30th March 2020
Dear fellow entrepreneurs
Together we are facing an unprecedented situation. Our hearts are with those that have been impacted by the virus, either directly or indirectly.
For just on 20 years, we have been honoured by the trust you have placed in BAN and our independent accountants to keep you financially up to date, 100% compliant and ensuring that your business wealth is properly managed.
In today’s challenging environment, and as business owners ourselves, we understand your anxieties at this time. Our approach to the services our franchisees provides your business has always been about encouraging you to invest proactively in managing compliance and tax risk …..and now we’d like to return the favour with a little investing of our own. Over the next few weeks, we will be keeping you informed of new developments in business and business relief provisions to survive this storm so that you are ready for take-off when normal business trading conditions are restored.
Follow us on our Facebook and LinkedIn pages where we will provide you and your business with tips on business measures and strategies you might want to consider to help you get through this.
Many small and medium businesses are going to be negatively affected financially by the regulations of the nation-wide lockdown in some way or another. Numerous businesses will not be able to continue with their operations whatsoever. Unmistakably, businesses that have not got a reserve of money saved from profits earned over the years are going to be more distressed than those that have provided for a time of need or trouble. This means that, regrettably, there are going to be businesses that will weather this storm and others that will not.
Recognizing the considerable impact that the nation-wide lockdown will have on businesses that will cause many to close and people to lose their jobs, the government and the commercial banks have put in place several relief measures to support people and Covid-19 distressed businesses whose livelihoods will be affected.
We have attached a list of the most notable financial assistance being provided to businesses that may go into distress because of Covid-19 for your perusal.
PUT A BRAKE ON UNETHICAL BUSINESS CONDUCT
President Cyril Ramaphosa said when addressing the nation on the evening of Monday 23rd March:
“I want to make it clear that we expect all South Africans to act in the interest of the South African nation and not in their own selfish interest.”
As accountants, we have been alarmed at recent e-mails being sent to some of our clients by their customers. Astonishingly, our clients have been receiving letters, dated prior to the commencement of the nation-wide lockdown but after the President’s address to the nation, informing them that payments due to them will be moved out to after the lockdown period and that a further extension of payment might be considered at that time when they reassess the situation. Clearly, these companies are withholding payment for goods and services already delivered.
Not only are actions and letters like this morally wrong, it is illegal. Letters like this is in fact proof that the company is not able to pay its debts and has been trading while commercially insolvent, which can have significant legal liability ramifications, particularly on the directors personally. Unless the creditors agree to not being paid indefinitely or there are provisions that allow for this in their credit agreement, the debtor does not have the right to do this.
One can only imagine the disastrous impact this would have on every business and how many more employees would lose their jobs throughout the country if everybody decided to take an irresponsible stance.
As business owners we are all in this together. Ethical business practices include assuring that the highest moral and legal standards are observed and ethical business owners should demonstrate personal integrity and the courage of their convictions by doing what they think is right even when there is great pressure to do otherwise.
If your business is going to be distressed as a result of the Covid-19 lockdown, the right thing to do is to apply for financial assistance from one of the banking sources or funds set up by government that we have listed in the attached document. If your business continues to run into trouble, only then consider telephoning your larger suppliers to negotiate some payment relief until your business is back on track once we have recovered from this epidemic.
If we are to continue doing business once this is all over, we all need to recognize our moral responsibility and to practice good business ethics and responsible commercial conduct now.
The BAN Team