Accounting and consulting firm Grant Thornton has issued a new ten-step report, outlining actions SA companies can take to help them address the challenges presented by the global credit crunch.
The 32-page document offers advice to local businesses interested in not only surviving, but thriving in this challenging time.
“Cash is the lifeblood of business and matters more than earnings,” the report says. It advises local businesses to focus more on liquidity than profitability; even at the expense of drawing down on interest-bearing credit facilities, as cash on hand means greater flexibility when it comes to decision-making.
Cost control is highlighted, with emphasis placed on cost containment where possible and cuts where necessary. Business owners are encouraged to be relentless in their tough decision-making, and to avoid decisions based on relationships when it comes to trimming staff. The report advises careful consideration of business realities, and quick, decisive action.
Customer creditworthiness and purchasing power should be closely scrutinised, the report says, along with the renegotiation of the shortest reasonable credit terms.
Tax emerged as an area many businesses would do well to focus on. Grant Thornton advises businesses to take advantage of the available opportunities to reduce tax liabilities, such as fully utilising deductions and allowances, and making the smallest allowable estimated tax payment. Registering for e-filing and paying attention to unclaimed VAT caught up in a business's financial system are examples of the things companies can do to mitigate their tax payments.
These are highlights from three of the 10 steps Grant Thornton's report recommends companies take to address the global financial crisis. Leonard Brehm, chairman of Grant Thornton South Africa, will analyse the report further at ITWeb's IT Confidence Conference, on 10 March at The Forum, in Bryanston.
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