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The Impact of Load Shedding on South African Businesses and Proactive Measures to Mitigate these Challenges

Power cables with sunset

Load shedding has become a prevalent issue in South Africa, posing significant challenges for businesses across various industries. The deliberate power outages, implemented to balance electricity demand and supply, can severely disrupt operations and lead to financial losses. In this article, we will explore the detrimental effects of load shedding on South African businesses and highlight proactive measures your business can take to counter these challenges. We will also provide current examples to illustrate the real-world impact.

  1. Operational Disruptions:

Load shedding disrupts the normal functioning of businesses, particularly those heavily reliant on electricity. Manufacturing plants, mining operations, and technology companies suffer from production halts, delivery delays, and decreased productivity. To counter this, businesses can invest in backup power solutions such as generators or uninterruptible power supply (UPS) systems to ensure continuous operation during power outages.

For exavulnerable, lacking enough resources to invest in backup power solutions. So to mitigate these financial losses, businesses should definitely conduct an energy audit to identify energy-saving opportunities, implement more efficient equipment, and explore renewable energy options.

For example: A restaurant chain in Cape Town experienced a significant drop in revenue during load shedding due to decreased customer footfall and limited food preparation capacity. To counter the impact, the chain invested in energy-efficient appliances, installed solar panels on their rooftops, and implemented a demand management strategy. As a result, they reduced their reliance on the grid, saved on energy costs, and remained operational during power outages. Feeding their customers that are not able to cook during load shedding!

  1. Customer Relations:

Inconsistent power supply and disruptions in service delivery can definitely impact customer relations in a bad way. Businesses may struggle to meet deadlines, respond to inquiries, or provide timely customer support during load shedding. To address this, aim to communicate transparently with your customers, manage their expectations, and explore alternative communication channels such as mobile apps or social media.

Example: An e-commerce company based in Durban experienced a surge in customer complaints and negative reviews due to delayed order deliveries during load shedding. In response, the company implemented a proactive customer communication strategy, providing real-time updates on delivery times, offering compensation for delays, and leveraging social media platforms to address customer concerns. These measures helped rebuild trust and maintain positive customer relationships.

  1. Equipment Damage:

Frequent power outages and sudden power surges during load shedding can damage sensitive equipment, resulting in costly repairs or replacements. Most insurance companies currently have a restriction on claims for surges. Some insist on installing surge protectors on your DB board, and may specify a fixed amount claimable. Protect your equipment by installing surge protectors, voltage regulators, or UPS systems. Regular maintenance and testing of backup power sources are crucial to ensure they function properly during these outages.

Example: A graphic design agency in Pretoria experienced equipment failures and data loss due to power fluctuations during load shedding. To safeguard their equipment, the agency invested in high-quality surge protectors and implemented an automated backup system for their digital files. These measures protected their valuable assets and minimized downtime during power outages.

In a nutshell, load shedding poses significant challenges for businesses in South Africa. And the reality is that it is here to stay (hopefully not in the long run). It is impacting operations, finances, and customer relationships. But, taking proactive measures can definitely help mitigate these challenges.

Try investing in backup power solutions, implementing energy-saving measures, and definitely start communicating transparently with your customers. You have to protect sensitive equipment if your business relies on using it. Be proactive, minimize your losses, try to maintain productivity, and ensure your business has long-term sustainability as a goal. If you want to thrive in the South African economy you have to proactively address the challenges posed by load shedding by adopting resilient strategies and investing in sustainable solutions.

Start with the basics, set up a load shedding contingency plan that includes alternative power sources, energy-saving measures, and have a clear communication strategy. With both employees and customers. Prioritize essential operations, utilise backup power solutions, and educate your employees on energy-saving practices. Your goal should remain maximum productivity during downtime.

Stay updated on government initiatives and energy demand management programs that offer incentives for reducing electricity usage during peak demand periods. Embracing renewable energy sources, such as solar power, can also provide long-term benefits by reducing reliance on the grid. There is a business tax incentive for investing in solar energy, so chat to an expert today about how that could benefit your business.

Good luck, and keep your light shining!

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The Role of a Digital CFO in Assisting Businesses in South Africa’s New Digital and AI-Driven Landscape

Yellow line with black arches

As technology continues to advance, businesses in South Africa must adapt to stay competitive in the digital and AI-driven landscape. A key component of this adaptation is the integration of digital CFOs into their financial decision-making processes. In this article, we’ll define the role of a digital CFO, explore their responsibilities, highlight key trends shaping their role, and discuss the benefits of hiring one to consult with your business.

What is a Digital CFO?

A digital CFO is a financial expert who leverages technology and data analytics to provide financial guidance and support to a company. They oversee a company’s financial operations, including budgeting, forecasting, financial reporting, and risk management. Using digital tools and data analytics, they help companies make informed financial decisions, improve operational efficiency, and reduce costs.

Responsibilities of a Digital CFO

A digital CFO’s responsibilities include:
  • Financial reporting: Creating accurate and timely financial reports that support strategic decision-making.
  • Forecasting: Using data analytics to forecast financial outcomes and identify potential risks and opportunities.
  • Budgeting: Developing budgets that align with the company’s overall goals and objectives.
  • Risk management: Identifying and managing financial risks to protect the company from financial loss and reputational damage.
  • Cash flow management: Ensuring the company has the resources it needs to operate effectively and pursue growth opportunities.
  • ESG considerations: Helping the company integrate environmental, social, and governance considerations into their financial decision-making processes.

Key Trends Shaping the Role of Digital CFOs

  1. Automation: Digital CFOs are using automation to streamline financial processes, reduce costs, and improve efficiency. This includes automating tasks such as invoicing, accounts payable, and financial reporting.
  2. Data analytics: Digital CFOs are using data analytics to gain insights into financial performance and identify areas for improvement. This includes using predictive analytics to forecast financial outcomes and identify potential risks.
  3. Cloud technology: Digital CFOs are leveraging cloud technology to access financial data from anywhere, collaborate with colleagues, and store financial data securely.
  4. Cybersecurity: With the increase in digital operations comes an increased risk of cybersecurity threats. Digital CFOs are playing a critical role in identifying and managing these risks to protect their companies from financial loss and reputational damage.
    Benefits of Hiring a Digital CFO for Your Business
    Hiring a digital CFO can bring many benefits to your South African-based business, including:
  5. Improved financial reporting: A digital CFO can use technology to streamline financial reporting processes, providing accurate and timely financial information to support strategic decision-making.
  6. Increased efficiency: By automating financial processes, a digital CFO can reduce manual tasks, improve accuracy and speed, and increase overall efficiency.
  7. Better risk management: A digital CFO can use data analytics to identify financial risks and opportunities, enabling the company to make informed decisions that minimize risk and maximize profitability.
  8. Enhanced strategic planning: A digital CFO can help the company develop a strategic financial plan that aligns with the company’s overall goals, taking into account market trends, regulatory requirements, and other factors.
  9. Improved cash flow management: By using digital tools and analytics, a digital CFO can improve cash flow management, ensuring that the company has the resources it needs to operate effectively and pursue growth opportunities.
  10. ESG considerations: A digital CFO can help the company integrate ESG considerations into its financial decision-making processes, ensuring that the company is aligned with regulatory requirements and stakeholder expectations. (ESG stands for Environmental, Social, and Governance. ESG considerations are a set of factors that companies take into account when making business decisions. ESG factors are becoming increasingly important in financial management, as investors and stakeholders are increasingly interested in investing in companies that have strong ESG performance.)

In conclusion, a digital CFO can play a critical role in helping South African-based businesses navigate the complexities of the new digital and AI-driven landscape. By leveraging technology and data analytics, they can provide financial guidance and support that drives growth and profitability.

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#BizTrends2023: The Accounting Practice in 2023: What the future holds for businesses

Women answering her phone with a laptop on her lap.

Trends that are surfacing in the accounting industry in the lead-up to 2023 year include a flip in the role of the accountant, business owners taking control of their accounting and shift in the workload of accountants.

Digital disruption and rapidly evolving technology present the accountancy profession with both substantial opportunities and risks. But it also presents both big opportunities and challenges for the accounting profession as a whole.

I believe the accounting profession will change significantly in a world where all transactions are fully transparent and have built-in validation. Both auditors and accountants’ areas of emphasis are evolving in business. Ultimately, digital disruption will influence the nature of demand and expectations on what an accountant is and does.

The accounting role post Covid has slowly been changing from accountant to financial manager. Businesses now want accountants with diverse skills, who are more relevant and strategically focused. They want pre-emptive problem solving and a personal relationship.

Business owners are taking control of their accounting with proactive alerts. After the emerging of accounting technologies, we are now at a stage where we no longer do strenuous manual data processing. We’re becoming educators and we’ve started training the business owners to do their own accounting and managing their business finance.

We’ve become account managers, focusing on client needs.

The evolution of the accountant

Business needs have evolved in such a way that the role of an accountant is shifting, and they are taking on more of a Financial Manager role, which includes accounting and other aspects of finance. Financial managers are concerned with a company’s overall health, from cashflow planning and investments to long-term spending objectives.

In the past, accountants were responsible for compiling and maintaining information in the form of reports and historical records, while today, as more of a financial manager, they interpret the data, and make recommendations based on what they see happening now, they monitor the results to ensure that goals are met in real time.

This means that it is essential for business owners to maintain a close relationship with their accountant so that they are fully informed of the business’s expectations, challenges, and procedures. If accountants are unaware of the business objectives, they cannot assist with strategic future planning for the business.

Balance of workload is shifting; less processing, more insight

Technology has been an integral part of the accounting profession in recent years. The days of constant on-site consulting have given way to quick off-site encounters, accompanied by a multitude of extra tools for visibility and accountability of business tasks. The technological improvements of the present day have eliminated the need for obsolete financials, lack of real-time data, remote control sessions, and even basic desktop applications.

While our role previously consisted of 80% processing and 20% insight, today it’s closer to 20% processing and 80% insight. This allows for more proactive accounting, which provides valuable financial insights for the business owner. Proactive accounting provides businesses with benefits such as managing their finances effectively, easy decision-making, and potentially increasing profits. The accountant must think ahead and add the value that clients demand from their services. In contrast to basic accounting, which consists solely of punching numbers and filing taxes on time, proactive accounting goes above and beyond to be strategically useful to a business.

By examining spending patterns and revenue trends, a proactive accountant assists businesses in improving their financial planning and suggests strategies to save taxes and time expenditures; they make sure that the accounting process has benefits beyond just ensuring tax compliance.

Business owners are taking control of their accounting

Business owners are working smarter and comprehending more because of technology. Accountants become educators and start training business owners how to manage their own accounting. The availability of software and applications with consumer-level functionality has made it easier for non-accounting professionals to comprehend their financial situation. In addition, access to faster software that can manage more complex tasks, as well as interconnected technologies, has made accounting easier and more efficient. Remote access to real-time data enables both accountants and clients to simultaneously view, edit, and comment on their accounts.

And, when clients can access and analyse the data on their own, they become excited about their financial position and are better able to comprehend their accountant’s strategic recommendations. In the end, it implies that clients can prosper through improved business processes, allowing them to remain in business, grow their business, and remain a client.

The role of the employee is shifting

Considering the changes that technology brings to the needs and expectations of clients, the accountant’s workload, and their individual roles, it begs the question of what the future role of established accounting firms and Accredited Training Centre (ATCs) are and how they adapt. From their professional and social responsibility to pass on their expertise to Learners of the accounting profession, to recruitment and retention of skilled professionals, accountancy firms and ATCs need to consider whether a shift in their practice is required.

With the proliferation of remote work caused by the Covid-19 pandemic, opportunities for qualified accountants are greater than ever. Employers can access talent from across the country through remote work. It has expanded candidate pools and heightened market competition for top talent.

A hybrid workplace combines remote work and office-based work, providing employees with the flexibility and autonomy to choose when and where they work. Providing flexibility and a digital-first mentality will make a firm more appealing to a wide range of talented professionals, which is essential for attracting and retaining top talent.

Unquestionably, the accountant of the future will need to be technologically savvy in order to adapt to the industry’s transformation. As intelligent technologies advance and more businesses migrate their data to cloud-based systems, accountants must become adept at leveraging the cloud to provide clients with up-to-date financial analysis and to maintain their competitive edge.

Despite the fact that many accounting tasks are being automated, accounting professionals will never be replaced by technology, and future accounting jobs will require committed professionals who are willing to adapt as the industry evolves.

The digital world is evolving rapidly, and we are just at the beginning of the journey. Technology, the shifting role of finance and accounting activities, and the skills and competence required by finance professionals to remain relevant are now necessary, and it is the responsibility of all finance professionals to guarantee that they remain relevant and adapt to their clients’ needs.

We take a proactive approach to each accounting task because we understand that your company’s finances cannot exist in isolation from its strategic objectives. Approaching tax, audit, and cash flow with greater foresight can spur internal and external development. Contact us today for more info about our services.

This article originally appeared on BizCommunity.