South African SME’s Failure Rate can be Stemmed Through Modern Accounting
04 May 2016
Many South African small and medium enterprises (SMEs) are struggling to survive. This is according to the 2015 SME Growth Index which found that one in five South African SME’s reported a decline in turnover from the previous year, while a further 20 per cent reported zero growth in turnover during the same period.
According to BDO South Africa it is expected that the number of South African compa-nies filing for bankruptcy during this year may increase by as much as 53%.
However, SMEs can be greatly assisted by their accountants to remain in business when things are not looking good. This is according to Colin Timmis, National Manager for Business Services & Advisory at BDO South Africa, who says that a business’s account-ant, and the methods that they employ, can ultimately lead to business longevity for the essential small and medium enterprises in South Africa.
A business’ accountants should be helping SME clients with the following:
- Their companies value proposition
- Examine factors that are negatively affecting cash flow and profitability
- Customer profitability analysis
- Existing and new product line review
- Organisational set up
“Ironically, many business only get the above assistance from a Business Rescue Practi-tioner (BRP) when they are already going through the motions of engaging in business rescue,” says Timmis. “It should not take the appointment of a BRP to access the ser-vices that every business needs to stay alive and by then it is too late.”
The way we do accounting has changes
According to Timmis, new accounting tools have been developed in recent years, and it is long overdue. “The tools of the accounting trade are getting an upgrade with cloud accounting systems such as Xero™ which assists SMEs with the above challenges.”
BDO is able to add value to Xero’s™ functionality with custom built reports that offer support where it is needed the most, and to nurture and grow our clients’ businesses into sustainable and successful organisations.
How cloud accounting with an adviser can lead SMEs to success
Timmis highlights some of the applications made possible through Xero™ and which are now offered to South African businesses:
- Accounting records that are reconciled daily/weekly;
- Accounting records that can be viewed from anywhere in the world, at anytime, on any device;
- Automated debtor invoice reminders and follow ups;
- Automated customer satisfaction surveys;
- Electronic and automated supplier invoice processing;
- Online quote acceptance;
- Online proposal tools;
- Management reports that are visual and focused on business sustainability;
- Automated KPI notifications;
- Custom built reports for different users;
- E-commerce integration; and
- Inventory management, with assemblies, warehousing and production.