Blue Chip Issue 89

BLUE
CHIP
PRACTICE MANAGEMENT | Accounting
Get back on track, in
four strategic steps
Accountants can help small businesses.
By Karl Smith, Senior Education, Training and Member Support Manager, SAIPA.
“
Business Rescue” and “liquidation” are unfortunately
words that are too often used in public discourse, due to
the devasting impact companies – with depleted cash
reserves – have realised over the past two and half years.
With an increase of 44.8% in business liquidations (Stats SA)
and fewer businesses reported to have entered Business Rescue,
small businesses in South Africa are assessing financial positions
too late – when they can no longer keep the doors open.
This is where Professional Accountants (SA) can be a
company’s internal advisor, helping to re-strategise operations
for better success and restoring financial wellness. With small
businesses employing from 50% to 60% of South Africa’s
workforce and contributing around 34% of GDP, there is a new
market opportunity and duty for Professional Accountants (SA)
to provide advisory support to help keep small businesses on
track and financially sound.
Accountancy professionals are trained to exercise judgment,
engage in critical thinking and have a deep understanding of
complex multi-faceted operations and the resulting financial
consequences. They are ideally suited to help small business
owners and entrepreneurs identify their strengths, weaknesses,
opportunities and threats, as well as create a plan to address them.
With global entrepreneurship high on our country’s economic
agenda, here are several ways Professional Accountants (SA)
can strengthen the small business sector and help companies
regain financial stability while wrestling through the tough
economic climate.
Review the business’ financial status
The pandemic could have exacerbated financial issues that a
business was already experiencing, such as cash-flow problems
or a decline in business activity that resulted from changes in
the business cycle or broader economic pressure. A professional
advisor should assist in determining whether the business had
any pre-existing conditions that are not necessarily related to
the pandemic, but that may have been masked because of it.
Cash flow management can
be a deciding factor in a
small business’ prospects of
survival and ability to thrive.
76 www.bluechipdigital.co.za