The Importance Of Management Accounts

By Cavel Koert | SAIPA

Key Relationship Manager

Cavel has a National Higher Certificate and National Diploma in Accounting and a BTech in Internal Auditing. She is also part of SAIPA.

When you have an accurate overview of your business today you can take better decisions for tomorrow.

Let us have a look at why it is important for your business to have up-to-date management accounts on a regular basis:

• Helps to make business decisions and plans – Management accounts supplies all financial information to management on a regular basis and through the availability of this information better analysis and forecasting can be projected to make financial decisions.

• Measures the performance – Management accounts monitor the overall performance of a company and various tools are used to measure the company’s performance. Managers are then able to identify variations in performance and to take corrective measures accordingly.

• Increases efficiency – Management accounts enable the company to set targets and check whether the targets are fulfilled. It ensures all resources are fully utilised to help improve efficiency.

• Better services to customers – Management accounts help to control prices by having cost control devises thus giving quality goods at fair prices.

• Raises profitability – Management accounts make companies cost-conscious and assist in avoiding all extra expenditures.

• Provides Reliability – Management accounts provides reliability to decisions as it provides accurate information. Various tools and techniques are used to provide the users of the accounts a realistic picture of the business performance.

• Financial assistance – Financial institutions require up-to-date monthly management accounts if companies require any loans, overdraft facilities and HP agreements.

Xero On The Move

By Dewald Niemand

Practice Manager

Dear Clients,

Have you heard of Xero Accounting?

It is taking the South Africa by Storm!

Northbound Financial have become an official partner of Xero Accounting cloud-based accounting software. With the ability to work from anywhere in the world and having access to live data, we as practice support Xero Accounting.

Benefits of Xero Accounting:

• Everything is in one place

Store documents online for quick access. Capture Bills and receipts via email, or scan files from your mobile

• Automate your Admin

Connect Xero to your bank for automatic bank feeds. Easily synch bank and financial information. The Artificial Intelligence built into Xero will also learn how you want to process items and will do it for all future transactions, alternatively rules can put in place for a wide variety of transactions

• Invoicing and Debtors Control

Setup invoice reminders for various overdue days. Without doing the actual reminding, the system will send automatic reminders to your clients on all and any overdue invoices. Take the stress out of your debtor’s management. Let Xero Accounting do the work you find stressful.

Speak to any Staff member at Northbound who will assist you with the conversion, giving you access to the platform and making recoding your accounting transactions hassle free.

GET 20% discount for Xero when registering through Northbound!

Click here for more info.

SARS Lifestyle Audits.

By Laverne Geswint | GTP – (SA) SAIT

General Tax Practitioner South Africa

SARS have started conducting lifestyle audits on various taxpayers in cases where the lifestyles of taxpayers did not match their income declared for tax purposes which means that the taxpayer is not declaring all his or her income and thus is underpaying tax due.

• SARS first launched lifestyle audits in 2007 but has in the past year ramped up its scrutiny of wealthy South Africans.

• It established a High Net Wealth Unit last year, which has sent out pre-audit questionnaires to many wealthy South Africans.

• SARS has the power to review sources like the national administration traffic information system (NaTIS) to identify the owners of new expensive cars, as well as property registries, to find out who has been buying pricey homes.

• It is therefore important to be honest and declare all your income sources to SARS in your income tax return such as any rental income, business income etc

• The audits are designed to detect an individual is living above their means illegally, and not declaring some of their income to SARS

• In doing this process SARS can request information going back five years. If you do not have the necessary documentation to justify income or expenditure, then SARS can levy taxes on these amounts. Keep all your records!

• Where someone has not declared tax, SARS can charge up to an additional tax of up to 200% of the tax due on undisclosed income, plus interest. It may also refer the person to the National Prosecuting Authority for investigation.

• Lifestyle audits are troublesome and time consuming, so it is important to consult with a tax consultant to pre-empt any potential audit risks and to rectify any issues with SARS.

Tough Times – A Rising Interest Rate and A Weakening Rand.

By Cornel Gouws | CA (SA)

Key Relationship Manager

As a business trading in challenging times, do you:

• Analyse revenue and explore margin opportunities?

• Procure from your supply chain at optimal prices?

• Consistently challenge your expense lines looking for savings?

• When spending money consider ‘nice to have’ as opposed to ‘need to have’?

• Know your balance sheet – where is the cash being applied or tied up monthly?

• Consider a consolidation of debt strategy?

• Make use of forward exchange contracts to eliminate currency uncertainties?

• Speak to your bank to understand new product offerings which could benefit the business?

**Off topic – reminder that the EMP501 reconciliation is due by employers by 31 October 2022.