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Give Your Business A Cash Management Makeover This Year

Is your New Year’s resolution to improve cashflow, save costs and deflect crime? Then here are 10 simple tips for you to give your business a cash management makeover this year.

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As much as marketing strategies, productivity and customer service determine business success, how you manage the cash you make, is what makes or breaks a business. Whether you are one of the few who have automated the management of the cash in store or not, now is a great time to turn over a new cash management leaf.

Crime in general, and cash crime specifically, is a real business risk in South Africa. The Global Cash Index report, released in June 2017, confirms that cash is still used in the majority of retail transactions worldwide. In South Africa alone, there is around R140 billion cash in circulation at any given time. And nothing gets the criminal juices flowing like a target consisting of cold, hard and unprotected cash. One of the biggest favours you can do for your business, your staff, your customers, and your bottom line, is to automate your cash management and payment processes.

According to Richard Phillips, joint CEO of Cash Connect Management Solutions, automated retail cash management should be the retail solution of choice.

“It saves money and time, enhances efficiency, improves cashflow and greatly improves the store’s risk profile while allowing owners and managers to focus on core aspects of running the business,” he says. “Our new age technology delivers essential benefits and savings that no retailer should be without”.

An automated cash management and payment solution is up to four times faster than a manual cash handling system. Business owners can save up to 70% of their business day, as they no longer have to count and recount the cash, spend hours on recons and preparing bank deposits. Cash deposited in store converts to value on the same day and even instantly, on demand!

Related: 5 Cash Management Tactics Small Businesses Use To Become Bigger Businesses

Implementing an automated cash management solution should be a well-considered business decision. Make sure the solutions on your shortlist tick these boxes before you make the final choice:

10 Tips to improve your business cash flow this New Year

1. Save time, money and resources

The solution has to improve business efficiency by addressing all the staff touch points associated with manual reconciliations and banking, counting, shrinkage, double-count supervision, and in-store as well as in transit cash insurance and overhead costs. You want a system that is fast, accurate and error-free.

2. No concerns around cash

Is your cash guaranteed from the moment it is deposited into the cash vault until the value reflects in your bank account? The provider you select has to take full responsibility for your cash, including while it is in transit.

3. Devices and procedures that reduce risk

The complete solution – from the cash vault to the cash collection process – has to help de-risk your business. Consider not only the risk of cash losses, but the broader harm that a violent armed robbery will do to your staff, customers and brand.

 4. Focus on your core business

Your provider has to lift the full burden of cash handling and management from your shoulders, leaving you free to give your undivided attention to growing your business.

5. Same-day access to cash

It can take up to three days for cash to become available after being deposited the traditional cash handling route. Your automation provider has to guarantee that the cash will reflect in your bank account on the same banking day that the cash-in-transit company collects from your premises. This reduces your cost of funds and the opportunity cost related to cash.

Related: Reducing Your Cash Risk – The How And Why

6. Reputation as a crime deterrent

The trauma of living through an armed robbery often results in employees leaving because they feel unsafe. Likewise, even loyal customers can choose to rather shop in an environment they perceive to be safer than a shop that had been targeted. Businesses report a trade recovery period of up to six months after a violent attack. This can be avoided by choosing an automated cash management and payment solution with cash vault technology strong enough to act as a deterrent.

7. No-nonsense, 24/7 support

Unlimited in-field technical support and round-the-clock access to a professional first-line customer support call centre are non-negotiable requirements.

8. Reporting that supports decision making

An accurate and real-time picture of your cash situation is critical. Make sure your chosen provider delivers an easy-to-use record of all transactions via a user-friendly online information portal. You must be able to track your cash every step of the way.

9. Transparent costing

Ideally you want a one-price-covers-all rate with no hidden additional costs. Check that the quoted fee includes consumables, communications and maintenance.

Related: 10 Expert Tips On Managing Cash Flow As A New Business

10. Value-added extras

We all want as much value as possible for the money we spend on service providers. Your preferred cash automation solution shouldn’t be an exception. Two examples of such extras are the quick and efficient access to unsecured finance that Cash Connect Capital offers its existing clients, and the benefit of Instant Access to the cash whilst in your vault.

While Cash Connect Capital allows retailers to take advantage of an unsecured finance offering to increase stock levels or purchasing bulk stock at discounted rates, Instant Access gives retailers access to the cash whilst still in their vault to improve cash flow for urgent supplier payments for example. These are the kinds of invaluable benefits your cash management service provider should provide to ensure business efficiency, growth and success.

By simply changing the way you handle the cash in your business, you can improve profitability, staff morale and retention, and your brand reputation. You don’t have to be part of the cash crime statistics in South Africa. Instead, join the ranks of successful businesses that trade in a safer and more efficient retail environment.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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3 Stealthy Tax Hikes Payroll Managers And Employees Need To Take Note Of

By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa

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“Dammed if you do and dammed if you don’t.” 

The adage summarises the difficult decisions government and the Finance Minister faced when balancing the country’s books, rescuing state-owned enterprises, and reviving the growth of our economy. Given the economic pressure that most taxpayers are facing, government ideally needed to achieve all of that without direct increases to personal income tax in the most recent Budget Speech.

Personal income tax has comprised at least a third of South Africa’s total tax revenue in recent tax years, despite growing unemployment. The 2019 Budget, presented in February, forecasts that personal income tax will account for nearly 39% of tax collected during the upcoming (2019/20) tax year. Given that we are in an election year and that the tax base is fragile, it’s not surprising that the Finance Minister and the National Treasury avoided direct increases to the statutory tax tables used to calculate PAYE for employees in the budget.

Nonetheless, government has made inflation work in its favour to impose some tax increases by stealth. Here are three ways government is raising more revenue without direct tax increases:

1. Bracket creep

The statutory tax tables used by payrolls and employers have not been changed for 2019/20, nor have the brackets been adjusted for inflation. This effectively amounts to an indirect tax increase that will yield a revenue saving of approximately R12.8 billion for government’s coffers.

It is not unusual for government to use ‘bracket creep’ to effectively raise more revenue. But unlike previous tax years, even low- and middle-income earners are not getting much relief. Rebates and the tax threshold are being increased by small amounts to allow some relief, but many people this year will feel the pain as inflationary salary increases push them into a higher tax bracket.

2. Medical aid credit not adjusted for inflation 

As proposed in the 2018 Budget, the Finance Minister did not apply an inflationary increase to the Medical Tax Credit, which allowed him to raise an extra R1 billion in revenue for the year. Surprisingly, these funds will be allocated to general tax revenue rather than ring-fenced for healthcare. In previous tax years, revenue generated from below-inflation increases on medical scheme credits was used to fund National Health Insurance (NHI) pilot projects.

There is still no clarity on how the NHI is going to be funded except for a general statement that the funding model is a problem for the National Treasury to solve, and that the principles of cross-subsidisation will apply. One wonders if any real progress will be made soon, given the fiscal constraints government faces.

3. Business travel deduction left untouched

The Budget leaves the per-kilometre cost rates used to determine tax deductions for business travel untouched. By not increasing travel rates to account for inflation, government effectively increases income tax collection at the cost of the taxpayer. This will be a blow for people who need to claim from their employers for business travel in their personal vehicles. This change has slipped through largely unnoticed and the budget does not provide numbers for the expected increase in tax revenue.

Closing words

Amid political turmoil and uncertainty, the Finance Minister presented a balanced budget for 2019/20 that offers hope for the future along with some tough love. With government taking steps to accelerate economic growth and improve revenue collection, we should hopefully see a steady improvement in government finances, which will translate into less pressure on the taxpayer in future years.

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Entrepreneur Today

SMEs: Staying On The Right Side Of The Taxman

Remaining SARS compliant can be a constant challenge for small- to medium-enterprises (SMEs), especially when they are trying to focus on growing their businesses and streamlining their operations.

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EasyBiz Managing Director, Gary Epstein, says submitting taxes can be a seamless process that does not have to take up more time than is necessary. “If business owners understand what is required of them and they put a few processes into place to deal with their tax submissions properly, their lives will be so much easier.”

What are the top three considerations for SMEs when submitting tax returns?

“Firstly,” says Epstein, “SARS returns must be accurate and submitted in terms of the relevant Act. Secondly, returns should be submitted and paid on time to avoid unnecessary penalties and interest, and thirdly, business owners must follow up on queries issued by SARS. “Do not ignore these queries, act on them as soon as possible”.

What are the major SARS submission deadlines for SMEs?

Epstein points out that small business owners need to adhere to various tax deadlines, each with their own particular dates for submission. “It is important that business owners diarise the dates (and set advance reminders for themselves) and/or enlist the services of an accountant or financial adviser to help them keep abreast of requirements.”

Value-added tax (VAT)

VAT payments need to be submitted in the VAT period allocated to the business, according to various categories and ending on the last day of a calendar month. This may mean making payments once a month, once every two months, once every six months or annually, depending on the category.

Provisional taxes

Provisional tax should be submitted at the end of August (first provisional) and at the end of February (second provisional) – for February year-end companies.

Employee taxes

In addition to submitting an annual reconciliation (EMP501) for the period 1 March to end of February for Pay-As-You-Earn (PAYE), Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF), employee tax, in the form of an EMP201 return, needs to be submitted by the seventh of every month.

When can SMEs get extensions and is it worth it?

Epstein says SMEs can apply for various extensions, but these are subject to the Income Tax Act and Tax Administration Act.

“It is best for SMEs to consult their tax professionals to get advice regarding extensions for their businesses.”

What is SARS not flexible about?

SARS is not flexible when it comes to late returns and late payments.

“I cannot stress enough how important it is for SME owners to ensure their tax returns are submitted on time. In this way, they will avoid the inconvenience and expense of additional fines and interest,” notes Epstein.

What skills do SMEs need in their organisations to be able to submit to SARS efficiently?

Business owners often don’t have the time or expertise to deal with tax submissions throughout the year. If the business cannot afford to employ a full-time accountant or financial services expert, it would do well to outsource its tax requirements to a registered tax practitioner.

“I would recommend that even if they are not submitting the tax returns themselves, business owners should have a broad understanding of the tax regulations and what is expected of them. There is a lot of helpful information on the various Acts and tax requirements on SARS’ website,” says Epstein.

How does the right software help SMEs remain SARS compliant?

SME’s (and their accountants’) jobs can be made easier by using reliable accounting software to calculate accurate VAT reports. These reports are only as accurate as the data entered into them, which means care needs to be taken when inputting data into the accounting programme. Epstein says a good accounting software package must be reliable, easy to use and functional.

“SMEs need to check that the software has thorough reporting capabilities and can interface with other software solutions. Of course, it is also important to find out whether the software is locally supported by the vendor or not.”

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Entrepreneur Today

4 Dangers Of Business Under-insurance

A common short-term insurance peril that many SMEs face when submitting a claim following an insured event is the risk of being underinsured.

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Malesela Maupa, Head of Products and Insurer Relationships at FNB Insurance Brokers says, many small business owners mistakenly believe that by merely having a short-term insurance policy in place they are adequately protected against unforeseen events.

“This is technically correct provided that the business is covered for the full replacement value of the items insured. However, in circumstances where the sum insured does not cover the full replacement value or material loss of the item insured, the business is underinsured,” explains Maupa, as he unpacks the dangers of business underinsurance:

1. Financial loss

The most common risk is financial loss on the part of the business. If the business is underinsured or the indemnity period understated, the short-term insurance policy will only pay out the sum insured for the stated indemnity period as stated in the schedule, with the business owner having to provide for the shortfall. This often leads to cash flow challenges, impacting profit margins or rendering it difficult for the business to recover following the financial loss.

2. Reputational damage

Should an underinsured business not have sufficient funds to replace a key business activity or critical component following a loss, this may impact its ability to fulfil its contractual obligations, leading to a loss of business or market share, and irreparable reputational damage in the worst-case scenario.

3. Legal action

A small business also faces the risk of customers or clients taking legal action against it, should it fail to deliver on goods and services following a loss or be unable to honour its financial commitments that they committed to prior to the loss.

4. Survival of the business

A catastrophic event such as fire, which could result in the loss of stock or company equipment and documentation, could threaten the survival of a small business that is not yet fully established, if the business assets are not adequately insured.

Working with an experienced short-term insurance broker or insurer is essential when taking up short-term insurance to ensure that business contents are covered for their full replacement value.

Furthermore, depending on the nature of the business or item insured, the policy should be reviewed on a regular basis to avoid underinsurance as the value of items often change overtime due to fluctuations in economic activity. Where it’s necessary, evaluation certificates need to be kept up to date.

“Lastly, SMEs should ensure that the sum insured does not exceed the replacement value, which would lead to over insurance. Should a business submit a claim following a loss, the insurer would only pay out the replacement value, regardless of the higher sum insured,” concludes Maupa.

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