Redefinition, Redevelopment and Rebirth!

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I recently attended a seminar on Business Rescue – part of the New Companies Act (Did you know there was a new Companies Act?).

It enables companies to remain in business when things are not looking good. Effectively, it suspends all creditors claims (including SARS although SARS may not agree) and enables the business to appoint a Business Rescue Practitioner (BRP) to help get the business back on the right track and doing what it was set up to do – make profits.

Ironically, the independent BRP will set about doing what the companies accountants should probably have been helping the SME to do in the first place!

You know, all the good stuff like:

  1. Evaluating the companies value proposition
  2. Examine factors that are negatively affecting cash flow and profitability
  3. Customer Profitability analysis
  4. Existing and New product line review
  5. Organisational set up
  6. And the list goes on...

So why does it take the appointment of a BRP to do what every business needs to stay alive? The blame unfortunately lands at the door of both the Accountant and the Business Owner.

You see Accountants in South Africa deal with one of the most complex Income Tax Acts in the world (which is why a new one is coming soon..) and so they WORK HARD on making sure things are right. As a result have little time for new things and definitely not any time for Change. This is probably one reason why 90% use the same ineffective bookkeeping software AND billing models that actually create more WORK and openly damage client relationships.

Don't get me wrong, business owners are also to blame. Although they are some of the most hard WORKING people I know, to many SME’s think that the business will grow itself if they continue to just put there head down and WORK harder (an employed person has no idea how hard some SME Owners work!)

As a result the Accountant is WORKING harder and the Business Owner is WORKING harder both with there heads in there own Sand Pits oblivious to the Value each can add to the SME which is potentially looking at Business Rescue in a few months or even worse operating FAR BELOW ITS POTENTIAL!

The solution for the Accountant and Business Owner is accountable discipline and adherence to never ending Redefinition, Redevelopment and Rebirth!

You see Accountants work with hundreds of companies and see each ones bank accounts, cash flow problems, opportunities, restraints and the solutions. This translates into a HUGE amount of VALUE that can be added provided they communicate this VALUE and lift there heads long enough to realise that they see what the Business Owner does not. They can guide the Business Owner through Redefinition, Redevelopment and Rebirth of the SME!

But, in the words of Warren Buffett “Price is what you pay, Value is what you get” and the Business Owner needs be willing to acknowledge the transfer of Value when it occurs and it’s benefit for the SME in not only avoiding penalties and interest but also in generating and enhancing revenue. The Business Owner needs to determine the price they are wiling to pay for the Value that has been requested and added otherwise both the Business Owner and Accountant can request Business Rescue!

The Business Owner needs to acknowledge the need for Redefinition, Redevelopment and Rebirth!

 

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  • Rudi
    Rudi Wednesday, 06 March 2013

    As matter of interest. What "ineffective bookkeeping software AND billing models" are you referring to? I know this is an issue in our country and just about every accountant I know only use Pastel. They're not open to exploration for possibilities that could be more cost, and time effective; either for themselves or the business owner. That, and the fact that they only do what they're taught in college / varsity w.r.t. "best practices". I've heard at least 4 different versions of doing something in a very particular way that I don't know what is the actual way of doing it. I'm not referring to bending the rules with SARS, or anything like that, but rather in simple book keeping, what they do and often the things that they do isn't very optimal or even 100% accurate.
    In running a business I've learned that there's often more than one way to accomplish the same goal. And more often I'll get a more optimized way of accomplishing that goal if I research the other possibilities a bit.

  • Colin
    Colin Wednesday, 06 March 2013

    I would say bookkeeping software that: (1) Separates the Business owner from the Accountant (2) Can not be used without an Accountant (3) Is difficult to use without training (3) That causes the Accountant to compete with business owner i.e.: Allows the accountant to do work that the business owner could do. Billing Models would be time based billing where the business owner (1) Does not know what the service will cost (2) Ignores Value creation (3) Promotes in efficiencies. The accounting industry is changing and the new Companies Act is going to further divide the practice of Accounting allowing new Business Models and New Software to be introduced to SME's that they were previously never exposed to.

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