Accountants must get over the idea that they are record keepers and compliance box tickers, says Louis Klopper CFO (SA), one of the business rescue practitioners involved in the rescue of eight Gupta companies since early 2018.
“Accountants must lift their game,” he says. “The country has thousands of failing businesses that need their help. It is not sufficient to charge huge fees for signing off financial statements and making sure the regulatory compliance issues are in order. That’s just a small part of what they are expected to do.”
Accountants should be able to spot the signs of impending disaster, adds Klopper, and one of the tools for doing this is management accounting.
“You have to be able to analyse a company, not just by reading the financial statements, but by making a causal link between financial and operational performance,” he says. “You have to be able to walk the factory floor and inspect with you own eyes what is happening at the operational level. This is quite different to sitting in a room somewhere and going through the financial statements.”
You cannot rescue a business from an ivory tower
Business rescue is a legal process embodied in the 2008 Companies Act, but the function of Business Rescue Practitioner (BRP) is being hijacked by the legal profession – which is ill-equipped to deal with the mechanics and causes of business failure. In many instances, their real interest is in business liquidation because of the 10% fees they can claim on any asset sales realised from the auction.
“Business rescue practitioners must be able to come up with a business rescue plan and convince a court that the plan can work and save the company, and save jobs.”
Klopper’s advice to Saiba members is to train themselves up as fast as possible as business rescue specialists by doing the licensed course available only through Saiba. Then to mentor under an experienced practitioner.
It’s not an easy job, since you may be spending a lot of time in court – and will need a good legal team behind you. In the case of the Gupta companies, Klopper and his team have been in court about 60 times in nearly three years, defending actions brought by opportunists seeking to liquidate the companies and collect the 10% liquidation fees (giving little thought to the survival of the companies) and from people who want the BRPs removed and replaced with people more accommodating to themselves. In other words, says Klopper, you have to become something of a street fighter. But the rewards far exceed any of the shortcomings.
“To be able to rescue a company and save the jobs of employees is perhaps the most rewarding thing you can do.”
Don’t wait until the business fails
Klopper previous told Accounting Weekly that he is on a mission to save South African businesses in distress as a result of the Covid devastation.
“The problem is that most businesses wait until it is too late,” he says. “The time to act is before things get out of hand. Calling in a turnaround specialist can save untold agony for business owners – not to mention the jobs of staff. The country needs every job. We cannot afford to lose any more.”
Accountants need to become turnaround specialists rather than rescue specialists, through the skill set required is the same.
“Get involved with your clients’ businesses and help them sort out their messes. Don’t just collect fees for preparing financial statements and ticking the compliance boxes. Accountants, especially Saiba members, are best suited to this work because they deal with entrepreneurs and small to medium-sized businesses – these are the heart and soul of the economy. My advice to them is to get trained as business rescue specialists – and do it now.”
Apply for a Business Rescue Specialist licence from Saiba
Saiba is the only professional body offering a specialist business rescue specialist licence. Find out more here.
Louis Klopper can be reached at firstname.lastname@example.org.