More and more companies are re-thinking their executive teams and outsourcing the financial aspect of their operations. In this modern age of dynamic and complex business markets replete with endless streams of new technology, automation and digitalisation, it is nearly impossible to stay abreast. Mounting operating expenses and inefficient labour in this financial climate are also not helping businesses achieve their envisaged growth.  Addressing these challenges from an operational and strategic perspective should not be taken lightly and certainly requires expert input. Considering an outsourced option for the financial operations of your company can be suitably beneficial.

Handre Lourens, business rescue practitioner and consultant at Hobbs Sinclair says, “The question you have to ask yourself is, does your business merit a full-time financial manager or financial director, or are you best placed to outsource this crucial function?”  The trend is with outsourcing, and here’s why. 

Outsourcing
Outsourcing your financial function and operations brings the advantage of securing a practised professional tailored to the requirements of your business – when you need it, how you need it – without the burden of employing someone full-time at the high cost of a permanent, qualified professional.   

Strategic decision-making and up-scaling
An outsourced financial go-to person will assist with business growth by managing your working capital cycle, cash flow, strategic decision-making and mitigation of risks, critical in the scale-up phase of any business.  

Monitoring your business
Experts in financial management, with diversified skill-sets and knowledge, will implement systems to mitigate risk and devise management accounts to monitor your business. This will enable better strategic decisions for growing revenue and customer base, cutting costs while increasing productivity and efficiency.

Business plans
Growing your business requires  financial backing. If you need bank finance to develop your business, a bank will be expecting an in-depth forecast and detailed business plan. Expert input in this regard is extremely valuable to your application. 

Tax planning
If your business is booming and you have secured a sustainable market share, your customers are happy and your bottom line is smiling, the next phase of efficient tax planning is critical. Lourens suggests, “Before the taxman comes knocking on your door, get the experts in to ensure your tax planning is as efficient as possible and, most importantly, to make sure you have made sufficient cash flow provisions.”  

The rewards
At the end of an era, when it’s time to sell your business, outsourced tax professionals will efficiently evaluate your business to ensure you receive the capital you deserve for all your hard work, sweat and tears.

By Handre Lourens, Business Rescue Manager at Hobbs Sinclair  

Most financially distressed companies have the same things in common: poor working capital controls and the employment of a reactive working capital management strategy rather than a proactive approach.  

Improving the company’s working capital through a proactive strategy can be a quick way to get your head above water without increasing sales or cutting cost. For companies in financial distress, that kind of improvement can be the first step to turning the company around. For healthy companies, the surplus cash flow can be reinvested in ways to create value for customers, be invested in a brand or expand your services or product range.  

The process of improving working capital can also highlight improvements in operations such as supply-chain management, human resource management, procurement, sales and non-value-added cost.  

The first step is to focus on your income and customers and to ask the how, who and when question. You need to understand exactly how your income is generated, who you will collect it from and when you will collect the income.  Once you have established the above, you should focus on collecting all income due to you as soon as possible. This can be done by informing debtors of their balance due, following up on debtors to pay their outstanding balances, offering a discount on early settlement of their account or, as a last resort, taking legal action to recover the balance due.  

The focus should be to reduce your debtors’ collection days to as few as possible, while at the same time retaining the customer relationship. The second step is to focus on your inventory levels. Having a clear understanding of the demand and supply of your product or service is a key factor. You should establish the optimum amount of inventory to sustain your level of demand while maintaining a small buffer for unforeseen circumstances.  

The third step is to focus on your expenditure and, more importantly, the supply chain relationships that the company has. Contacting each supplier will allow you to understand the suppliers’ working capital needs and offer specific payment terms that are beneficial to both parties. This is an ongoing process that does take lot of time.  

All this will add to reducing your total number of working capital days. That means the number of days it takes you to buy an inventory, manufacture a product, sell the product to the customer and collect your money. Getting this number of days as low as possible will ensure a healthy bank balance and a bottom-line that will put a smile on your face.  

There are, however, some risks involved as well. Too little inventory can disrupt operations. Stretching supplier payment terms can leak back in the form of higher prices, if not negotiated carefully, or unwittingly send a signal of distress to the market. But management who are mindful of such pitfalls can still improve working capital by active management and focusing on the constraints.  

Working capital is often under-managed simply because of lack of awareness or attention. There is also the possibility that working capital may not be tracked or published in a way that is transparent and relevant to all stakeholders. That almost always indicates an opportunity to improve.   At Hobbs Sinclair, as business rescue practitioners, our first focus is on improving working capital to free up cash flow. This allows us to keep the day-to-day activities running while a long-term strategy can be developed and voted on by creditors in the best long-term interest of the company and all the stakeholders.  

In conclusion, working capital is critical to a company’s operations and the financial team within each company needs to take on this responsibility and share it so that it is implemented into every activity within the company.

SEESA and Hot91.9FM are collaborating in April 2017 to provide one lucky candidate with the opportunity to win a bursary to the value of R100 000 to study towards a degree in Accounting.

On 06 April 2017, Hot91.9FM’s Breakfast Show with Darren Scott announced that nominations are now open to stand a chance to win this bursary as part of Hot91.9FM’s #JoburgsHottestBursaries campaign. For the entire month of April 2017, listeners and the public can nominate candidates for this bursary by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it. with their motivation as to why they must be awarded the bursary.

“Our goal is to contribute to South Africa’s future through tertiary education. We are starting with Accounting bursaries and hope to develop the successful candidates to Chartered Accountants.” – Roelof le Roux, SEESA Financial Director

Candidate nominations are open until 30 April 2017, after which Hot91.9FM will announce the bursary winner in May 2017. For more information about this initiative, contact This email address is being protected from spambots. You need JavaScript enabled to view it..