Financial Management & Reporting

Are you a small business owner without a dedicated financial manager in the company? Here you can educate yourself on financial management and reporting issues.

10 financial management tips

It has been proven that many businesses failures are caused by poor financial management and record keeping. This article outlines ten ways in which you can survive businesses failures that are caused by poor financial management and record keeping. Learn how to manage your finances better by limiting your capital expenditure, not cutting back on marketing, learning about financial management, reviewing your debtor management system, reviewing your creditors, among other strategies.

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Assessing your company's financial position

You may think that because you have good bookkeeping and accounting processes in place and your cash flow is under control, you can sit back and relax. Unfortunately, you'd be wrong. This is the perfect time to do an in-depth analysis of where your business stands financially. If you're not so clued up about the accounting and financial side of your business, you may not realise how an in-depth financial analysis can benefit your company. Learn how to get the most out of your financial information.

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Auditing – the big question

Auditing in relation to SMEs has always been a debatable and contentious issue. Out of just about every SME owner that I have met, almost all would opt to have their business audited. That is, of course, if there was a combination of a reasonable price attached to it, together with a professional and efficient service guaranteed. This article explores why regular auditing is beneficial for SMEs, and what SMEs should consider before being audited.

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Balance sheet template

Some describe the balance sheet as a "snapshot" of the company's financial position at a point (a moment or an instant) in time. For example, the amounts reported on a balance sheet dated December 31, 2012 reflect that instant when all the transactions through December 31 have been recorded. It summarizes the company's assets, liabilities and shareholders' equity at a specific point in time. Use this balance sheet template to create your own balance sheet.

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Basic accounting terms and concepts

While you may find the bookkeeping and financial admin side of your business the most daunting, understanding a few basic concepts will help you understand what your accountant is trying to tell you. It's important to have some basic knowledge so that it's harder for someone to pull the wool over your eyes. This article aims to provide you with that knowledge by explaining and providing examples of common accounting concepts.

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Business valuation methods

There are a number of instances when you may need to determine the market value of a business. Certainly, buying and selling a business is the most common reason. Estate planning, reorganization, or verification of your worth for lenders or investors are other reasons. Valuing a company is hardly a precise science and can vary depending on the type of business and the reason for coming up with a valuation. This article looks at some of the common methods used to determine the value of a business.

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Current ratio calculator

Your current ratio, a comparison of current assets to current liabilities, is of particular importance to you if you're thinking of borrowing money or getting credit from one of your suppliers. Potential creditors also use this ratio to measure a business or entrepreneur's liquidity or ability to pay off short-term debts. Bankrate has created and provided a free, online calculator which you can use to calculate your current ratio at any given time.

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Example of a tax invoice

In order to comply with VAT regulations, for any sale of more than R50, you have to issue a tax invoice, with the word "tax invoice" printed on it. This is the most important document in the VAT system. The VAT Act prescribes that a tax invoice must contain certain details about the taxable supply as well as the parties to the transaction. This includes the value of the goods/services excluding VAT, and the VAT amount (calculated at 14% of the above amount), among others.

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Financial statements – are they relevant to my business?

Over the years, I have come across many a practitioner / entrepreneur who runs their practice / business and yet rarely glances at their annual financial statements – those things you do for SARS, or possibly the bank manager, but which cost you an arm and a leg. Financial Statements are another tool in the entrepreneurs’ arsenal in managing their business, and it should be so in your practice as well.

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FindanAccountant.co.za

Finding and choosing the right accountant for your business can mean the difference between success and failure. All accountants are not created equal. You need the right match for your exact needs. Unfortunately, once you've selected an accountant, it's often a hassle to switch due to the detailed knowledge that person gains of your business. Therefore it pays, when selecting an accountant, to 'get it right the first time'.

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Hiring an accountant – the 10 point checklist every entrepreneur needs

In the entrepreneurial world the relationship between the entrepreneur and their accountant is significant and intimate. Exposing our financial matters to someone else feels much like showing up to a meeting without our clothes on; and we have good reason to be selective about whom we choose to entrust with our innermost confidences. Accountants are an indispensable part of any business venture. Cultivating a pro-active profit type of accounting relationship provides meaningful and valuable support to all types of entrepreneurs.

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How to increase your profit margin

A profit margin is an indicator of a company's pricing strategies and how well it controls costs. Differences in competitive strategy and product mix cause the profit margin to vary among different companies. The easiest way to remember it, is that the margin is the difference (financially) between what everything costs and what you charge. If your margins are too low, you will never make a profit and on the other hand if you set your margins too high, you run the risk of never making a sale. This article looks at how best to increase your profit margin.

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How to select an accountant or bookkeeper

You can get an idea of an accountant's level of skill by looking at their experience and qualifications. But how can you tell if they can be trusted with your sensitive financial information? You can always ask business colleagues and acquaintances if they know a good bookkeeper and hope you get a personal recommendation. But what other options do you have? This article looks at the factors you should consider when making this crucial business decision.

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Income statement template

Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period. The income statement is important because it shows the profitability of a company during the time interval specified in its heading. The period of time that the statement covers is chosen by the business and can vary. This template is intended to be a simple and practical tool to be adjusted and used by SMEs working in all sectors.

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Insuring debt and liability

There are various ways to ensure that your business does not go down or be tied up in endless red tape because of the debt or liabilities you have left behind at your death or should you become disabled. A business is a valuable asset, built up by the dedication of its owners. Every care should therefore be taken to protect it for the generation of future income and as a cornerstone of wealth. This article looks at how to secure your business's financial future.

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Is accounting knowledge necessary when running a small business?

Does a small business owner need to understand their business's financials? Before we answer this question, let's draw a distinction between monthly accounting and financial accounting. Monthly accounting involves bookkeeping, payroll and tax. Financial accounting includes the calculations that allow you to price your products and services. Many small business owners who produce accurate monthly accounts, don't know how to then use those numbers the monthly accounts have produced, to carry out financial accounting. This article explores the importance of having basic accounting knowledge, but outsourcing your accounting needs.

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Keep your credit record squeaky clean

At one time or another, you may have to apply for a loan or overdraft to expand your business, buy equipment or finance some other aspect of your operations. This is when having a good credit history becomes very important. Establishing and maintaining a good credit record takes time and can be challenging during tough financial times. This is why you should not obtain credit for unnecessary expenses. This article looks at how to keep your credit record clean.

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Managing debt

For a growing business, having a manageable level of debt can be an effective way of doing business. While some small business owners are proud of the fact that they've never taken on debt, that's not always a realistic approach. The question for many small business owners is: How much debt is too much? The answer to this question will lie in a careful analysis of your cash flow and the specific needs of your business and your industry. This article will help you analyze whether taking on debt is a good idea for your company.

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Monthly bank reconciliation template

If you find yourself spending lots of time every month reconciling your bank statement and still aren't able to nail it down to the penny, our specially designed monthly bank reconciliation form contained in the attached file might be able to help you. It can help make the process far less painful and much more accurate, and will even do some of the clerical work for you. Just put in the account balance shown on your bank statement, your deposits in transit, your outstanding checks, and your account balance according to your books in the spaces provided.

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National Credit Regulator

The National Credit Regulator (NCR) was established as the regulator under the National Credit Act No. 34 of 2005 (The Act) and is responsible for the regulation of the South African credit industry. It is tasked with carrying out education, research, policy development, registration of industry participants, investigation of complaints, and ensuring the enforcement of the Act. The Act requires the Regulator to promote the development of an accessible credit market, particularly to address the needs of historically disadvantaged persons, low income persons, and remote, isolated or low density communities.

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Ombudsman for Banking Services

The Ombudsman for Banking Services (OBS), also referred to as “the OBS”, resolves individual complaints about banking services and products. We do this in an impartial, independent, confidential and speedy manner. Any bank customer who has a complaint against his or her bank may approach the Ombudsman for Banking Services for assistance. We resolve complaints by investigating matter according to the rules of the OBS. If the matter has not been resolved by negotiation after investigation, a firm decision may be taken. The decision may be in the form of a recommendation or a determination.

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SMEasy

SMEasy is an award-winning, easy-to-use business management and accounting system for small business that’s specifically designed for people who don’t understand accounting. SMEasy is totally different to any other accounting system. It’s developed by entrepreneurs for entrepreneurs so it understands your realities and speaks your language. You don’t need to understand anything about accounting to use it! 

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South African Fraud Prevention Services

The Southern African Fraud Prevention Service (SAFPS) is a proudly South African non profit company committed to combating fraud across the financial services industry by providing a shared database to member organisations as well as offering the South African public a means of protecting themselves against impersonation and identity theft. From an initial membership of only two banks, the SAFPS now provides fraud related data to some 65 trusted brands in the South African economy.

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Trial balance worksheet

Whatever kind of business you run, you have to close your books at least once a year to prepare an income tax return — or more frequently, if you want to get a better handle on how your business is doing. An important part of closing your books is preparing a trial balance — in other words, a list of all of your bookkeeping accounts and the balance of each at the end of the period — to see if your books are still in balance. If you are already doing this, you know that it is tedious and time-consuming; if your accountant is doing it, you know that it is an added expense.

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VAT: some of the requirements – part 1

“Who here loves the VAT man?” That is a question that I ask on a regular basis.  Sadly though, more often than not, mine is the only hand that goes up. It is definitely a mind set that needs to be changed if we are to make the best use of the concessions that SARS gives us. It is about what you know and how you use it that will allow you to make the most of your relationship with SARS. That said, here are a few tips in terms of what must be done regarding the VAT requirements. 

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VAT: some of the requirements – part 2

“Who here loves the VAT man?” That is a question that I ask on a regular basis.  Sadly though, more often than not, mine is the only hand that goes up. It is definitely a mind set that needs to be changed if we are to make the best use of the concessions that SARS gives us. It is about what you know and how you use it that will allow you to make the most of your relationship with SARS. That said, here are a few more tips in terms of what must be done regarding the VAT requirements. 

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VAT: some of the requirements – part 3

“Who here loves the VAT man?” That is a question that I ask on a regular basis.  Sadly though, more often than not, mine is the only hand that goes up. It is definitely a mind set that needs to be changed if we are to make the best use of the concessions that SARS gives us. It is about what you know and how you use it that will allow you to make the most of your relationship with SARS. Here are a few more instances and situations that many folk don’t know about, where you can claim VAT back if the product/service has been used for business purposes.

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What entrepreneurs need from accountants

If entrepreneurship is the future of progressive industry, which I believe it is, then a shift needs to occur in the relationship between an entrepreneur and their accountant because this is one of the most important and enduring alliances they will forge. What makes an accountant valuable to an entrepreneur? In short, a valuable accountant is one who listens. This article further explores this relationship by looking at the types of accountant you may come across in your career.

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What to expect from your bookkeeper – part 1

Every day I meet people who haven’t listened and who are now paying the price and I mean “paying” in every sense of the word. Sure a good bookkeeper/accountant will cost you money. Sure there will be administration that you will need to do on a daily/weekly/monthly and annual basis, but look at what you have to gain from than – a business where you actually know what’s going on! Here are some of the things that a good bookkeeper/accountant should be doing for you.

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What to expect from your bookkeeper – part 2

It is imperative that your bookkeeper/accountant advise you in advance of any changes that will affect you. For example, imagine the waste of money and resources if the Company owner only found out that the has to pay VAT monthly when he reaches the R35 million turnover per annum mark, 6 months after he has met that particular milestone? The penalties and interest would be absolutely staggering! This article continues looking at the things that a good bookkeeper/accountant should be doing for you.

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Why do I need financial statements if I have a small business?

Why do I need financial statements if I have a small business? Well, if you run a registered company, having financial statements is a requirement for three reasons. You need financial statements if, in future you need funding for your business; because it's a legal requirement to prepare these statements; and to prevent you from declaring incorrect taxes to SARS. This article explores these three reasons in more detail.

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