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Task force to tackle late payments for SMEs in SA

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A task force put together by key players in the accounting world plans to address the biggest cash-flow issue facing small and medium enterprises (SMSs)

For small companies, cash flow is everything. Even small gaps can hurt supplier relationships, incur additional fees and can be the difference between staying in business and going under. It’s no surprise, then, that recent Xero research found that cash flow and late payments were the number one concerns for SMEs.

The report, titled “The State of Late Payments in South Africa,”  also found that an astonishing 91% of SMEs experienced late payments on their invoices over the past year. SMEs are currently owed, on average, R99,801 at any given time.

Late payments are one of the major causes of cash flow problems. When combined with other irregularities like holidays and tax deadlines, late payments can put businesses precariously close to the red. Beyond that, companies that are waiting on payments will have a harder time processing and making decisions and risk passing on the problem of late payments if they are unable to pay their suppliers on time too.

According to the report, one in five South African businesses struggled to pay for critical services, suppliers, and staff because of late payments. Almost 20% struggled to invest in growth and innovation, while 17% had to declare bankruptcy.

The South African economy needs small businesses to succeed. That’s why several prominent role players established a late payments task force, to get insights about what small businesses in South Africa can do to stay on top of cash flow. The experts on the task force are Louw Barnardt, Co-Founder and Managing Director of Outsourced; Colin Timmis, Country Manager at Xero; Jeanne Viljoen, Project Director, Practices at SAICA; and Damian Baker, Manager of Business Process Solutions at SNG Grant Thornton. 

Baker warns that “Delayed payments have a direct impact on working capital and can severely constrain growth capacity”.

“That’s why it’s crucial to set out your payment terms, invoicing dates, and due dates in contracts from day one to eliminate ambiguity. Once you’ve established the ground rules, it also helps to send your invoices promptly, as the sooner you invoice, the sooner settlement could be received.  If you’re having persistent problems, consider implementing interest charges or setting up a monthly debit order.”

Timmis strongly recommends relationship building with those responsible for making the payments.

“Working closely with the accounts departments of the companies you’re invoicing can ensure prompt payment,” he says. “Make sure that they are familiar with your payment terms and know how to reach you with any questions. If you build a strong enough relationship, they might even work towards speeding up turnaround. 

“Differentiating between primary and secondary contacts is also crucial, as is learning your customers’ payment cycles. Ask them whether they want to be invoiced 100% upfront since this can make their life easier if they’re working through an allocated budget. It’s also important to conduct a credit check on prospective clients. Companies and suppliers with bad credit histories might be liable to pay late in the future.”

Barnardt recommends developing a comprehensive cash flow strategy.

“Cash flow is often misunderstood as a simple matter of being ‘in the red’ or ‘in the black’,” he says. “In reality, it is far more complicated, and that’s why businesses need a comprehensive cash flow strategy. In short, this is about managing ebbs and flows: making sure you have enough staff to make the most of spike periods, and knowing how to upsell customers, bring them back, and get by during downtimes. A reorganisation of staff schedules at the right moment, or a strategic promotional sale can make all the difference.”

Jeanne Viljoen points to the power of smart accounting technology: “Modern accounting software offers greater visibility of your numbers and makes it simple to manage your finances, all while being more affordable – and beautiful – than previous solutions. What many don’t know is that it can also be a powerful tool in helping you to avoid late payments by sending out invoices in bulk and automatically tracking payments. Embracing technology means that businesses will be able to spend less time on troublesome administrative tasks and more time on growth.”

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TikTok takes on COVID-19

The fastest growing social media platform in the world has also become an epicenter of public education about the coronavirus, attracting more than 30-billion views, writes ARTHUR GOLDSTUCK

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The young have been getting a bad rap for wanting to party on while COVID-19 sends the world into lockdown. But a different movie is playing itself out on the social platform that is growing fastest among teenagers: TikTok.

Awareness campaigns by TikTok itself, collaboration with the International Red Cross, and spontaneous videos made by TikTok creators have combined into a barrage of information, education, awareness and social consciousness around the coronavirus.

Both globally and in South Africa, TikTok’s COVID-19 campaigns have gone viral.

The local #HayiCorona challenge, designed to remind people not to touch their face and wash hands regularly, has passed 1.5-million views. The TikTok collaboration with the International Red Cross, the #WashingHands challenge, has passed 12.6-million views.

One of the best-known participants in these challenges is the past year’s icon of South African talent, the Ndlovu Youth Choir, took up the global challenge with a 20-second hand-washing video. It put together a performance that brings tremendous energy to what can be a clichéd message, and ends with a punt for the Department of Health’s WhatsApp information service. The video can be viewed below.

@ndlovuyouthchoir

Our community has limited access to running water. Follow these instructions on how to safely wash your hands using a bucket. ##coronavirus##washinghands

♬ original sound – ndlovuyouthchoir

“On a global scale, TikTok also partnered with the World Health Organization (WHO) to ensure that, while creators are still having fun and expressing themselves on the platform, they stay informed with COVID-19 information coming from a reliable source,” a TikTok spokesperson told us. “Through the partnership, the WHO has created an informational page on TikTok that offers information to curb the spread of the coronavirus as well as dispelling myths.”

The page can be viewed at https://vm.tiktok.com/GHTEGf

TikTok has hosted a number of livestreams with WHO experts, attracting users from more than 70 countries, tuning in for live question and answer sessions. It has also introduced labels on coronavirus-related videos, to point users to trusted information. Resources are also offered directly in the app and in a dedicated COVID-19 section of TikTok’s Safety Center, at https://www.tiktok.com/safety/resources/covid-19.

If users simply want to explore videos on the topic, they can search via the #coronavirus hashtag, or click on https://vm.tiktok.com/swKbn4. The hashtag has had an astonishing 33.8-billion views, indicating the scale of activity and interest around the topic on the platform.

Read more on the next page about how South Africans have embraced the campaign.

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On World Backup Day: backup, backup, backup

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It was World Backup Day yesterday, 31 March, at a time when business continuity is threatened as never before. That makes calls for protecting email and defending against ransomware all the more urgent.

The global coronavirus pandemic has brought into stark relief many organisations’ lack of business continuity plans and policies. With more than two billion people around the globe in forced lockdown in wide-ranging government efforts to stem the tide of infections, an unprecedented number of employees are working remotely.

This interruption to the normal way of work is precisely what an effective and resilient business continuity strategy should plan for, says Heino Gevers, cybersecurity specialist at Mimecast

“Companies need uninterrupted access to critical business applications during times of disruption, including safe and secure web and email access for workers that are now operating outside the normal perimeters of the organisation,” he says. “In addition, comprehensive backup and archiving solutions should be ready to restore access to critical business applications should there be any unplanned downtime to ensure continuity until the crisis passes.”

According to Gevers, the current global crisis is likely to push business continuity up the list of priorities for many organisations that have been disrupted by the effects of the coronavirus.

“Organisations are facing new challenges to their productivity; for example in terms of technical support. If a remote user is infected with malware or ransomware, how does the IT team restore that device or do any remediation without being able to physically access it?”

Gevers advises that organisations implement tools that enhances the data protection capabilities of commonly-used tools such as Office365 and can leverage archived data to provide quick recovery of email data in the event of accidental loss, malicious attacks or technical failure. 

“As adoption of cloud-based business applications grow in the wake of forced lockdowns around the globe, companies need to ensure they have the tools to recover in any situation,” he says. “This includes a data management strategy that combines archiving, backup and data protection capabilities to allow for quick restoration of critical systems and applications in the event of disruption.”

Jasmit Sagoo, head of technology at Veritas for the United Kingdom and Ireland, warns that this is a golden age for cybercriminals looking for ransomware opportunities.

“As the global cost of ransomware continues to grow, this World Backup Day, Veritas is saying: ‘don’t pay up, back up!’,” he says. “Ransomware is said to generate an estimated annual revenue of $1 billion a year, and companies who are not consistent in backing up their data are allowing criminals to line their pockets.

“Ransomware attacks exist only because some businesses can’t survive unless the hackers give them back their data.  So, the key to survival is removing that reliance and being able to regain access to data, without engaging with the cybercriminals.  The best way to do that is with a sound backup strategy.

“Sagoo advises organisations to create isolated, offline backup copies of their data to keep it out of reach of any attackers.  They then need to proactively monitor and restrict backup credentials, while running backups frequently to shrink the risk of potential data loss. Businesses should also test and retest their ransomware defences regularly.

“Ransomware strikes without warning and it doesn’t discriminate between its targets – it can happen to any organisation, large or small. Despite their best efforts, most companies will fall to at least one attack. What distinguishes one victim from another is the ability to bounce back, which ultimately depends on its backup strategy.

“When ransomware hits, organisations that aren’t prepared often feel helpless to do anything other than to submit to their attacker’s demands.   That’s why we’re urging all businesses to use World Backup Day as a catalyst to get ahead of the situation and get their data protected.”

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