If you have a business in South Africa, you need an accountant to help you meet the many minimum legal, regulatory, and financial obligations it entails.
However, when your accountant becomes your partner in managing your business’ financial matters, you benefit from compliance, financial and tax expertise that has not only proven to be a critical factor in the success of any business, but that can also unlock the unique growth drivers specific to your business’ success.
In addition to the substantial legal, regulatory and financial obligations that are minimum requirements faced by all businesses, there are also well-documented reasons why as many as 80% of businesses fail within the first 5 years.
These minimum requirements, as well as the common reasons for the high rate of business failures, are better managed with the right accounting, compliance, and tax solutions, which are generally provided by accountants.
Traditionally, accountants seemed to simply report the numbers on a historical basis, using lots of jargon that most people don’t understand.
Today’s progressive, modern accountants, however, offer a more holistic solution, instead assuming the role of a partner that manages your business’ financial matters and contributes to the overall success of a business, attending not only to legal obligations and the common reasons for business failure, but also unlocking the unique growth drivers specific to your business’ success.
No longer in the background, leading accountants now translate finance and accounting jargon into simple terms that anyone can understand and relate to. They highlight risks, interpret business owners’ problems to reveal the impact on the business, and provide solutions to increase operational efficiencies.
| Why 80% of businesses fail in the first 5 years
According to studies, 50% of businesses fail within 2 years and between 70 – 80% of businesses fail within 5 years, for these common reasons:
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The ideal solution: your accountant as a partner
The ideal solution is an accountant or accounting solution that does more than report on historical numbers and attend to the minimum legal, regulatory, and financial requirements, rather assuming the role of a partner that manages your business’ financial matters and unlocks the unique growth drivers specific to your business, directly contributing to the overall success of your business.
Keeping you focused on the big picture, while freeing up your time to focus on improving operations, acquiring new business and implementing your growth strategy, such an accounting and financial partner will also explain the impact of certain decisions, point out the risks and rewards of taking one direction in the business instead of another, provide you and your staff with relevant training to better understand accounting as the language of business, and act as a sounding board for ideas to address various business challenges.
A good accounting partner is an asset to your business, assisting you with everything from company strategy to your compliance requirements, and vastly improving your business’ chances of achieving success.
For example, when our qualified and experienced team at PSTM becomes your partner, as do with all our clients, our mission is to thoroughly understand your businesses, to give you a better understanding of the numbers that drive your business, to help you be proactive rather than reactive in managing business issues, to assist you in making high quality decisions timeously, and to unlock well-defined growth drivers specific to your business – all tailored to help your unique business achieve financial success.
What options are available to fulfill the accounting function?
Having established that all businesses need an accountant, and that the ideal solution would be an accountant that assumes the role of a partner, managing your business’ financial matters, we can explore the options available to bring this vital function into a business.
The extent of the accounting function in a business depends on the business’ unique requirements, which can range from the owner DIY-ing it to a part-time bookkeeper, and from a qualified inhouse accountant to a fully outsourced accounting and finance function.
Depending on the extent of the financial management needed, different levels of expertise will also be required to fulfill this function – ranging from a junior bookkeeper who only maintains the records to a qualified Chartered Accountant (CA) who can assist with company strategy as well as finances.
Often, at the start of a business, business owners undertake their own record-keeping. In reality dealings with compliance and financial matters is not a strength for most entrepreneurs. But even if they are capable, it is important to evaluate if this is the best use of their time, which may be invested more productively focused on more strategic tasks.
In addition, it is highly recommended that business owners who take on this responsibility obtain, at the very least, relevant training, expert advice, and the right level of professional oversight.
At the minimum, an accountant will maintain the financial records of a company and could also take care of compliance and tax matters.
It may also be possible for a single person to fulfill the accounting function. For example, a small business with a basic and simple business model may be fine with just a bookkeeper. However, as the business grows and the number of stakeholders increases, it may be time to consider someone who is more qualified, or it may become necessary to invest in a full accounting team.
Regardless of the extent of the accounting function required in your business, there is also the option of keeping it inhouse or outsourcing it. Business owners don’t know what they don’t know, so it is crucial to have experts on your team that ensure what you don’t know is highlighted and attended to professionally.
If you choose to keep the accounting function inhouse, you need to make sure that you, your inhouse bookkeeper, accountant or finance team have the correct qualifications, experience and tools to know what needs to be done, and to do it correctly.
Businesses can also outsource all of the accounting function, or only certain parts thereof. The benefit of outsourcing is knowing that this important business function is taken care of by experts with their fingers on the pulse of the latest legislation, regulatory changes and market expectations.
Ideally, you want an accounting solution that is flexible to accommodate your business’ specific needs now and as these change over time.
For example, if your business is still small, you may simply need basic assistance such as help with tax submissions and professional oversight of compliance issues. A larger business may need advice and assistance in setting up the structure of an inhouse accounting team, or perhaps support for an existing inhouse accounting team, such as training, upskilling or access to technology.
For some businesses, a fully outsourced accounting and auditing is the right solution. While an outsourced service requires investment, it may make more financial sense than having a full-time team, depending on your unique requirements.
The right accounting partner would be able to support your business through all these phases of business growth, with a tailored solution every step of the way.
What is the right accounting solution for your business?
Given all these options and variables, how would you choose the right accounting and financial partner for your business?
We suggest asking these questions when considering an accountant, inhouse accounting team or an accounting solution.
- Do they listen to me and hear my concerns?
- Are they addressing my business’ pain points?
- Are they pointing out things that I didn’t know I had to do?
- Do I feel like this solution can add real value to my business?
- Do we get along?
- Am I comfortable with them working with my attorney and other advisors?
In addition to relying to some extent on your gut feel as to whether any solution is the right fit for your business, it is also crucial to verify that the right qualifications and experience are in place, to ask for references and to contact these references.
On a practical level, don’t hesitate to speak to your accountant if you feel there are gaps that need to be addressed and insist on a Service Level Agreement to guide the relationship.
As you look for the right accounting partner for your business, we invite you to engage with us on our website, Facebook or LinkedIn or on +27 (11) 656 0061 and find out more what the ideal accounting solution for your business could look like.
