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Improve Your Cash Flow: Manage Your VAT

Viresh Harduth, Vice President: New Customer Acquisition (Small & Medium Businesses) for Sage Africa & Middle East on the increase in VAT in South Africa and how it affects your business.

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If you went shopping on 1 April, you likely encountered aisles and aisles of products with no price tags as retailers updated their shelf pricing to reflect the new VAT rate. As a consumer, this was probably a slight inconvenience because you didn’t know how much something cost until you had to pay.

Yet, as a small business owner, the VAT increase was more than a slight inconvenience. Not only did you have to update your systems and train your teams but you likely had to spend money printing new price tags and ensuring you were compliant – this was, after all, the biggest tax change in 25 years.

The VAT increase will also impact your cash flow because you will need to pay more money to SARS. But now that the dust has settled, Small & Medium Businesses have an opportunity to review their operations and uncover ways to improve their cash flow and offset the higher VAT payments.

Related: 5 Marketing Missteps That Make Cash Flow And Business Growth Stumble

Here are five ideas to free up cash that are easy to implement and don’t require major changes to your business:

  1. Negotiate extended payment terms with suppliers. When you receive an invoice, you generally have 30 days to pay. Try to negotiate longer payment terms with your suppliers – like 60 days – so that you have cash in the bank for longer.
  2. Enforce your own payment terms for customers. The time between issuing invoices and waiting to get paid is a danger zone for small businesses, especially when you need to pay VAT to SARS. Reduce your payment terms for customers from one month to 14 days, for example, and stick to it. Send regular reminders on overdue accounts and follow up on the phone.
  3. Incentivise customers to pay earlier. Offer various payment methods that make it easier for customers to settle their accounts sooner. Issue invoices promptly and offer discounts for early – and full – payment. This will also increase loyalty.
  4. Reduce stock on hand. If you have surplus stock, it means you haven’t aligned your stock with your sales, which ties up available cash. Stock management is as important as financial management. Knowing what’s in your stock room – and bank account – at all times, is crucial to maximise cash flow.
  5. Work with an accountant. While cloud-based accounting solutions like Sage can help you keep track of your cash flow and stay compliant, an accountant can identify areas to save money and cut costs, freeing up working and investment capital.

Related: Strategies To Help You Stay Out Of The Red With Cash Flow

When you improve your cash flow, you reduce the need to rely on bank overdrafts and loans. The key to the success of any business is to free up as much cash as possible. And, with the VAT increase, you need more cash than you did yesterday.

*Remember, you have until 31 May to reflect the VAT increase in your product and service prices. Until then, you can apply the additional 1% at the till point, as long as you put up signs informing customers that you will be doing this.

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Entrepreneur Today

A Conversation With Yourself Could Change Your Life

Thami Buti is a 24-year-old South African actor. He is amongst the 46% of South Africans between 20 and 50 years, who have no savings at all. He’s probably one of 90% of people who will retire with less than 50% of their income.

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Except none of this is true for Thami, because he’s had a conversation with himself – at six different ages – in Sanlam’s new educational campaign.

In Sanlam’s Conversations with Yourself campaign, Thami gets transformed into a 20, 30, 50, 65 and 80-year-old (actor Hlumelo Mzimkulu plays the 10-year-old) called YOU. And over a series of conversations, these characters in their different age brackets sit and share wisdom on life’s ‘what ifs.’ Disrupting the traditional approach to ‘finance talk’, the central idea is this: what if you could learn everything you need to know about life, from yourself? What if 65 year-old you could tell you – at age 20 – to stop buying so many cappuccinos and to invest more into an RA? And 30-year-old you could ask you at 80 how many kids you have – and how you afford to give them the lifestyle and opportunities you want for them?

Sonja Sanders, Head of Marketing and Client Experience at Sanlam Personal Finance, says each of the seven Conversations with Yourself films uses humour and insight to broach a different topic – and presents the accompanying product solve. “For example, the Conversation on Life and Retirement tackles retirement in a completely new way. Planning for retirement is often not a priority when you’re young. But what if you knew only 6% of South Africans are able to cover their monthly expenses once they retire? And what if you could ask your 65-year-old self whether you are one of the 6%? Would 20-year-old you still take that year off? Would you at age 30 still buy that flashy car?”

Using banter to bring home the fact that today’s decisions will define life when you’re older, the script takes a notoriously low-interest topic and makes it relatable.

The same goes for the highly sensitive topic of death, which no one wants to talk about — undoubtedly a problem in a country with an average age of death that stands at 64 years, and where 40% of the workforce is more likely to have cell phone insurance than life insurance.

Sanders says, “Conversations with Yourself takes an idea we’ve all had to the next level: The wish to fast-track into the future to see if our lives worked out the way we expected. Ultimately, you are your own partner in life. Everything you do now either benefits your future or jeopardises it. It’s often too daunting to imagine one’s future-self. But Conversations with Yourself connects the future to the present, and makes the experience real and impactful.”

Related: How To Start Saving Money Today

South Africa’s problematic savings culture has been well documented. In the retirement space, Sanlam’s Benchmark research has identified millennials as the generation most at risk of having insufficient savings, mainly due to their DIY approach to money matters, their mistrust of financial service institutions and the fact that they don’t identify with retirement as a goal. It’s a generation known for overconfidence despite their poor financial literacy. Millennials prefer self-directed advice – so what better way to deliver it than through a ‘conversation with yourself’?

“As WealthsmithsTM, Sanlam wants to empower people with the knowledge and tools to enable them to make positive financial decisions today. This should set them up for success both now and into the future. Conversations with Yourself helps people to appreciate that the planning they do today has significant implications for their future self. Ultimately, the campaign uses progressive storytelling to share a story to which any generation can relate. The story of you,” concludes Sanders.

Visit Conversationswithyourself to watch the films and start your own conversation.

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Entrepreneur Today

10X-e Partners With Alphacode To Accelerate Five Top Companies In South Africa

South African Scale Up specialists, 10X-e, will partner with SA’s premier fintech incubator subsidiary of RMI, Alphacode to support SA’s top Fintech’s on their path to scale.

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This collaboration will initially see five of SA’s highest-profile fintech companies investing two years scaling up using 10X-e’s much lauded 10X program. 10X-e’s founder, Jason Goldberg, says that this accelerator program helps scale-up teams learn and apply the 12 disciplines for rapid and sustainable growth.

“We are delighted to be working with AlphaCode –  SA’s premier fintech support brand – to help some of SA’s top Fintech  entrepreneurs scale-up” says Jason.

The first five elite fintech businesses selected to join the program are Entersekt, Livestock Wealth, Click2Sure, Invoice Worx and Isazi Consulting.

“Globally leading mobile authentication and security specialists, Entersekt are set to be South Africa’s next ‘unicorn’ while Livestock Wealth is changing the investment landscape by offering the ability to own and manage your livestock via an app from Sandton (or anywhere), outsourcing all the dirty work to their specialist operators. Click2Sure was founded by Dan Guasco – the original founder of what became Groupon SA, and Isazi Consulting (who started already in late 2017)is led by one of SA’s leading teams of data scientists and artificial intelligence experts” Jason continues.

“Another accolade for this cohort is that three of the five businesses are majority black-owned tech ventures, and most certainly earned their place on the program on pure merit terms. We’re really proud to be supporting these globally competitive entrepreneurs.”

Related: Jason Goldberg Asks Are You (Realistically) Ready To Scale Your Business?

Jason notes that, even for elite entrepreneurs and ventures like these, specialist scale-up accelerators like the 10X Program can be the difference between scaling and failing.

“There’s no doubt that accelerators specialising in how to scale a business are invaluable for most entrepreneurs at this delicate stage in a business journey. Growth often kills when businesses cross a threshold of complexity not experienced before. Most great entrepreneurs are scaling a company for the first time. Fortunately, there is a defined ‘physics’ of rapid growth;  rightly applying the 12 Disciplines of 10X Entrepreneurs – the heart of the 10X Program – you can dramatically increase the rate and sustainability of growth,” he says.

“We are dealing with the ‘crème de la crème’ of South Africa’s entrepreneurs dealing with the most extreme growing pains, so the need for guidance from seasoned Scale Up leaders who’ve ‘been there’ is key to both the success of the business and to its contribution to our economy. We look forward to helping these Founders navigate the Bermuda Triangle of growth successfully” Jason concludes.

The partnership with Alphacode will see game-changing support provided to these businesses worth around R1million over a period of 2 years as they are hand-held by industry experts on the treacherous path to scale.

Related: Do You Have That 1 In 100 Business That Can Scale And Land An Investor?

About 10X-e:

Scaling – the Bermuda triangle of growth – is hard, and fraught with failure. Very few of even the top 1% of ventures succeed at scaling, mostly due to poor execution, due to lack of experience scaling businesses. The 10X Program brings the ‘Science of Scale’ and seasoned Scale Up Leaders to help founders navigate the Bermuda Triangle of growth

Our team has helped some of the Continent’s most exciting high growth businesses scale up through the most treacherous parts of the journey. We tailor make multiple workshops to the specific needs of you, your team, and your business. Our workshops serve to address the most pressing challenges that your business faces, helping remove the hurdles towards 10X growth.

For more information on the 10X Accelerator Program, visit: www.10x-e.com

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Chairman Of Futureproof, S’onqoba Maseko On Instilling New Ways To Accelerate Our Youths

In the near future, traditional employment opportunities will no longer exist. SA needs to prepare our children for the fourth industrial revolution, now.

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Futureproof is proud to introduce the chairman of our board, S’onqoba Maseko. S’onqoba received her Honours Degree from Wits University and is just three exams away from being a fully-qualified Actuary. The 31-year-old S’onqoba, originally from the banking industry, has previously filled several key roles at The First Rand Group, including; executive assistant to the Group CEO, Sizwe Nxasana and the head of the FNB Innovators Programme.

She is the founding COO of the Sifiso Education Group – a disruptor in the education space which also is the owner of Future Nation Schools. S’onqoba is also the Managing Director of an advisory and implementation consultancy for SMME’s called Perpetu8.

Naturally, combining her skills and experience with a passion for education and entrepreneurship has made her the perfect fit for Futureproof! S’onqoba believes that education is crucial. “It’s a game changer for the nation, the continent and the globe. It requires us to prepare children for an uncertain future in the best way we know how,”

“In a country such as ours, Futureproof instils the entrepreneurial qualities needed to not only run a business but to navigate through life,” S’onqoba continues.

Related: Futureproofing The Next Generation Of Entrepreneurs

The current education system does not cater to the needs of our local and global economy. In the time of innovation, our teachers are not equipped to deal with this change and soon enough, traditional employment opportunities will no longer exist. Speaking to this topic, S’onqoba says: “It’s not about only content – you can Google anything. It’s about skills such as critical and analytical thinking, creativity, communication, collaboration and technology”.

With the lack of skills available to prepare our country for the fourth industrial revolution, S’onqoba says that we need to find ways to unearth existing skills and to impart new skills that are more aligned to what industry and the country needs. “We need to reframe our thinking: we need entrepreneurs, technical specialists, technology whizz kids. We need creatives, thinkers and solution-orientated problem solvers”.

“We need to make school content and theory relevant to the current and future world. We need a curriculum, approach and a pool of skills that align to the world and the future predicted. Grade 1 learners this year will finish school in 2030. Are we teaching them what they will need to succeed?”

She believes that the high unemployment rate of our youth is largely due to a lack of skills. “We have so many job vacancies yet so much unemployment. We still have companies wich only recruit based on formal qualifications and see this as the only way to have the required skills. This is outdated, and the world is moving beyond it”.

With South Africa now in technical recession, S’onqoba stresses the need for the country to pull up its boot straps and get on with the hard work that needs to be done. “Our entrepreneurial ecosystem is not working as well as it should. It’s broken. We’re spending billions as a country whilst seeing very little impact and return of that investment”.

Caring for the needs of all stakeholders, S’onqoba believes that one of the reasons for Futureproof’s success and phenomenal growth is because the business simply ‘gets on with it’. “No excuses, no time wasting” she explains.

Related: How Are South Africans Feeling About The Work Environment?

As a flourishing entrepreneur in a tough economy, S’onqoba shares some of her key learnings and says that an entrepreneur cannot survive without grit, curiosity and EQ: “Set up a business for scale from day one – think of your end state and build your business with that in mind. Recruit people who ‘get it’ and then develop them to be the best version of themselves so that they can add great value to your business,”

“Fill your board with passionate, skilled specialists who don’t only look to monetary income but are driven by passion, community and purpose.  Manage your time like its money; in fact, it’s more precious”.

We need to build sustainable businesses that employ more people and grow in revenue and turnover. “We need businesses that embrace the future and technology to solve the problems we face in an efficient and customer centered way without legacy and an inability to innovate standing in the way.” she concludes.

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