From the vault
- A safe and secure environment
- Guaranteed business continuity
- Fast and cost-effective payments functionality
- Capital to grow your business.
South Africa is still largely a cash-centric economy. A recent report shows cash usage in South Africa as a percentage of the GDP is 58,2%. “Cash continues to be the trusted and most widely used payment method in the country, accounting for well over half of consumer transactions being paid in cash,” says Steven Heilbron, CEO of Cash Connect. “Cash is instant and accessible. It’s easily exchangeable. And so, in a South African context, cash remains king.”
In South Africa, the current cash in circulation is approximately R135 billion, having grown from R119 billion in 2014, according to the South African Reserve Bank.
The retail cash crime landscape
Since banks have hardened their security, criminals have shifted their focus to the cash-in-transit industry. As the CIT industry hardened itself, focus moved to the next soft and most vulnerable target dealing with large quantities of cash: Retailers.
According to the latest SAPS crime statistics, South Africa has at least 55 armed robberies against retail businesses each day. This translates into over 20 000 armed robberies a year. A further 71 195 business burglaries, also in pursuit of cash, were reported in the last year. While cash is still king, it certainly remains high on the criminal agenda.
The Genesis of Cash Connect
With the knowledge and experience of working in the cash-in-transit industry at the time when CIT heists were rife, Cash Connect was born. The business started with identifying the cash crime shift to the retail industry. “We decided to figuratively move the bank into the retailer’s store,” says Steven.
“Our purpose was to create a safe and secure trading environment for retailers. We achieved this with our range of robust cash vaults, which are built to SABS Cat 4 standards, giving retailers an immediate risk transfer. The minute a retailer deposits their cash in a Cash Connect vault, their cash is guaranteed.”
Over the years this offering has evolved as Cash Connect’s understanding of the SME space and its needs has deepened. “In addition to creating a safe and secure trading environment and removing the cash risk for the retailer, we ensure that retailers can be settled on the same day, providing working capital a lot quicker and allowing for business continuity,” says Steven.
Cash Connect takes the cash risk. Whether or not cash is stolen from a CIT vehicle on route to a cash centre, the retailer’s cash has been guaranteed and settled.
“If a retail store gets hit in pursuit of its cash, often a lengthy insurance claim can leave a retailer in a vulnerable position, being unable to replenish inventory levels or meet working capital demands,” says Steven. “With Cash Connect, a retailer is safe and secure, working capital is received on the same day and business continuity is guaranteed.”
“By working with our clients who are SMEs, we understand their businesses and the vital role they play in our economy. To date Cash Connect’s annualized forecast is that we will process in excess of R75 billion on behalf of our retail client base. This has put us in a unique position to provide an offering that extends Beyond Safe.
“Now we provide retailers with growth finance in the form of working capital, boosting their businesses with an often much-needed cash injection. The business capital offering is fast, flexible, hassle-free, and unsecured. As an alternative financier for SMEs in South Africa, we understand the need for quick access to unsecured growth finance.
“For example, Cash Connect recently advanced R1,8 million of growth finance to one of its retail supermarket clients, within an hour of the application being received. This is what these types of retail businesses often require,” says Steven.
“Because we understand the retail space and our clients, we can provide them with this capital to grow, thereby giving them a competitive advantage. Retailers can use this cash injection to open a new store, facilitate the purchase of a new property, renovate their store, repay or create a shareholder loan or make use of bulk purchases at discounted rates. Our growth finance is also used in acquisitions, i.e. purchase of a fuel station or a chain of stores.
“Ultimately, it’s crucial for a retailer to turn inventory into cash and cash into inventory as fast and risk-free as possible. To meet this need, Cash Connect offers retailers capital to grow their business, robust technology to create a safe and secure trading environment and a risk transfer on the dropping of cash into the vault. Cash Connect’s offering ensures continuity of businesses against attacks, access to payments to suppliers directly off the vault, and a quick mechanism to complete the working capital cycle with same day value on daily cash takings. We take retailers from a place of safety to a place of growth.”
Cash Connect’s offerings provide retailers with business efficiencies that allow for significant financial benefits. “Retailers no longer need to worry about cash shortages that stem from the manual counting and reconciliation process. More hands on money means more risk, more people involved and of course more overheads. Retailers can save on overheads, salary costs and can now re-deploy staff to help run the business, saving both time and money.”
Security and Financial Benefits
From a security perspective, clients enjoy a safe and secure trading environment, guaranteed cover of their onsite cash, and removal of the cash-in-transit risk.
From January to May 2018, South Africa saw its worst cash-in-transit epidemic. With a record figure of 142 CIT heists in 140 days. These attacks were aggressive and dominated South African news and social media platforms. But, amidst all of this, Cash Connect clients were immune from losses resulting from this epidemic. Why? “Because Cash Connect offers an immediate risk transfer from the moment the retailer deposits the cash into the on-site Cash Connect vault,” says Steven. “Our cash vault technology, which is designed and manufactured locally, has been proven to be the most effective deterrent in the local retail market.”
The financial benefits of Cash Connect’s solution are multiple, offering retailers quick access to working capital, the ability to facilitate payments directly to suppliers from the vault and capital to grow their business.
“We have a compelling settlement service compared to credit cards and debit cards. We provide same day value, full risk cover on site and in transit, all for the cost of approximately 0,6% based on R1.5million turnover.
“Given that cash is still the dominant payment mechanism of choice in the country, it is difficult to understand how any business that deals with large volumes of cash can do so without robust and efficient automation. The myth that automating cash handling processes is expensive, is simply not true. The math speaks for itself. In fact, automation significantly reduces risk and cost.”
Passion for people and businesses
“SMEs are the lifeblood of our economy and play a critical role in the future of our country. We are determined about enabling South African retailers to reduce their risk and grow their businesses.
“The genesis of Cash Connect is that we have evolved from an initial focus of providing a secure trading environment to going well beyond safe. Our focus and purpose is targeted at enabling the growth of SMEs in South Africa.
“We will continue to evolve, while the nexus of our journey will remain the passion we have for our clients and their businesses.”
Financial Literacy Key To Business Success – Especially In A Tough Economy
What can South African SMMEs do to position themselves for success in tough economic times? Arming their people with basic financial literacy is a good place to start argues UCT Graduate School of Business Associate Professor Mark Graham.
In times of economic hardship, good financial and management skills in a business can make all the difference. According to a recent article in Business Day, international investors are sniffing about South African SMMEs that have proven themselves to be well-run during this time of subdued economic growth – and are also attractively undervalued.
Strong balance sheets and stable management in an environment of slow growth economy with low liquidity adds up to some bargain long-term investment opportunities for international consortiums it seems. Among those who have been involved in investment or buyout offers in the past few months are Clover and Interwaste.
It seems self-evident to suggest that well-run businesses attract investment and success. But what actually makes a business – of any size – well-run in the first place?
There is obviously no short answer to this; good leadership, a clear strategy and a strong and motivated workforce all play their part, but one factor that is often overlooked is financial acumen – throughout the organisation. While the accountants and members in the finance team are expected to understand the numbers, this is not always a core competency required in other departments. Yet, having a good working knowledge of finance at every decision-making level, from new managers to members of the board, can be key.
Even if people don’t need to know a lot about finance in their day-to-day job, the more conversant they are on the subject, the better off they – and the business – will be, according to Richard Ruback, a professor at Harvard Business School and the co-author of the HBR Guide to Buying a Small Business. “If you can speak the language of money, you will be more successful,” he says simply.
Financial savvy will give the marketing manager the ability to demonstrate not only that something is a good idea/product or service, but that it makes financial sense too, for example. And it will make sure that the people in the HR team understand more clearly why reducing staff churn is a good idea not only for company culture but for the bottom line as well.
A knowledge of some basic financial decision-making tools (the all-important balance-sheet, for example) and an appreciation of the difference between profitability and cash flow will ensure that non-financial managers are more likely to effectively participate in business strategy and decision-making. Someone who understands the financial statements of a business understands the business in a way that is not otherwise possible. It’s like looking beneath the hood of a car and understanding how it all fits together and why the car can move forward – or not.
Such people can more confidently identify potential problems and inefficiencies before they impact the overall financial performance, because those warnings are almost invariably reflected in the financials first – and often at departmental level. Critically, they can also help identify financial irregularities, enabling them to call out and stop fraud and corruption in its tracks.
Equipping its people with financial skills is therefore a good strategy for a business looking to position itself for growth and investment. And it makes sense for individuals too – Joe Knight, a partner and senior consultant at the Business Literacy Institute in the US and the co-author of Financial Intelligence, says that an absence of financial savvy is “career-limiting.”
Let’s not ignore the fact that there are challenges however. Finance matters tend to scare a great many people. Traditionally, these areas of knowledge carry the stigma of being impenetrable, and financial literacy is not ideally developed at early levels. According to a study by the Financial Services Board, South Africa currently has a financial literacy rate of just 51%.
This means that roughly one out of every two people is likely to prefer to abdicate from financial decision-making – leaving it to the “numbers” people. But with some intervention and training it is possible to empower individuals to decode these mysteries and get to grips with the language of finance.
All things being equal, it’s not pure luck that allows some businesses to operate well and thrive while others fail. Well-run businesses are generally run by well-informed people. In short, decision-makers who don’t understand basic financial concepts and the language of finance simply don’t know what is going on.
While the SA government is currently talking up the need for foreign direct investment to rescue the country from the economic doldrums, there is much that ordinary businesses can do to position themselves for success. And ensuring that their people are adequately equipped to understand the nuances of business through the language of finance is perhaps a good place to start.
Trade Agreement Tips That Will Save You Costs
If you are looking to benefit from trade agreements, you need to keep the following advice in mind.
Trade benefits all parties involved. When a country has scarcity of certain resources or lack the capacity to satisfy their own needs, they have the opportunity to trade the resources which they produce in surplus, for the products they need or want.
When goods are transferred from one country to another, it stimulates the economy as products and money is switched between hands. Over the years, the competitive nature of moving goods from one country to the other, negotiating prices and opening new markets has caused certain agreements to immerge to promote trade between the member countries.
A trade agreement is an arrangement between two or more nations in order for goods to move more easily between borders with mutually beneficial tariffs imposed on imports. These agreements ensure that duty tax is removed or reduced on condition that the importer and exporter provide the correct documents. This is all the more reason for traders to familiarise themselves with the current trade agreements in place.
Tip1# Know Whether You Export To Or Import From A Country With A Trade Agreement
There are a few trade agreements that you need to be aware of which will significantly cut duty tax. The Southern Africa Development Community (SADC) Free Trade Agreement (FTA) is one of them. The fifteen SADC member states included in the agreement enjoy an impressive 85% free trade on goods.
Another trade agreement commonly used by South Africans is the South African Customs Union (SACU) which allows duty tax free movements of goods. This means zero duty tax is payable on trade between these countries. Trade agreements with European countries include the SADC-EU Economic Partnership Agreement (EPA) and the SACU European Free Trade Association (EFTA). We have prepared a list of all the trade agreements as well as the countries involved here.
Tip 2# Know Which Certificate Of Origin Is Necessary For The Specific Trade Agreement
Only traders who can prove that goods were produced or processed in a member country may benefit from these agreements. This is why importers and exporters need to submit paperwork attesting that the goods were made in the country listed as the beneficiary of the trade agreement. The proof provided is called a ’Certificate of Origin’.
A certificate of origin often abbreviated to C/O or CoO is a printed form or electronic document completed by the exporter and certified by a recognised issuing body, validating that the goods in a particular export shipment have been produced, manufactured or processed in a particular country.
The exporter has to submit proof that either a) the products were wholly obtained from that country; this means all components and manufacturing originated in that country, or b) that it is sufficiently processed in the country of origin.
In other words, although some components might have been imported, the product was sufficiently transformed, or value was added in such a way that the final item can be deemed as new or original. Furthermore, if a company was registered in one country and the manufacturing plant in another, the certificate of origin would be issued from the manufacturing plant’s country. There are various certificates of origins used for different countries. Read here for more details about the different documents required to ensure you benefit from lower duty tax.
#Tip 3: Ensure The Certificate Of Origin Is Completed In The Right Manner
These documents must be completed correctly. Most of the information provided has to come from the exporter. If the wrong information has been reported, it can influence the relationship between the importer and exporter negatively.
Common mistakes when filling out a Certificate of Origin may include:
- Identifying the wrong country of origin
- Using the wrong H.S. code
- Providing an incorrect or incomplete and rather ambiguous description of the goods
- Not including a description on how the cargo is packed or reporting a total weight that does not include packaging
- Exporting goods made from imported material and not sufficiently processed to be deemed as originating from the exporting country.
A lot of information can be misrepresented on the certificate of origin. For this reason, we recommend making use of companies specialising in trade administration to ease the stress and to ensure that all the t’s are crossed and i’s are dotted.
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