Do You Really Need a B-BBEE Consultant?

Every B-BBEE certificate and every affidavit rests on the Codes of Good Practice. The Codes are gazetted law that runs to hundreds of pages of definitions, formulas, targets, thresholds and exceptions. Add sector codes with their own rules, amendments, practice notes from the dtic, guidance from the B-BBEE Commission, and draft changes that are still on the table. A simple idea quickly becomes a technical exercise. Most businesses that are verified only find out how technical B-BBEE is once the verification starts. By then the financial year has closed and it is too late to change anything.

How complex is B-BBEE really?

In reality, the complexity is directly related to the complexity of the business being measured. In other words, it’s situational. A small business that is 100% black owned may only need a sworn affidavit. A group with holding companies, an empowerment transaction, several divisions and hundreds of suppliers has far more decisions to make, and every one of them affects the final level.

The question is: do you know how to apply, measure and claim each unique scenario?

What happens when your entity makes a loss? How can you improve your procurement score without obtaining more supplier B-BBEE certificates? Which spend are you allowed to exclude from your total procurement spend? What if there is outstanding acquisition debt on shares, and will your net value still meet the ownership sub minimum? Do you understand the difference between flow through and modified flow through, and whether you can or should use it? Have you met all the qualifying criteria to apply the YES enhancement, and do you know how to calculate your YES target? How does a consolidated measurement work?

Each of these has a correct answer under the Codes and other legislative pieces, and it is rarely the obvious one.

The benefits of working with a consultant

A consultant works on your side before, during and after your measurement period. That starts with planning: setting targets and budgets before your financial year begins, while there is still time to act. It includes applying the Codes correctly to your specific structure, and making sure every claim is supported by the evidence your verification agency will ask for. When the queries come, you have someone who knows how to answer them. A good consultant also keeps up with amendments, practice notes and guidance from the B-BBEE Commission, so your strategy is based on the rules as they stand today, not as they were three years ago.

This matters because your verification agency cannot play that role. It has to stay independent, so it can test your claims, but it cannot advise you on how to structure them or how to improve your score.

Optimisation: more points for less money

Optimisation starts with knowing what each point costs your business. Some targets are based on net profit after tax and others on your payroll, so the cheapest points are not in the same place for every business. It continues with claiming everything you are entitled to, applying the right benefit factors, multipliers, enhancements and certain mechanisms provided in the codes, optimising your score wherever possible.

The result is a better level, a lower cost and a scorecard you can defend.

So, do you need a consultant?

B-BBEE is a specialist field. You would not guess your way through a complicated tax return. You would use a tax consultant who knows which deductions and allowances apply to you and how to claim them correctly. B-BBEE works the same way. Two businesses can spend exactly the same amount and end up on different levels, simply because one applied the Codes better than the other.

If your business is small and 100% black owned, an affidavit may be all you need for the time being, however, proper planning when it is expected that your revenue will exceed the thresholds is important.

Inclusion Works Consulting is a B-BBEE consulting firm in partnership with Eqeight Accounting. We help businesses understand where they stand, assist with planning, optimisation and implementation, and build a B-BBEE strategy that makes sense.

Visit www.inclusionworks.co.za or email info@inclusionworks.co.za.