Tag Archive: small business


Sage Business Index by Softline shows local confidence in business prospects remain stable, but confidence in SA economic prospects dips

8th November 2012, Johannesburg: Softline, part of the Sage Group PLC, today released the results of The Sage Business Index – Local and International Business Insights.

The Index is a global measure of confidence across small and medium sized businesses. Nearly 11,000 small and medium sized companies in 15 countries across Europe, North America, Brazil, South Africa and Asia responded to the survey. The Index shows that whilst there is a general decline in confidence in global and local economies, businesses remain cautiously optimistic in their own growth prospects.

In South Africa, confidence in both individual business prospects and the outlook for the global economy remain largely unchanged, down slightly from March 2012 (Index scores: 64.44 to 64.19 and 44.71 to 44.54 respectively). Confidence in South Africa’s own economic prospects has fallen slightly further from 46.11 in March 2012 to 43.03 in September 2012.

South African Index Scores* September 2012 March 2012 September 2011
Global economic confidence 44.54 44.71 45.92
SA’s Country economic confidence 43.03 46.11 44.10
Own business confidence SA 64.19 64.44 62.58

(Below 50 is decline/less confident above 50 is improvement/more confident, 50 is no different)*

The research, which included 1 879 South African small to medium size businesses, was carried out by Populus, a UK based opinion and research consultancy firm.

Economic confidence – local concerns in line with macro-economic trends

All countries, with the exception of Brazil, registered an index score below 50 showing that respondents generally feel that the global economy is continuing to decline. Unsurprisingly, the Eurozone countries feel the most negative, with fears of a “double dip” recession having risen sharply.

In South Africa, businesses surveyed are feeling less confident about the prospects for the local economy, with the index declining from 46.11 to 43.03 over the past 6 months. This, however, is in sharp contrast with how they feel about their own business prospects which scored positively at 64.19.

Commenting at the official results presentation in Johannesburg today, Ivan Epstein, CEO (and co-founder) of Softline and Sage AAMEA (Asia, Australia, Middle East and Africa) said, “Looking at the results against an international backdrop, South Africa scored the second highest index rating of all the countries polled in terms of individual business confidence. Entrepreneurial spirit and business culture is identified by businesses as one of the most important aspects for doing business successfully in South Africa. This endorses my strong belief that South Africa is a fertile environment for successful entrepreneurs and small businesses.”

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Business performance and challenges – revenues maintained, cost challenges

There are some positive signs in the global survey with 63 percent of respondents saying that over the past 6 months revenue has either increased or held steady whilst 82 percent have either increased or maintained employee numbers.

South Africa achieved a similar score with 65 percent of businesses polled showing either steady or increasing revenue and 84 percent of businesses either increasing or maintaining employee numbers.

Rob Wilkie, CFO of Softline and Sage AAMEA commented that “72 percent of South African businesses said that they have adapted to the challenges of the current economic climate. The agility and resilience of businesses in South Africa is testament to a strong entrepreneurial business culture and strength of South Africa as a place to do business”.

Increasing costs are the number one concern of businesses surveyed in South Africa. Wilkie commented that “this was expected given that CPI is on an upward trend with the main drivers being food prices, fuel and electricity. In addition, an inevitable consequence of the recent high wage increases seen in the mining and transport sectors is going to be higher inflation, particularly when decoupled from increased productivity”.

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Government – businesses call on government to do more

All countries participating in the global survey feel that their governments don’t provide sufficient support for business, with the exception of Singapore where 54% of respondents indicated that their Government provides adequate support.

In South Africa businesses are calling for skills development and education (46%), the reduction of bureaucracy and legislation (40%), a reduction in business tax (34%) and currency stability (28%).  Wilkie commented, “in order to enhance its competitiveness, government must address the quality of primary education, particularly in view of a very high unemployment rate. Over-regulation and red tape is a further obstacle, specifically firing and hiring practices, wage determination, public sector tender procedures and enforcement of contracts”.

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Investment for growth – future prospects

In considering the year ahead, 29 percent of South African businesses surveyed said they were looking to diversify into new markets, 28 percent would invest further in marketing and sales within their existing markets and 27 percent would invest in skills development and training.

According to Epstein, “economic and political reforms in Africa have resulted in an improved business environment and offer an attractive opportunity for South African businesses to diversify and expand across their border.”

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In conclusion Epstein said, “ We’ve seen evidence in this research report and others, that small and medium sized business in South Africa require more focused attention from our leaders. The future of the South African economy, and most importantly, the ability to create employment in this country will be dependent the stimulation of more businesses that are sustainable over the long term. Private business and Government have a pivotal role to play in the economic growth and development of small business in South Africa.”

To view the full article, please visit http://businessindex.sage.com/

For more, please follow Softline on Twitter http://twitter.com/SageGroupZA

The submission for manual tax returns has now passed. The deadlines for efiling submissions is the 23rd of November 2012 and in this post we’ll be exploring why it is sometimes necessary to seek out professional advice with your tax return.

There are many examples of incorrect tax returns which have ended in large sums of money being owed to the South African Revenue Service, and even court proceedings.  A recent article on the Moneyweb news website states that in one such case, the tax court in Pretoria had to consider an objection by a tax paying company against assessments issues by a SARS auditor. Of course, SARS had issued this assessment based on the tax return submitted by the company and their accompanying financial statements.

Despite many arguments from the company on if they were suitably qualified to be submitting tax returns on behalf of the business, and other issues, SARS won the case. The court ultimately found that the company had underpaid tax on several fronts and was now liable to pay the outstanding tax as well as the interest on the aforementioned amount.

This is just further proof as to why businesses, large and small, should seek the assistance of professional tax consultants when it comes to that time of the year. The help of a professional might cost far less that the penalties involved in an incorrect tax return.

In September 2011, Softline launched the Sage Business Index in South Africa. Softline joined the Sage Group plc eight years ago and while the group had run the Index a year prior, South Africa did not participate. The Sage Business Index surveys small businesses across Europe, North America, South Africa and Asia, aims to reveal a definitive landscape for small businesses confidence, concerns and challenges on a bi-annual basis.

With the 2012 annual Sage Business Index fast approaching, we took a quick step back to review the results of the half year research conducted in March this year. Polling over 10 000 businesses across four continents, the Index showed that while confidence in the global economic outlook continued to decline, the outlook for local market conditions and businesses was improving. Interestingly, South Africans were slightly more pessimistic than their global counterparts about the outlook for the global economy, with a 1.21 decrease in the Index score, compared to the .52 decrease of the global sample at the time.

In March, CEO of Softline and Sage AAMEA (Africa, Asia, Middle East and Australia), Ivan Epstein said that it was encouraging to see that once again, businesses in South Africa were more confident about their own prospects. He went on to say that companies are focussed on the day-to-day challenge of maintaining and improving their businesses, and Government should do all they can to harness and help the entrepreneurial spirit that already exists.

Epstein said that he was interested in researching the impact of increasing fuel prices on local sentiment. With this week’s additional price hike, it’s clear that business and consumers alike are facing challenges.

The Index scores in March 2012 and September 2011 were as follows:

March ’12 September 11
Index Scores Global SA Global SA
Global economic confidence 43.95 44.71 44.47 45.92
Country Economic Confidence 47.26 46.11 47.11 44.10
Business Outlook 58.86 64.44 57.88 62.58

(Below 50 is decline/less confident above 50 is improvement/more confident, 50 is no different)*

The results in March 2012 also outlined that while local confidence was increasing and the rate of decline in global confidence slowing, there were still a number of challenges facing businesses. Rising inflation and the increasing cost of fuel, energy and raw materials topped the list with all countries citing this as their top concern – with 58% of local businesses listing this as their number one concern. Over a third of South African businesses noted instability or uncertainty in the local economic market as a worry, and a similar proportion (34%) said the same of reduced cash flow in the supply chain.

In anticipation of the upcoming Index, Epstein says that the Index has proven itself as a vital tool for Softline and Sage in the region to take stock of the challenges and worries affecting customers. “I hope that the upcoming results show us that the sentiment amongst businesses remain stable given the current economic climate.”

SARS - SME companies should brace themselves for the interim PAYE reconciliation that is due from 01 September 2012 to 31 October 2012. Employers are required to fully reconcile and submit their employee tax certificates and EMP501 reconciliation for the period 01 March to 31 August 2012, by the end of October 2012.

Employers need to make use of the new SARS e@syFile software release, e@syFile V 6.1.0. to successfully submit their interim PAYE reconciliations. If they don’t, they will not be able to transfer their data electronically as the new software release will not recognise the old format.

“Companies have no choice,” says Philip Meyer, technology director of payroll and HR software developer Softline Pastel Payroll, part of the Softline Group and Sage Group plc.

Legislation dictates that each and every employee in a company must be registered on the SARS database with their own tax number. Therefore individual income tax reference numbers must be reflected in the interim PAYE reconciliation. If one or more tax certificates do not include the tax reference number, companies will receive an error notification in e@syFile and with effect from 01 September 2012 companies will be penalised.

“New legislation that took effect in March this year means that medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with Medical Aid tax credits. If companies did not make use of the medical aid tax credit method, their submission will be rejected and they will be required to manually recapture the details on e@syFile”, adds Meyer.

A new IT3(a) reason code for tax certificates has been introduced by SARS for non-deduction of PAYE  and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied. There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year. Most automated payroll software systems already cater for these codes.

Companies can receive step-by-step assistance from a SARS Contact Centre agent with Help-You-eFile. Help-You-eFile is a new service innovation from SARS which gives companies access to SARS Contact Centre agents online.

For a smooth interim PAYE reconciliation, opt for a reputable payroll software solution that can automate the reconciliation process for the company. Some automated payroll software providers require that users only load their employees’ information and payslips. Therefore no manual calculations are requires and companies can simply upload the file to e@syFile.

For further assistance with the interim PAYE reconciliation season, companies can attend the SARS interim submissions seminar, hosted by Softline Pastel Payroll.  Make contact on +27 11 304 4390 or go to seminars@pastel.co.za

Softline was recently very proud to be involved as a sponsor organisation with SIFE (Students in Free Enterprise), an international non-profit organisation that brings together South Africa’s top leaders with students, with the aim of creating a better, more sustainable world through the positive power of business.

SIFE hosted the SA 2012 national competition in July this year and 26 higher education institutions participated.  Participating students are required to form teams on their campuses and apply business concepts to develop outreach projects that improve the quality of life and standard of living for people in need.  The SIFE competition held last month was an opportunity for all teams to showcase the results from their projects and win the chance to compete in the SIFE World Cup.

SIFE South Africa CEO, Letitia de Wet says that all the participating teams showed great commitment in developing their communities and enriching their outreach through the creation of sustainable businesses. “It is heart-warming to see such commitment from these youths as it gives us hope that South Africa’s talent and entrepreneurial outlook is increasing – enabling a future led by inspiring and focused leaders who will constantly look for ways in which to not only develop their own skills but also integrate these learning’s and uplift the communities in which they operate.”

Nozipho Tshabalala, Organisational Development Consultant for Softline says that the sponsorship of the SIFE initiative is aligned to the Softline motto of not waiting for someone to help you, but rather taking steps to help yourself. “Learning about the projects and initiatives launched as a result of this competition has been inspiring, specifically the long term effects these students are having on the communities they live and study in.”

“Development of an entrepreneurial spirit is key for scholars and students in South Africa, and projects like these go a long way to educate young South Africans about starting and running small businesses with the added bonus of benefitting a community.”

The University of KwaZulu Natal has won consecutively for five years now, and this year they were awarded the National Champion title because of the outcome and impact they have achieved through the development and implementation of outstanding sustainable community outreach projects. As a result, they will be competing against winning teams from 38 different countries globally, where they will represent South Africa at the 2012 SIFE World Cup in Washington (D.C.), taking place from the 30th of September to 2nd October 2012.

We wish them all the best for this global competition and we at Softline are proud to be associated with such an uplifting initiative.

 

by Darryl Smith

Darryl Smith

Darryl Smith

This is a difficult topic to discuss, particularly as I am a passionate employee of a Business Intelligence (BI) software vendor. So of course Alchemex is the best solution, but seriously in the interests of fair blogging and not to market our own product, I will try to be as objective as I can and keep away from naming vendors.

I was in a meeting in Europe last week and in the meeting there was a person from a large ERP vendor trying to make a selection from a set of BI tools. They were evaluating from a list of 250 BI products! And a large portion of these were developed in just one country, Germany.  I was quite amazed. 10 years ago or so there were only a handful of BI vendors to choose from. Wow things have changed.

These days none can really answer the question “which BI tool is best for SMB’s?” as it is very general. The good news is that in this time the set of technologies, solutions and practices that sit under the BI banner has expanded vastly creating more specific niche areas within that BI banner that individual vendors can choose to excel in and then to eat their piece of an ever expanding pie.

No BI vendor can be the best, or realistically even do well, at any one time in all areas. Those that specialise well for the market segment they serve will continue to thrive. This still does not mean that the task of selecting a BI solution is not daunting for the end customer (SMB customers for the purpose of this blog). They are generally not IT savvy and the BI jargon and technologies can take years to fully understand. It is like being English and being in a foreign country ordering food off a menu with no English translations.

But perhaps a way of simplifying it is not to look through the vast menu of BI vendors and then the non-trivial menu that each of these provide for the components in their stack, but rather to identify what the business needs most and through this trying to quickly eliminate the majority and then spending more time looking deeper into a refined list. Kind of like arriving at a restaurant having a good idea of what you would like to eat and then zooming in on that area.

I am going to generalize as an example but some of the generalizations would probably ring true for customers in the SMB space. Assumptions….

1.            I am an SMB with only an ERP system

2.            My primary areas that I need insights into are around Financials

3.            Understanding my sales is also important to me

4.            I am interested in other information in my system to but these are less critical to me

5.            My ERP system is desktop based (bear in mind that ERP SAAS offerings are still a small part of the market today although this is changing)

6.            I don’t have a complex IT infrastructure

7.            I don’t want to spend large amounts of money on implementation, consulting and support

8.            I don’t want to pay large license fees

Immediately criteria 6, 7 and 8 eliminate ALL enterprise level vendors, criteria 5 and 6 eliminate Web based solutions and criteria 7 eliminates any solution that does not ship with reports for your specific ERP system out the box.

So in this generalised scenario one would be left with more commoditised affordable desktop solutions that target the ERP system with bundled solutions. This should narrow it down to a handful of product options and that is when it is important to  really start looking at the finer detail of a business’s needs.

And if one wants to get information in a familiar environment like Microsoft Excel, the choices are narrowed down even further.

Over the last few years most ERP vendors have acquired the BI solutions that they feel work best for their market. And you may find your ERP vendor is one of these that provide a bundled solution. This could eliminate many costs of ownership for you and the single point of ownership from the vendor can eliminate a lot of pointing fingers when you do require support.

By Sandra Swanepoel, a Director of Softline VIP, part of the Sage Group plc.

Sandra Swanepoel

Payroll software is a mission critical function to any business.  There is a definitive necessity for any business to ensure that all changes, upgrades or installations of a new or existing payroll system are done in conjunction with a service provider that can deliver.

The relationship between the employer and employee is delicate and can easily be derailed if the payroll system should fail.  Making the correct choice is crucial.  The company’s software as well as its internal processes will suffer a major setback if the payroll installation is not done correctly.  The process needs to be underpinned by thorough training and supported by a concrete change-management process that documents all the procedures that need to be incorporated into the payroll solution.

The choice of a payroll system should be made with a long-term objective in mind.  To make this a reality, the company needs to consider the longevity of their payroll software investment.

It is of cardinal importance to ensure that the software is stable.  It is a very difficult aspect to ascertain during a demonstration.  There is however nothing stopping you from asking your prospective payroll software provider to provide you with client names as a reference.  This will help you to establish whether the payroll software that you are considering has a history.  Also ask them how often their software is updated; too many updates will point to an unstable product.

Another crucial aspect to consider is support.  If you install the product now, will the service provider’s support staff be available during peak times?  The company’s financial year-end is generally considered to be the busiest period for payroll administrators.  Support staff are normally flooded with queries or requests at these times and you want the assurance of knowing that your service provider is up for the challenge.

Investing in sustainable technology would be wise.  We live in a fast-paced business environment where technology changes rapidly.  You will want to invest in something that is up to date and current.  A good gauge would be to ask what technology your service provider is using and how often a new product is launched into the market.  If the product is versatile and adaptable, you should not have to change or update your payroll software too often.

One of the biggest concerns in the payroll software industry is leave management.  A company can stand to lose a great deal of money if their employee’s leave is not calculated and managed correctly.  Ensuring that the company’s payroll system operates its leave policy within the parameters set out by the basic conditions of employment act should be a given.  Companies that utilise an employee self-service strategy, often reap the benefits of having an electronic and accurate system that ensures that there are no mislaid leave forms.  It also facilitates a timeous leave approval process.

Having payroll software that is in tune with the country’s statutory changes and legal requirements is fundamental.   Ask whether your service provider keeps track of all the changes in the country’s laws.  Adherence to the parameters of the basic conditions of employment act is crucial to the maintenance of amicable employee relations in addition to complying with legislation.

Making the correct choice when it comes to HR and payroll software is therefore crucial.  Keeping these basic guidelines in mind, will ensure that your company makes a decision that it will not regret.

- A commentary by Rob Wilkie, CFO Softline and Sage AAMEA

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Sage Business Index polls over 10,000 businesses (across Europe, North America, South Africa and Asia) in order to measure the changing mood of business. In South Africa 1,000 businesses were surveyed and the responses show that both business outlook and economic confidence is still improving, albeit at a slower rate since last measured in September 2011.

This is consistent with the views we got from a few leading SA economists. According to them, our real income is growing. This means that we have dutifully been paying down our household debt (made easier with low interest rates). Our household debt to disposable income ratio has therefore fallen. In theory this means that we have more cash available to absorb price rises in food, petrol, tolls and electricity. In addition, banks are once again lending and households are taking on more credit. Not only are we absorbing price increases but we are also buying more with buoyancy recently reported in both retail and the consumer goods sector.

In short, there appears to be some cyclical buoyancy. The next 6 months will hopefully give us a clearer view of its sustainability.  Keep an eye out for price inflation – if it starts to rise faster than disposable income, consumer spending will decline. This is referred to as demand destroying inflation and what always follows is a drop in confidence.

…. and spare a thought for those who have not been in line for pay increases, or retirees reliant on an eroding interest income? Their real income has declined and price increases are already hurting. These households are already under a lot of pressure, a precursor perhaps for what is to come.

“The budget speech provided for a few uninspiring tax incentives for small business. But are tax incentives what small business really needs? I would argue that quality infrastructure, less red tape and admin burden and access to finance are far more important. Small business would also like to see local government award contracts fairly; and those lucky enough to win a contract still face the challenge of getting paid on time. As the growth engine for our economy, we need small business. I guess the fundamental question then is how do you start a business without some sort of decent education?”

- Rob Wilkie, CFO Softline and Sage AAMEA