Accountants: Key to SME survivalSubmitted by Marc Ashton
According to research released by Xero Accounting, 49% of small and medium sized businesses say accountants are a key factor in their survival.
This research was released as part of the annual Xero “State of South African Small Business 2022” report which looked at the overall health of the SME sector in the country.
A key takeaway from this report is that accountants are no longer simply there to handle the finance function of a small business, but to also be a strategic advisor to the business owner.
As an entrepreneur, the finances of a business are often a very personal element and it is hard to let an external party see the real state of your business. However, when you start to see your accountant as a strategic advisor rather than a number-cruncher, you can start to focus on running your business rather than drowning in admin.
Here are a couple of practical examples of how an outsourced accountant or bookkeeper can help you:
How often do you reach the end of the month and know you have done more than enough work to cover the bills, but discover that this isn’t reflected in the bank account? Xero data suggests that 34% of SMEs reported payments running up to 4 months overdue - so you are certainly not alone.
Having an external finance function allows you to focus on servicing the client while ensuring that your debtors are meticulously followed-up.
Are you missing out on rebates and incentives?
Do you run a business where you employ entry-level employees under the age of 29? If so, you might be missing out on the Employment Tax Incentive (ETI) as an example which rewards you for creating youth jobs.
This is a prime example of an incentive out of the South African Revenue Services (SARS) that you might be missing out on.
As a business owner, you want to focus on your area of expertise. Your accountant is regularly studying the ecosystem to find ways to make your efficient and profitable.
Helping you out of a SARS squeeze
As at the 31st of January 2022, SARS had collected over R1.25 trillion Rand from SA taxpayers – up 28.2% on the previous tax year. As the economy has begun to grow again, SARS is seeking out its fair share from tax-payers.
As a small business, you are often so focused on day-to-day operations in your business that you fail to plan for your engagements with SARS. An experienced, methodical accountant can not only help you stay compliant but help you navigate outstanding issues that might be distracting you from running your business.
Getting you funding ready
The fintech ecosystem in South Africa has surged in recent years with the likes of LulaLend, Bridgement and Retail Capital all playing a critical role in providing access to finance solutions for SMEs.
Many of these platforms can provide you with access to working capital inside of 72 hours, which can be a game-changer for entrepreneurs.
However these platforms are all dependent on your ability to share your up-to-date financial information with them so that they can analyse your risk profile. If your accounts are not up-to-date, you will find it hard to access this finance and present your business in the best possible light.
Beyond the books
The Xero research shows that accountants are no longer just there to balance the books. 40% of respondents see their accountants as part of their investment advisory teams, 33% expect their accountant to help with online strategy and 11% see their accountant as contributing to their data science offering.
Running a business is a lonely endeavour for many entrepreneurs and having the right strategic advisory team in place can make all the difference.