Why CEOs are turning to cost efficiencies to save the bottom line
Revenue growth is challenging in the current economic climate and cost efficiency is crucial for survival.
Covid-19 has all but decimated the South African economy. Over the past 15 months, the country has witnessed mass business closures as South Africa found itself in various levels of lockdown throughout 2020 and into 2021. At least 42.7 percent of SMMEs were forced to close shop last year, according to The SA SMME Covid-19 Impact Report, released in November 2020 by FinFind – an online platform that automatically matches seekers of business finance with funders.
The corporate sector has not performed any better. No sector has been spared, and with the long-tail effect of the pandemic only just beginning, CEOs and CFOs are desperately seeking alternatives to limit the damage. Revenue growth is challenging in the current economic climate and cost efficiency is crucial for survival.
EMS Solutions has been making a profound difference to its clients’ bottom lines, especially those companies with turnovers in the R50m-R100+ million bracket. This specialist financial consulting firm, with its national footprint, has recovered lost profits amounting to hundreds of millions of rands, owing to comprehensive system reviews of VAT, accounts payable, duplicate payments and employment tax incentives (ETI).
The Profit Recovery division comprises a multi-disciplinary team of financial accounting specialists and data experts who perform a comprehensive analysis of financial information, primarily focusing on VAT and duplicate payments.
VAT affects a large proportion of company transactions, yet is often neglected. VAT is a highly specialised field, yet many tax consultants lack the necessary expertise. As a result, there’s a high probability of EMS Solutions finding errors, and the potential for large refunds.
The EMS Solutions Profit Recovery team boasts an intimate knowledge of VAT legislation and the intricacies of VAT regulations in different economic sectors. Through experience, out-of-the-box thinking and unique skills, Our experts identify and recover VAT payments that are either due to human error or, more commonly, inaccuracies in a system’s architecture or governance practices.
Our process can identify minor errors and processing inconsistencies from the data. Although this might seem immaterial per transaction, it can lead to significant profit recovery when extrapolated over many transactions and a longer time period. The VAT Act allows retrospective corrections for up to five years.
Examples of system issues EMS Solutions has encountered:
- Failure to claim for bad-debt write-offs
- Incorrect VAT reconciliation
- Failure to claim VAT on manual entries
- Capturing errors on VAT returns
A distinct advantage of EMS Solutions’ value proposition is that its profit recovery process bears no risk for the client. The company only earns a percentage of profits recovered. There are no costs payable if no profits are recovered, yet clients still benefit from peace of mind in knowing that there are no errors in their systems.
Additionally, EMS Solutions’ service requires minimal resources from a client’s financial team, yet the finance department benefits by learning about system errors and good governance practices that can translate into additional savings moving forward.
Through its unique collaborative process working directly with the finance function, EMS Solutions’ Profit Recovery team has helped to empower the CFOs of large, blue-chip organisations. Every CEO wants to know that the finance team is doing more than just counting beans. This is an opportunity for businesses to transform mindsets beyond balancing budgets and explore new ways of making their organisations more profitable.
A clear distinction must be made between auditing and profit recovery. These are very different processes and cost models. Auditors bill by the hour, provide assurance by using samples, check that there has been no change in the system from the previous year, and sign off on that.
Our profit recovery process is far more in-depth and forward-looking. We examine and analyse all financial data in a system, not just a sample, and are always looking for new and innovative ways to recover profits by keeping abreast of changes in VAT legislation. Our focus is to find errors in processes that can be fixed, which can lead to significant savings for our clients. Our clients always win.