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Cashflow Management

Let’s talk money!

Have you ever heard it being said “if you can’t manage R1000, you won’t manage R100 000”?

Yup, that’s it! Managing your cash flow is basically tracking how much money is coming into, and out of your business. However, profit does not equal to cashflow. Cash flow is one of the most important components that makes the business successful, like many say…it is the blood that keeps the heart of the kingdom pumping! 

Businesses that have more cash going out more than it comes in completely die or get into debt they could have avoided. 

Back to Basics. 

You should be tracking your cash flow either weekly, monthly or quarterly. There are essentially two kinds of cash flows:

1️⃣Positive cash flow: when money coming into the business through sales for instance, is bigger than the money leaving business by means of salaries, expenses, etc.

2️⃣Negative cash flow: when money leaving the business account is greater than the money coming in. This screams TROUBLE for the business. 

Understanding cashflow 

Simple example: company x renders your services in May, and you invoice them on the 31st of May. Company x only monetise the invoice in around June-July, whilst you had salaries to pay. Thus cash outflow exceeded cash inflow in May. If many other customers continue to do this, you can almost see how your company could run into cash flow issues.

The cash flow statement basically records all of the organization’s cash inflows and outflows, and includes cash from operating activities. The cash flow statement is divided into three parts: investing, financing, and operating activities. Failure to manage this cash can lead to problems. 

We have mentioned the poor cash management may lead to cashflow problems or bankruptcy, but here are some of the causes:

1️⃣Poor understanding of the cash flow cycle – not having a clear understanding/ timing of cash inflows and outflows from the business. E.g. when to pay for accounts payable (what you owe to suppliers),etc.

2️⃣ Lack of understanding of profit versus cash – a business can be generating profits on its income statement and be burning cash on the cash flow statement.

3️⃣ Lack of cash management skills – it is important to acquire the necessary skills to manage your finance. If you are looking for this service, do get in touch with us! 

As they would say, successful financial management involves balancing 3️⃣ elements:

accounts receivable (what you are owed by the customer), accounts payable (what you owe to suppliers), and shortfalls (the amount of money you owe that exceeds your available funds). Make sure  one element doesn’t overtake the others. 

If you can’t afford to pay someone to do this for you, you can do it by yourself. Here are 7️⃣ tips to manage cashflow:

1️⃣Have an emergency fund 

2️⃣Encourage early payment from clients 

3️⃣Put cashflow over profit 

4️⃣Assign someone to monitor your cashflow 

5️⃣Drive and/ or boost sales 

6️⃣Reduce expenses where possible 

7️⃣Finance purchase orders 

An example..

Plan to Succeed: finance

Have you heard the saying, “if you fail to plan, you are planning to fail“? COVID19 is here to prove to us that it’s no cliche! Many are becoming more aware of their financial wellness, and cautious about planning for the future (unforeseen events). Would R10 000, R20 000 have been enough to keep your bakery business amid the national lockdown? It might sound like that’s not a lot, but in difficult economic times/dry seasons, every cent counts.

The first most important step is to set specific short, medium, and long-term financial goals/targets. These goals can include saving up for property, making sure that you are adequately financially provisioned for unforeseen events, and so much more. This process is called financial planning.

A financial plan is obviously different from your financial statements. Here, you make projections for the coming months/years, forecasting income/profits. Hire a qualified and licenced financial planner who will assist you in assessing every aspect of your business finances to help you design and regularly review your financial plan as your business grows.

At Accase Solutions, we offer Financial administrations services, Management Of Cashflow and Budgeting. To get to the bigger goal, you need to hit the smaller targets. Let’s break it down:

Budgeting is simply balancing your expenses with your income, creating a plan to spend your money. This spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. 

Cash flow management is basically tracking how much money is coming into and out of your business. This helps you predict how much money will be available to your business in the future.

financial administrator is responsible for managing the accounts receivables and payables of the organization.

…moving right along…

To help you gets started, here are six steps to create your financial plan:

1️⃣ To start off, think about what you want to accomplish and ask yourself… Do I need to expand? Do I need more equipment? Do I need to hire more staff? Do I need other new resources? Most importantly, how will my plan affect my cash flow?

2️⃣ Create monthly financial projections by recording your anticipated income based on sales forecasts and anticipated expenses for labor, supplies, overhead, etc..

3️⃣ Through the year, compare actual results with your projections to see if you’re on target or need to adjust. Monitoring helps you spot financial problems before they get out of hand.

✳ If you don’t have the expertise, consider hiring an expert to help you put together your financial plan.

Accase Solutions is registered with the IAC, Institute of Accounting and Commerce as a Certified Tax Practitioner since registration of Accase Solutions.

Practicing number: PR0100503.
Get in touch with us, a consultant await your call 📲😊

Do you need business insurance?

We can all agree that the global pandemic [COVID19] caught us off guard, no one would have thought we would experience at this specific time. What other reason do you need to have insurance, emergency funds, savings, etc for your business?

In this blog, we will share WHY your business needs insurance and WHAT type of insurance do you need. As a business owner, you may be asking yourself, “Is business insurance really necessary?

According to Discovery Insure CEO Anton Ossip, businesses generally need cover for:

  1. Business assets, tangible or intangible.
  2. Theft (including theft by employees).
  3. Loss of profits or revenues.
  4. Legal liabilities, including liabilities arising from social media interactions.
  5. Losses to the business and liability to third parties following a cyber-attack on business computers (which we covered on our previous blog)

There is a variety of business insurance coverages available to business owners to choose from, you can tailor your insurance protection to address the specific risks facing your business. Some of the aspects of your operation that need protection include (but not limited to): 

  • The type of work you do
  • Your physical premises
  • Property and equipment
  • Intellectual property
  • Employees and customers

Bear in mind though, businesses in different industries need different business insurance coverages to help meet their unique needs.

What insurance does a small business need?

If there’s one policy you’re legally required to have as a small business, is employers’ liability insurance (EL).

EL covers your business in the event that one of your employees claims they’ve suffered an illness or injury as a result of working for you. It covers any legal and compensation costs involved in defending the case. If you don’t have EL, your business can be liable to pay a fine.

Does your tech need insurance?

Technology has definitely changed business insurance needs. Without a doubt, it can do wonders for your business…especially now more than ever, COVID 19 has enforced the revolution by going virtual to communicate with each other, including clients.

However, we did mention in our previous blog post that technology like computers and the internet can be vulnerable and/ or exposed to risks. If you don’t have insurance or security of some sort, your business may face a large financial and operational loss.

What you need to understand is that every business has its unique needs; which is why it’s important to consult with an insurance broker or financial adviser on the type of cover that’s right for your business. Some of which are:

How to buy business insurance that’s right for you in 4 easy steps:

  1. Assess your risks – think about what kind of accidents, natural disasters, or lawsuits could damage your business.
  2. Find a reputable licensed agent – commercial insurance agents can help you find policies that match your business needs. They sell company policies, so it’s important to find a licensed agent.
  3. Shop around – you should compare rates, terms, and benefits for insurance offers from several different agents, as they vary.
  4. Re-assess every year – as your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, you should contact your insurance agent to discuss changes in your business and how they affect your coverage.

If you want a starting point, check this comparison of Small Business Insurance Companies in South Africa: https://comparenreview.co.za/top-10-insurance-companies-south-africa/

You may assist us by adding what you know, we would love to hear from you!

Guide to hitting Online Sales.

Landing here, our assumption is that you’ve read our previous blog on “Going Digital”!? If you haven’t, you can catch up ⏪ this blog article is more of a continuation ⏩



We believe in continuous learning, hence we are consistent in adding to your knowledge with our weekly blog posts. If there’s any specific topic you would like us to cover, feel free to drop us a comment or shoot us a DM on our socials @accasesolutions. Ok, let’s get to it!

Now that you know what does “Going Digital” means, WHY go digital, and HOW to go digital, let’s help you get started with a proven strategy that has helped marketers sell through digital platforms. In this blog, we will focus a bit on marketing and making sales online.

Rule number 1: Don’t ignore what people want, give it to them. DO NOT neglect customer needs! Second to that is knowing how to communicate your value by teaching your customers about your products/services and sticking to the mission!

Developing a digital marketing strategy
1️⃣ Define your goal.


There are 2️⃣ types of goals
☑ Ongoing – overall focus on marketing (long term)
☑ Campaign goals – specific initiative and short term

The common include:
• Improving customer engagement
• Generating more leads
• Growing sales
• Increase traffic
• Expand reach
• Enhancing brand perception


Choosing the right channels
“You need to be active on every social media platform” is a myth and bad advice. Invest in a smart mix of channels. Choose the ones that make sense for your audience.

A business should be centered around your ideal client avatar. You need a comprehensive customized strategy that’s proven to work in your industry.

Try the following:
• Research the channel’s audience
• Review research studies – source: business insider, social media today, etc.
• Discover how channels affect distinct

Facebook – 2.4 billion active users offer a lot of business features.
Instagram – 500 million active users, visually based. The online mall
Twitter – top messaging platform. Ideal for trending conversations
LinkedIn
• Top professional networking site
• Ideal for connecting with industry experts
• Great for B2B marketing
YouTube- top video sharing site. Business & influencers can create channels & monetize.

Creating content
Crafting messaging – Identify valuable content
Choosing topics – relevant topics that aren’t always marketing but also entertaining, educational, and value-driven, also align with your business goals


Selling on social media


“Your brand is what people say about you when you’re not around, so it’s built through sales and that means getting an experience with you.”

Stories sell!! To get to people’s wallets, you first need to get them to their feelings. That’s the hook!

> Customers trust people over brands
63% of customers trust influencers vs brands…reaching customers that trust opinions of that person
> Influencer partnerships (sponsored) – Paid endorsement of product or service
> REVIEWS – sending free products for reviews
> Co-branded – Influencer & company cooperate on product marketing, then share resulting sales
> Paid advertising – purchasing exposure to certain audiences & preferred placements. Start with a test campaign – AB Testing


When it comes to Customer Service, give INSTANT RESPONSES. Use platforms like Keyhole and Mention, be sure to make your message sounds humane. Turn on notifications, or look through manual searches.


To conclude, we leave you with the following tips:
• Algorithms change every 1 or 2 months, stay up to date.
• Customer service is important!! When people enquire from you, they already have other options. Be the best option!
• Take things personally instead of seeing them as a problem-solution equation. 

Go Digital or Go Out of Business.

“Going digital” is more than just a buzzword, it’s a catalyst for growth. Not only does it allow more productivity and cost-saving, but it’s also an essential strategy in the t COVID-19 crisis.

“If your business is not on the internet, then your business will be out of business.”

~Bill gates~

WHAT does “going digital” mean?

Digital transformation is inevitable, it presents your business with endless (online) opportunities and you reap the benefits when someone searches for something related to what you do or sell. Essentially, going digital means building an online presence for your business. this requires a full understanding of how your audience (target market) uses technology to access what they need, at the right time.

For instance, when someone clicks a link to your website, they can learn so much about you like pricing, client testimonials (which builds trust), or even schedule an appointment.

WHY go digital?

How digitizing can help you build your business  

1. Build relations on social networks  

2. Selling online  

3. Finding new customers  

4. Keeping existing customers  

Ask yourself, “ why do I want to go digital ? “ before anything else, people have to know you exist.  

Additionally, this will also give you valuable insight into prospective clients,  what the ey want and how to give it to them. 

HOW to go digital:   

To make digital strategies to truly succeed, employ a human-centric approach

Action steps to get started:

  1. Goal Setting  

Be intentful. Before going digital, think about what is your objective and what you want to achieve online. It will help you set the right priorities and help align your plan.  

2. Find Your Audience + Platform

WHERE DOES YOUR TARGET MARKET HANG OUT??

If you cant answer that question, stay back and think about it for a while. There are tons o digital platforms/social media networks, it’s a waste of time and money to spend time on and efforts on LinkedIn for instance when the vibey youth you are looking for is on Instagram.

3. Create A Strategy

It will help to find a team of experts to help you on this one. Marketing is almost a full-time job, the other thing to note is the everchanging algorithms – this requires you to always stay up to date with how these channels work so you can be on top of your game and beat your competitors.

4. Launch

This is one of the easiest. If you are going the social media route, you can create business pages where your customers can reach you, and new audiences can learn about you. Then start sharing content.

5. Analyze And Improve

This is one of the most important things to do because what are you doing if you are not measuring your growth? Not only does it help you measure, it gives you insights on people’s interests about you so you can “give people what they want”

Finally, or rather a bonus point: stand out from your competition 

that may sound cliche but it can’t get any truer! Provide valuable or quality content and stay consistent. This will help you gain people’s trust, in a world full of scammers and fraudsters.

That’s all from us today, we hope these help you in some way. Feel free to indulge in our blog, we have a read with some of the tools you can use to run your business digitally, it complements this read 🔗👉 https://accasesolutions.co.za/2021/03/09/5-must-have-apps-on-your-phone-entrepreneurs/

Important things to know about tax in South Africa

Understanding the South African taxation system

To put it in simple terms, tax is a compulsory contribution to state revenue, you must pay South African taxes if you work in South Africa or own a South African business. South Africa uses a residence-based taxation system, non-residents are taxed on South African-sourced income.

Tax money does not only pay for public goods and services, it is also key in the social contract between citizens and the economy. Paying taxes fosters economic growth and development. This is the government’s sources of funding for social programs and public investments.

Understanding taxes: types, filing for returns, refunds from SARS:

There are many different type of taxes. Just to mention a few, some include:

  1. Pay As You Earn (PAYE)
  2. Personal Income Tax
  3. Provisional Tax
  4. Capital Gains Tax
  5. Value Added Tax

Ordinary taxpayers are those who earn a salary from an employer. Your employer should deduct Pay As You Earn (PAYE) from your salary monthly and pay that to SARS on your behalf.

Here’s an example of how your Net Income will look like after taxes

Why SARS issues refunds:

If for instance you take an unpaid leave at work, the payroll administrator has to adjust your tax therein. If the adjustment is not made, it means that your company deducted more tax as it was based on a wrong annual income. In this case, SARS is liable to give you a refund.

The whole point of filing for tax returns is for SARS too determine all your tax, and if you have paid, they conclude on the right amount. If you have overpaid them, they will definitely give you your money back. Understand that, you only get a refund IF you have overpaid because you filed for returns.

Income Tax VS Provisional tax.

Provisional taxpayers have multiple sources of income such as a salary and commission or are business owners or self-employed including freelancers and contract workers. This means that you need to pay taxes even from other activities like renting out a room in your home (e.g. Airbnb), you will have to declare those to SARS when you do your tax return.


SARS has what we call Provisional tax payment which is paid in advance, every six months. This means you pay provisional tax twice a year before your year ends. Just after the year ends, you compare what you have paid already to what you should have paid, and if underpaid there’s a third provisional payment/top-up due 6 months after year-end.

You could be asking, what happens when you pay SARS more than you should have?

…well, that’s okay because SARS will give you a refund after you’ve submitted your year end returns which is due 12 months after your year ends.

On Value Added Tax (VAT)
VAT in South Africa is levied on the consumption of goods and services, the rate is currently 15%. When you bill someone, you charge them VAT and that portion is not your money – you have to pay it to SARS. Businesses must register for VAT in South Africa if their annual turnover exceeds R1 million within a 12-month period. Taxpayers can, however, register on a voluntary basis if their annual supplies exceed R50 000.

When you buy from VAT vendors, you pay the VAT (which belongs to SARS), you’re supposed to get it back on your side because you paid VAT vendors. If for instance you sell items whose VAT element is R1000, and the material is R2000 worth of taxes, it means you paid more VAT than you have charged your customer. You can therefore claim excess herein, and SARS becomes liable to giving you a refund. SARS may request some verifications before paying the refund as the onus to prove such details is on the taxpayer.

A read from Expatica explains that tourists and diplomats visiting South Africa can claim a refund of the VAT they paid on goods purchased in the country. To qualify, you’ll need to be a non-resident foreign passport-holder or a South African passport-holder who is now a permanent resident of another country. You can reclaim VAT when leaving the country by declaring the goods in question to a customs official.

We will, for now close it here. Do reach out to us to learn more about taxes, filing for returns, and compliance.

Can SARS tax you even if your business is not registered?

Can SARS tax you even if your business is not registered?

The answer is YES. If you are running a business that is not registered, you are basically a sole proprietor.


What Is Sole Proprietorship?


A sole proprietorship is defined as a business that is owned and operated by a natural person (individual).

This is considered the simplest form of doing business. It simply means the entity is not legal (registered) and has no existence separate from the owner who is called the proprietor. Although a sole proprietorship can operate under the name of its owner or give a business’ fictitious name, the name does not create a legal entity separate from the sole proprietor owner.


Pros and Cons of Sole Proprietorship


Sole proprietorship obviously has some pros and cons. Here are 3 pros and cons:

Pros:
1️⃣Simple to establish, operate or even discontinue the business.
2️⃣Owner is free to make decisions.
3️⃣Owner receives all the profits.


Cons:
1️⃣The owner is legally liable for all the debts of the business. 
2️⃣​Limited ability to raise capital, which limits the expansion of a business when new capital is required.
3️⃣The owner alone has limited skills, they may need to hire employees with sought-after skills.



What Is Most Tax Efficient?
Sole Proprietorship vs LTD (PTY)

It all boils down to expected earnings from your business.

Individuals are taxed on a sliding scale, which means that the rate of tax you pay increases as your earnings increase. This applies to any individual earning more than R87,300 per tax year.

In a company, profits are taxed at a rate of 28%, irrespective of the value. Plus, dividends tax is levied at 20% on profits retained in the company and distributed as a dividend in the future.

In A Nutshell…

As an individual earns more, you move into the higher tax bracket. The difference in tax between a company and a sole proprietor decreases. At a lower level of taxable income, it’s more tax-efficient to operate as a sole proprietor and enjoy the benefits available to individuals. At higher income brackets, it’s likely that company registration would be more beneficial.

This should help you make a better decision if you were stuck between registering your business and operating it individually. For business registrations and taxes, please do get in touch with us 📲

Is Debt good for your business?

Debt is not necessarily a bad thing, you can use it strategically for your financial needs. If you are going to throw it in a marketing campaign, or perhaps renting property at a better location for your company to position your business for growth, always make sure the ROI (Return Of Investment) is greater than the debt.

Therefore, you will need to consider a few things before taking a loan: your business’s finances, your reason for the loan, etc before narrowing down your options.

Can business debt affect your personal credit score?

NB: Business Debt Can Affect Your Credit.
Even though your business finances are separate from your personal finances, the two can easily intertwine, which you cannot control.

Business debt will affect your personal credit score, especially when you are a sole proprietor. If you are a sole proprietor, you are the business—whatever you do personally reflects on your business, and vise versa. So, be discipline.

There are different types of loans, let’s explore these 5 common loans for small businesses:

1️⃣ Assets financing – ideal for business owners looking for funding specifically to purchase physical equipment

2️⃣ Invoice financing – for business owners with unpaid invoices who need an advance of capital to cover cash flow or other short-term financing needs

3️⃣ Commercial real estate loans – best for business owners looking to finance purchasing new or existing commercial property or renovating commercial space

4️⃣ Microloans – ideal for new or established businesses looking for a small amount of capital

5️⃣ Personal loans for business use – for newer businesses who are just starting out and need access to affordable financing

Can you take debt to your advantage?

Here are at least 2 ways to use debt to your advantage:

1️⃣ The ROI should be greater than the debt.

This takes us back to the examples we talked of earlier about marketing campaigns, rental of property, etc. It’s like taking a calculated risk. Although we can never be sure of outcomes as we rely on predictions, things like data mining and interpretation can help you take better decisions.

For instance, you can make good research about the area you are thinking of locating your business, considering the demographics, activities in the area and things as such. Also search about the property value. Should you think of relocating your business, you will at least make good profit from that – which you can also use for other parts of your business, or just throw it in your savings.

2️⃣ Don’t sell your equity.

Every business has lean time, it’s inevitable…but when that time comes, don’t sell your equity by adding more partners to, rather take a loan. Paying off debt is much easier than ending a partnership, it can get messy.

In a nutshell…

Debt is not the devil, but you MUST be discipline. First educate yourself and understand what you are getting yourself into. Debt can be expensive, set priorities and goals. Use the money wisely.

5 Ways Of How To Cut Costs In Your Business

Saving money is one of the prerequisites for business success. Cut costs by any means, don’t wait for your ship to sink!

Robust savings give your business the ability to grow. “It is smart to put back to push forward.”

Saving money is critical for the survival of your business, the global pandemic couldn’t be a better example – it took a toll on many businesses. Are you budgeting and making necessary adjustments for your business?

Now lets to the HOW:

1️⃣ Cut on traditional marketing. and explore the lucrative digital platforms.

Digital marketing is more affordable and much more lucrative, there are no limitations. It enables you to reach a bigger audience and when utilizing the right tools, you can reach a more specific target.

The first thing would be to find a team of experts, or outsource a freelancer while you focus on other parts of the business.

2️⃣ Outsource if you can – employees are essential to getting work done but they’re costly.

Having employees means having fixed costs. Although it’s great to have an internal team, you can always outsource freelancers. This gives you a great competitive advantage, controlled costs, and increased reach. You can get access to capabilities and facilities otherwise not accessible or affordable while saving costs.

3️⃣ Have more virtual meetings if on-site meetings are not a MUST.

There’s a lot of costs that go into one meeting: transport (worse if you are far apart), meal/drinks, plus a lot more time is lost in between. A virtual meeting only requires an internet connection.

If is it not necessary to meet in person, opt for virtual. It’s an even bigger loss if the deal is not sealed.

4️⃣ Explore partnerships and collaborations.

It’s not a cliché or a buzzword, collaboration is very necessary for growth. On the contrary, it makes teamwork successful.

The benefits include: networking and opening up new channels for communication, learning from others (especially how they do business), and boosts the morale of your business.

5️⃣ Get interns – they are more social and effortlessly improve your search engine optimization.

Most young people are generally social and like to talk about things they are proud of. Now imagine the FREE Word of Mouth you would get when they tell everybody about the great company they work for?

Did you know that hiring interns help you save on taxes?

The Employment Tax Incentive (ETI) is an incentive put in place by the government to encourage employers to hire individuals who are young and qualified but inexperienced, by reducing the cost of employing them. You just might want to think about it!

Those are just a few ways of going about it, for obvious reasons it differs from industry to industry. How are you saving and cutting off costs in your business?