effectively executed without an excellent Financial Manager(s) and related finance team reporting through to him / her.

Responsibilities that need to be covered in the financial manager (FM) job description. While this is not meant to be an exhaustive list of all responsibilities we feel that the following four main functions are critically important and certainly do need to be incorporated:

Planning

Define financial requirements against mandated goals and objectives; how annual and longer-term goals and objectives can be met through the use of financial resources, and translate these into specific financial commitments.
Assess these requirements in financial terms, determining what is achievable using available financial resources through costing all aspects of these requirements.
Provide a roadmap to support the budgeting process.

Budgeting

Forecast estimates for the predicted use of financial resources against the budgeted financial resources during a given fiscal year or period.
Allocate funds to specific accounts in the chart of accounts.
Monitor the actual use of financial resources against the approved budget and identify variances.
Adjust the approved budget under directives from appropriate management and/or in response to variances between planned and actual expenditures.
Report findings and action taken to the appropriate authorities.

Management & Control

Comply with the legal and statutory framework of policies, business processes, procedures and standards pertaining to recording, classifying, monitoring, and reporting on use and disposition of financial resources.
Establish, maintain, and apply an institution-specific framework of policies, business processes, procedures and standards pertaining to recording, classifying, monitoring, and reporting on the use and disposition of financial resources.

Performance Measurement

Produce financial reporting which is the recording and presentation of financial statements that show the organization’s financial position, operating performance and cash flow over a period of time through the use of financial statements.
Create management reports on a regular basis that are relevant to decision-making processes, measuring performance against measures and targets (output and outcomes) established during finance management planning, against budget objectives, and/or against financial management performance standards used within the industry.
Evaluating and analyzing findings, and exploring options for corrective action.

The benefits of using a part-time or interim Financial Manager (FM)

With the ever changing business landscape more and more South African companies are choosing to outsource the position of financial manager in line with International trends. There are a few reasons for this:

Cost

Full time, quality Financial Managers come at a huge expense to a company. These costs can be prohibitive to most SME’s and while the business certainly does need the expertise to grow and expand it is sometimes very difficult to justify the expense of a full time resource. The part time offering allows the company access to these required financial skills at a fraction of the cost. There are no up-front placement fees and clients are charged an all-inclusive hourly rate with none of the hidden costs associated with full time employment that can add 20% to 50% to your cost to company salary bill.

Exceptional Talent

Companies that specialise in the provision of these services are typically owned and managed by seasoned CA’s who have had many years working as FM’s and FD’s and know what to look for when it comes to financial talent. They only employ individuals who have had the necessary experience to deliver great value to the client from day one of any engagement.

Flexibility

For the part time / interim model to work effectively, the service offering needs to be delivered on a flexible platform. A more intense involvement in the early stages followed by a less intense involvement on going is the norm for most engagements. The individuals who are employed by these consultancies do so because their lifestyles / needs are not conducive to full time employment.

Administrative effectiveness

Outsourcing the financial manager position is effective in cutting down on administrative processes. By engaging a part-time or interim financial manager the company can avoid long contractual agreements, taxation complications, medical aid and provident fund contributions and leave provisions. Typical contract periods are month to month which further reduces the risks associated with a full time employment.

The right fit

The employment process is a bit like playing Russian roulette. The majority of placement consultants are not financial professionals and leave the hard decisions to the FD or HR manager after providing a mountain of CV’s to wade through. In our experience, even great looking CV’s with fantastic references and outstanding psychometric test results can be disappointing when it comes to delivery and a 3 month probation period can be a very limited time to make a full assessment as to ability.

A financial management consultancy employs its own staff and as a result of having a core group of permanent resources that have worked together for some time and gone through a stringent selection process, are more suited to make the call on the right individual for your business. There is no guarantee that they will be able to get this fit correct 100% of the time but at least there is the option of swopping the resource out with a more suitable candidate should the need arise. There is no such option with full time placements and the only options that are available tend to be very expensive ones.

February 5, 2014 / No Comments /

How the Income Tax Act can help the Entrepreneur

Section 12E of the Income Tax Act was created specifically to encourage new business ventures and to create jobs and this encouragement comes in the form of reduced taxation for qualifying small businesses. It is critical for the Entrepreneur and small business owner to understand how to structure his / her business in order to qualify for this reduced tax benefit. Please note that this section is NOT intended to benefit any professional person who renders his / her personal services through a company or close corporation. Personal services entities who maintain at least 3 full time employees for core operations would qualify as a SBC. It is important to note what is defined as a “personal service”. The first category includes professional or semi-professional activities that require a particular qualification and in many cases a license, certificate or membership of a professional body in order to practise. Examples here would include accounting, architecture, education, engineering, law, health and real estate. The second category comprises broadcasting, commercial arts, entertainment and sports.

Qualifying criteria for small business corporation according to the Income Tax Act:

Currently, a Small Business Corporation (SBC) is defined in The Act as a close corporation, co-operative or private company, where the gross income does not exceed R20 million per annum and which complies with ALL of the following requirements:

All the shareholder/members must, at all times during the year of assessment, be natural persons (i.e. individuals and not other companies); and
Shareholders/Members may not hold any shares/member’s interest in the equity of any other Company/Close Corporation. A share / interest in a listed company, collective investment scheme, friendly society and less than 5% holdings in certain other corporations would be exempted from this clause.

Not more than 20% of the Gross Income and Capital Gains consists of Investment Income and income from the provision of professional / personal services. Investment Income would include interest, rental income, royalties, dividends and trading in fixed property and marketable securities.

What is the benefit?

The best way to explain this is by way of example.

The effective tax of a resident company (excluding a personal service provider) that is assumed to pay out all profits as dividends is calculated as follows:

Taxable Income: R100.00

Normal Tax (28%): R28.00

Available for Distribution: R72.00

Dividend Tax (15%): R10.80

Total Tax (38.8%): R38.80

The rates of tax levied on a Small Business Corporation (SBC) for years ending between 1 April 2013 and 31 March 2014 are as follows:

Taxable Income : Amount

R0 – R67, 111 : Nil

R67, 112 – R365 000 : 7% of the amount above R67 111

R365 001 – R550 000 : R20 852 + 21% of income above R365 000

R550 001 and above : R59 702 + 28% of income above R550 000

If we assume that your business makes taxable income of R600, 000 for the 2014 tax year the following tax would apply:

Normal Resident Company: R600, 000 @ 38.8% = R232, 800

Small Business Corporation: R59, 702 + 28% of R50, 000 = R73, 702 + Dividend Tax of R11, 055. Total Tax = R84, 757.

This results in a tax SAVING of R232, 800 less R84, 757 = R148, 043. This is a massive saving for a new business that would typically be battling with Cash Flow issues.

Over and above these normal income tax savings, SBC’s also qualify for accelerated wear and tear allowances as well as Capital Gains Tax relief.

It is strongly advised that small business owners / entrepreneurs consult a tax professional, experienced accountant, lawyer or part time Chartered Accountant that is familiar with the Income Tax Act to help advise them on company structure in order to take advantage of the tax benefits that are available to them. This may not be as daunting as it sounds as there are companies on the market that offer this kind of service on a part time or project basis.

February 4, 2014 / No Comments /

Project Financing insights from visionary CFO’s

A challenge faced by many CFOs is the long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the company. Since a project financing structure often involves a number of different equity investors, as well as a ‘syndicate’ of banks or other lending institutions that provide loans to the operation, a critical element is the financial modeling to support the success of the project.

CFO’s are often required to demonstrate increased control over the business from their finance function whilst at the same time reducing costs, yet be visibly adding value to the business, both through processes and it’s people. CFO’s are finding greater cost pressures from inside their organisation and dealing with these pressures has meant that the more visionary CFO’s have transformed the finance function to be more creative and resourceful, especially when undertaking new project financing and the associated financial modelling and strategies. They are turning to highly skilled and experienced financial experts to assist with project financing. This means that CFO’s are able to have increased output whilst saving costs – maximum output affordable investment with managed risk.

“We have found that more and more CFO’s are leaning towards using part-time or interim finance resources to consult on new or proposed project financing assignments. These outsourced finance individuals have many years of experience behind them in a variety of industries and are able to bring valuable insights to the table,” comments Richard Angus, CEO of The Finance Team.

Outsourced financial executives bring many skills to the table. They are able to supply insightful business intelligence through up to date understanding of compliance and control, reporting procedure, operational efficiency and insights. These outsourced resources keep pace with changing environmental issues such as regulatory efficiencies, reporting, tax legislation, lending procedures, forecasting and profitability.

“Outsourced financial executives have a wealth of experience and knowledge; therefore, they are able to assist the CFO with integrated planning strategies, accurate forecasts as well as qualitative and quantitative analysis of the financial data. They are able to do this on a project basis thereby limiting expenditure and minimising risk as these resources are not employed full time. It is advisable however, when engaging a part-time or interim finance resource, to ensure that they are reputable and have references that can be checked. The alternative is to engage the services of a company that provides trusted part-time or interim finance resources. Their associates will have undergone a strict and thorough screening process before they are permitted to join the team. Your success is their success,” concludes Richard.

(Image Credit: IFR)

January 29, 2014 / No Comments /

South African companies face enormous challenges undertaking an international business expansion strategy into Africa

South Africa is strategically situated at the tip of the African continent, providing investment and marketing opportunities both within its borders, and to the rest of the African continent. It is the largest economy in Africa. South Africa offers investors a well-capitalised banking system, developed regulatory systems, an established manufacturing base, and abundant natural resources. Boasting a country size which is ranked 26th in the world in terms of population and GDP, South Africa has the world’s 15th biggest road network. It ranks in the world’s top 20 in terms of agricultural output. High standards of corporate governance ensure that minority shareholder interests are protected. The efficacy of corporate boards are ranked extremely highly compared to other countries. In its 2012-13 Global Competitiveness report, the World Economic Forum ranked South Africa second in the world for the accountability of its private institutions, and third for its financial market development, “indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world”. The country’s securities exchange, the JSE, is ranked among the top 20 in the world in terms of size. South Africa boasts a world-class and progressive legal framework and corporate governance environment. Legislation pertaining to consumer protection, commerce, competition, intellectual property and labour law ensures that the country conforms to international norms and standards.

Although faced with some challenges, South Africa boasts a well-developed economic, regulatory, social, and environmental environment, which, together with its potential for development and growth, is attractive to investors. As a result of this, many International companies are using South Africa as a “springboard” into what is sure to be the next big thing, Africa.

For many South African companies, future growth does not lie in expansion into other continents but rather into countries within the continent of Africa. Africa is set for exponential growth in the coming years and South African companies are perfectly poised to take advantage of this growth phase as mentioned above. Africa is the second largest and the second most populated continent which means South African businesses have massive growth opportunities right on their doorstep. Africa’s biggest resource is its people and if South African businesses can harness this resource and provide products and services that people want and need, chances of success are excellent and returns will be phenomenal.

The challenges of expanding operations northward are not that dissimilar to the challenges faced when establishing a business in South Africa – where factors such as the lack of infrastructure, job skills, communications, education and the lack of funding have a huge impact on operational success. However, if one can work around these challenges the opportunities and related returns are immeasurable when one considers that six of the twelve fastest growing economies in the world today come from the African Continent.

Highlighted below is a list of the more common challenges that face SA companies undertaking an international business expansion strategy into Africa:

Electricity

Across the continent only 10% of individuals have access to electricity. This poses a major stumbling block for any expansion programme. However, this being said, there are a number of companies that are investing massively by providing needed infrastructure such as electricity and road networks.

Transport and road networks

The challenges experienced in creating a viable transport network that not only connects Africa with the world, but also within the continent itself, are many. Road development projects are challenging due to the topography and lack of funding needed to create these networks. Companies are realising the critical need for these networks and are investing heavily by either creating these networks or providing funding for these projects.

Telephony and communications

As strange as it may seem, telephony is still in its infancy stage in Africa. In juxtaposition to this, is the fact that the mobile telephony market is booming and is now substantially more widespread than fixed line telephony. The telecoms market in Africa is one of the fastest-growing in the world and companies are looking at providing greater broadband wireless access technologies as the key to making internet available to the greater population at large, in order to facilitate growth within the continent.

Lack of qualified and experienced business practitioners and executives

There is an evident lack of qualified and experienced business practitioners on the ground within many African countries. Most companies have taken to importing the necessary leadership talent to initiate and establish successful operations within these countries. Due to the similarity of the challenges that are present in the South African market, more and more international companies are utilising South African executives to set up operations throughout the continent, whether it be on a full time contract or on a project executive or interim executive basis. South African professionals have been operating extensively throughout Africa since 1994 and have gained invaluable experience. This experience is critical as operating in Africa is unique.

Investment funding

Companies recognise and acknowledge the huge growth potential that exists in conducting business and trade within the African markets but many are loath to invest in these volatile African economies. There are however, companies that are fully aware of the challenges that face SA companies when undertaking their business expansion strategy and they are able to offer financial assistance and funding with which to tackle these markets.

At the end of the day, expanding into Africa has many challenges, BUT if planned and executed correctly, the rewards far outweigh the challenges. It is not an easy continent to tame but if you embraces these challenges and look for solutions and surround yourself with an experienced management / executive team, your success will be almost guaranteed.

(Image credit: Atlanta Blackstar)

January 28, 2014 / No Comments /

How much to budget for a Chartered Accountant salary

Engaging the services of a full time Chartered Accountant (CA) is an expensive yet worthwhile process for any company. CA’s are forward thinkers and as a result of their training and academic background, they have a grasp of business that truly marks them as unique in the marketplace which is why it makes sense to budget to include a chartered accountant salary in your business plan. They work at some of the highest levels in business as Chief Financial Officers (CFO’s), Financial Directors (FD’s) and senior Financial Managers (FM’s).

Due to their exceptional knowledge of the financial landscape and their level of experience, a chartered accountant salary package is a significant cost to any company.

In South Africa a chartered accountant salary can range from R70 000 to R140 000 per month:

Position	Full Time monthly cost	Part-time monthly cost (based on 3 days a week)
CFO	R 110 000 to R 140 000	R 80 000 to R 100 000
Financial Director (FD)	R 90 000 to R 120 000	R 65 000 to R 90 000
Financial Manager (FM)	R 70 000 to R 100 000	R 50 000 to R 60 000

The high cost of employing these financial experts is prohibitive for many small to medium enterprise and entrepreneurial ventures, even though they are the businesses that would benefit most from a qualified and experienced CA. However, the landscape is changing and many companies are engaging the services of CA’s on a part-time, interim or project basis. The concept is similar to that of fractional ownership where you only pay for the time you use, not a full time salary for your chartered accountant. If a company only needs the services of a CA three days a week, then they should only pay for three days a week.

What is the difference between a bookkeeper and an accountant?

The terms “bookkeeper” and “accountant” can be interchanged to a degree. Bookkeepers mostly act as data-entry clerks that deal with the day to day financial recordings and transactions within a business. The bookkeeper keeps the books and retains documentation for transactions and will usually report to a senior accountant.

An accountant focusses mainly on reporting, business analysis and processes to advise company leadership on the best form of financial management for the company. Theirs is an in-depth role as they devise financial strategies and ways to implement these strategies within the business, based on current financial data presented to them. So in essence the bookkeeper works closely with the accountant as up to date and accurate data is needed for the success of the business.

Why is the Chartered Accountant salary so high?

As with anything in life, the more specialised one becomes the more valuable their services become. Accountants do not become CA’s overnight. There is a lengthy process of extended education and experience required before they qualify. In South Africa, Chartered Accountants have more than four years of education plus a minimum of three years’ experience before they can be qualified a CA(SA), a total of seven years, including an entrance exam into the profession, known as the Board exam.

They are financial experts that are able to provide information on a number of aspects of a business’s financial matters such as financial reporting, tax, funding and corporate finance. They also have experience in areas such as auditing and forensic accounting and have the necessary expertise to set up viable accounting systems, processes and controls. Many Chartered Accountants play a strategic role within a business by devising financial strategies aiming to maximise profitability for the business.

Do you need a full time Chartered Accountant?

The answer to this depends on the size and scope of the business and whether there is enough work to justify taking a CA on full time. Quite often experienced CA’s are brought in on a part time or interim basis, as their experience and expertise is needed on a variety of aspects within the business such as devising a strategy or to assisting company leadership on new projects being undertaken. By engaging the services of a part time CA, companies are able to have access to the best possible CA’s on the market without having to take on the burden of a full time placement.

January 24, 2014 / No Comments / 2

3 ways to select a Part Time Finance Director

When selecting a part time Finance Director there are a few key elements to take into consideration. Your part time finance director should be able to oversee all the financial aspects of your company and have the necessary qualifications and experience to ensure the correct flow of financial information to the chief executive officer, the board of directors and where necessary, external parties such as investors and financial institutions. The incumbent should be able to create a financial strategy that dovetails with the company’s overall business strategy to create a winning formula for success.

Experience is critical when selecting your part time finance director. One should select a seasoned financial professional that has had many years of experience in a multitude of industries in some cases and industry specific experience in others. Experience cannot be bought (or faked for that matter) and is one of the first attributes that Human Resource departments and company leadership take into consideration when assessing top financial talent. Part time finance directors are typically semi-retired or financially secure and don’t necessary need or want full time employment but can still add a huge amount of value in terms of their experience and skill to companies who either can’t afford or can’t justify the work load of a full time finance director.

There are 3 ways to select a part time Finance Director:

1. Recruitment Agencies

Recruitment agencies have been the traditional avenue for sourcing full time and interim financial talent for some time now. While the recruitment model has and will continue to work well for full time placements there have been challenges when it comes to part time and interim placements. The biggest challenge is that most Part Time candidates are actively looking for full time employment and as such there is a high turnover of staff. This results in inconsistent service levels as great candidates are lost to full time positions and replaced by unknown and untested staff. This inconsistent service offering can lead to unhappy clients and serious brand damage.

Generally speaking, recruitment consultants who are placing professional candidates on a part time / interim basis are not professionally qualified or experienced and consequentially don’t understand the client need fully, which can lead to the wrong candidate being placed at a client. This is a crucial element of the process as most business owners are not financial professionals and therefore rely heavily on the consultant to advise and make the most appropriate selection.

There are not many agencies in the industry that specialise in part time / interim placements as the focus tends to be on full-time placements. This does appear to be changing as the international trend to outsource highly skilled professionals becomes more popular here in South Africa.

2. Private Referrals

Some accounting professionals consult to companies on a contract basis and are sourced either directly through advertising or referrals from friends or colleagues. While this option may well be cheaper than other methods, the client has none of the benefits associated with contracting through a consultancy.

Human Resource departments or company leadership will still need to conduct their own background checks and establish candidate suitability which is a difficult and risky task for an entrepreneur / HR Manager without a financial background.

3. Specialist financial outsource consultancies

These companies specialise in employing experienced and flexible financial professionals. All their staff members have undergone a very stringent selection process that focuses on experience and their ability to deliver and all references are confirmed prior to them being included in any form of service offering.

These companies are managed by professionally qualified and experienced individuals that are able to understand the challenges of the client and through experience and a good working relationship with their staff are able to place the right individual or team of people at the client that are best suited to the challenges at hand.

These firms charge an all-inclusive hourly/daily rate depending on the type and length of engagement and as a result there are no hidden costs. The price you pay INCLUDES annual leave, sick leave, pension/provident fund contributions, medical aid, travelling allowances, incentive bonuses and the like. These hidden costs can add between 20 to 50 percent to your cost of employment. You pay for hours worked. Nothing more.

(Image Credit: Membersathome)

January 21, 2014 / No Comments /

The value of CFO outsourcing

Feel close to the edge from excessive workload and responsibilities? In the recent 2013 CFO Survey titled “Endurance: The Journey Continues” published by Deloitte, one of the most significant stress factors facing CFOs today, is staffing and a lack of talent resources.

From the top stressor of “excessive workload, roles and responsibilities” to “insufficient support staff”, “too much admin/low value work”, “finding and retaining talent” and “time spent on staff-related issues”, one clearly has an image of a CFO who is stretched to the max, limiting time and the space to think strategically, instead focusing excessive time on the day-to-day operations side of the business.

This is a recurring theme from previous surveys. However, what is alarming is the extent to which the lack of good financial support staff has become a very pressing concern for CFOs, compared to the previous survey. This is in sharp contrast with perceptions that in today’s market there is an abundance of suitable and experienced executives to fill the necessary positions.

There are generally two options available to CFOs when looking for financial support staff. The first is engaging a full time employee with the necessary experience and qualifications, which in itself can be a long protracted, expensive procedure and carries an element of risk. The challenge with this approach is that the person may often not be fully utilised. The second option, which is growing in popularity worldwide, is to outsource the gap that exists in this support environment but utilising part time or interim finance executives offered by CFO outsourcing firms.

Speaking from experience within the CFO outsourcing environment, there is a definite shift towards engaging a part-time resource for the following reasons:

1. Experience

CFO Outsourcing companies who contract out financial executives should insist on their executives having a minimum of five years’ experience within the financial field and a minimum qualification of B.Com or B.Compt (Hons).

2. Flexibility

They are able to save companies money and time by bringing an immediate benefit. The outsourced executives are able to hit the ground running and CFO outsourcing companies are able to tailor make a solution that suits a company’s needs and budget.

3. Team approach

Once the CFO outsourcing company has an understanding of the business they are able to appoint the best possible executive or assemble teams of executives, with multiple skills sets, ensuring the correct level of experience and knowledge to assist a business.

4. Commitment

There is a higher level of commitment from CFO outsourcing companies – the “you do well, we do well” adage applies. Companies who engage the outsource resource are not tied into long-term contractual agreements and should work on a 30 day notice period, therefore, companies are not exposed to employment issues or termination complications.

5. Trust

The basis of any good relationship is trust.

6. Affordability

Why pay for a full time resource when the business only needs a part-time executive two or three days a week?

So the next time you are looking for a Financial Manager or Finance Director to support your business, try CFO outsourcing.

(Source: mweb.co.za)

December 9, 2013 / No Comments /

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