Finance for BEE Champions Training, developed by Transcend Corporate Advisors, is for BEE Champions that need help with understanding financial information. A BEE champion or the BEE portfolio is about leading and managing Transformation. We explore why it's imperative for the BEE Champion to have a strong and robust financial backbone to manage the BEE scorecard and transformation strategy.
A measured entity can spend a significant amount of time and money to transform the company and achieve a required BEE level. It is therefore important for the measured entity to calculate the correct targets as per legislation to obtain the desired result. The targets on the scorecard are driven by the financial results of the measured entity.
There are often challenges faced by the BEE champions due to:
- The BEE champion not sitting in the finance department and lacking an understanding of the financial aspects.
- The finance department not being aware of the BEE requirements and how the BEE targets are calculated.
- Finance not being involved in managing the transformation of the organisation.
- Changes to legislation affecting how the BEE targets are calculated.
- Changes to the budget or forecast affecting the BEE plan
- The availability of management accounts in a timely manner to ensure that the measured entity has the correct targets at a point in time.
- Significant differences between the actual financials and forecast financials used to calculate the targets (not monitored on an ongoing basis).
From the above, one can see that it is important that to monitor and implement the BEE portfolio, sound financial knowledge is required. The person responsible for the BEE scorecard must:
- Have the ability to read a set of financial statements to ensure the BEE budget and strategy is in line with the business budget and strategy
- Calculate accurate BEE targets (required by most of the BEE pillars in the scorecard)
- Set, manage and update the BEE budget
- Calculate the return on investment/business case for the BEE budget to encourage business investment
- Apply general financial aspects to the BEE audit to ensure an optimised verification
- To calculate and maintain BEE scores and calculations
Below is the BEE generic scorecard and pillars where BEE financial targets are required:
| |
Total Points |
Financials required |
| Ownership |
25 |
|
| Management control |
19 |
|
| Skills development |
20+5 |
Leviable (payroll) amount |
| Preferential procurement |
27+2 |
Total measured procurement spend calculation |
| Enterprise development |
5+2 |
Net profit after tax/indicative net profit after tax |
| Supplier development |
10 |
Net profit after tax/indicative net profit after tax |
| Socio-economic development |
5 |
Net profit after tax/indicative net profit after tax |
| |
111+9 |
|
Transcends Finance for BEE Champions course has been designed to give you the basic financial competencies to empower you to develop, implement and audit your companies BEE strategy. You will gain an understanding, as well as a practical application, of the following:
A basic understanding of accounting fundamentals:
- This will include an understanding of accounting equations, debits and credits, journals, ledgers, etc.
An understanding of the Annual Financial Statements and Management accounts:
- Detailed understanding of the Annual Financial Statements and Management accounts as well as source of the information.
- Understanding of information relevant for Total Measured Procurement Spend and BEE targets calculation.
Financial terms such as revenue, turnover, gross profit, net profit; indicative profit, etc:
- Definitions of relevant financial terms and what each is used for.
Calculation of Total Measured Procurement Spend (“TMPS”), including the relevant exclusions:
- This is used for your targets for preferential procurement
- An incorrect calculation of this number can lead to a significant variance of the preferential procurement score
The Budget review and BEE target setting:
- This calculation is required whether the company is in a profit-making or loss-making position and will have to be done before the BEE budget for the financial year is finalised. This will have an impact on various pillars of the BEE scorecard as shown on the above BEE generic scorecard.
Calculation of YES targets
- There are requirements for participation in the Youth Employment Scheme and one of those requirements is a calculation of targets that will determine the number of youth required to obtain a one/two-level(s) enhancement.
BEE is also not only a compliance aspect of the overall business. BEE should be seen as a commercial lever for growth.
It is important that the BEE Champion understands how to financially interpret the growth of the business as well as the impact of the cost of BEE and how the two inter-relate. If BEE is seen as a net cost contributor to the business, it is unlikely that the management of the business will buy into the BEE plan.
It is absolutely imperative that the BEE Champion can translate the BEE initiatives into a financial number and ensure that there is a positive return on investment to the business.
It is thus important for the BEE champion to have strong financial literacy, not only to effectively manage the numeracy aspects of the scorecard but to:
- Create buy-in to the BEE strategy;
- To measure and monitor return on investment of the BEE strategy and how it contributes to the growth of the business and
- Lobby for BEE budget every year to ensure sustainable, scaleable and value-adding BEE projects year on year
We are running a quarterly half-day course, should you need more information on the course, please do not hesitate to contact us.
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