Strengthening SA’s black-owned accounting practices in SMME sector

First National Bank (FNB), Xero and Edge Growth have partnered to launch the FNB Xero Programme for Accounting Practices (FXP), a developmental initiative to empower SA’s small black-owned accounting practices in the small-, medium- and micro-enterprise (SMME) sector.

Applications for the programme are open on the Edge Growth website to registered accounting practices that have been in operation for at least three years; are at least 51% black-owned; have an accreditation with a professional body such as the SA Institute for Chartered Accountants or the SA Institute for Professional Accountants; have industry experience servicing SMMEs; are keen to embrace technology to improve; and have aspirations to grow and attract investment.

A maximum of 15 entrepreneurs will be selected to be part of the programme, which will begin in June 2021 and run for eight months.

Accounting practices are vital to the SMME sector and sit at the heart of SA’s economic recovery.

Effective financial planning and accounting support the growth and profitability of SMMEs, and in the early phases of development typically rely on small to medium-sized accounting practices to provide these services.  

Now, during the biggest crisis most SMMEs have ever faced, SA accounting practices are at the front line of helping the small business sector — about half of SA’s workforce — weather the storm and plan their road to recovery.

But small accounting practices face challenges themselves. They are typically started by accounting graduates who might lack holistic enterprise development, leadership and digital skills, and don’t always have access to the right technology to help them to work more efficiently.

Programme design

In the first phase of the FXP, extensive research was conducted into the sector alongside industry associations and practising accountants to fully appreciate its context, challenges, risks, constraints and opportunities for value creation. The programme was then designed to mitigate risk, unlock constraints and leverage opportunities.

Head of SMME development at FNB, Heather Lowe, describes how the programme’s focus areas were chosen: “Ninety percent of the requests to FNB’s small business mentorship hotline over the Covid-19 period have been related to bookkeeping, and it became clear that this is an area in which effective intervention could have an outsize impact.

“The programme is based on a desire to shift the needle, and so we decided to focus on supporting accounting practices that have several years of experience, are accredited, have experience serving the SMME sector, and are at a stage that an intervention could take them to the next level. We also want to focus on black-owned businesses from an enterprise development standpoint, and on smaller enterprises that can be expected to scale.” 

The scope of the programme objectives necessitated a collaborative approach, and strategic partners Xero and Edge Growth were brought on board to provide specialist input.

Edge Growth, an SMME development specialist, was approached for its extensive enterprise development expertise, and helped to craft the programme from initiation. Stuart Townshend, director: growth at Edge Growth, says: “What sets this programme apart is the degree of tailored specialist support that has been built in. The strength of the FNB brand allows them to bring partners to the table who are aligned in terms of their pursuit of excellence and innovation in SMME development, and have the resources required to make a tangible difference.”

To maximise impact, the programme was designed to focus on unlocking constraints through digital transformation, improving quality of service, and enhancing practice management.  

Digital transformation

Helping accounting practices with digital transformation was chosen as a programme objective. The FXP’s technology partner is Xero, a leading provider of cloud-based accounting software. The FXP aims to promote the digital transformation of black-owned accounting practices by leveraging Xero’s cloud-based practice management and wider cloud tools. Cloud technology has the potential to transform how accounting firms do business — helping them streamline processes, scale and save time so they can focus on adding value to their clients.

Colin Timmis, Xero SA country manager, says: “SA’s accounting practices need collective support from the private and public sectors — from tech companies, banks, government, accounting bodies and other key organisations — to fulfil a role that creates wider value for society and contributes to SA’s economic recovery.

“Equipping accountants with the right technology and developing their digital skills through education and insights from established, thriving digital practices is key. The FXP is a fantastic model for this kind of cross-sectoral developmental collaboration and we look forward to supporting the accounting firms on the programme.”

Quality of service

The FXP aims to raise the bar in terms of standards and quality of services offered to the SMME market, and ensure that accounting practices are engaged in the right kind of work. Xero research has shown that about a third (28%) of small businesses want their accountant to act as a comprehensive business consultant and that this figure is growing rapidly.

Accounting firms need to adapt to this changing demand. Their ability to do so is closely related to digital transformation: having the right technology allows accountants to step away from manual and repetitive tasks, and to pursue more lucrative and value-additive advisory work.

Enhanced practice management

Small accounting practices focused on serving the SMME market often struggle to scale. Their owners are skilled at accounting, but frequently neglect other aspects of growing a successful business. The FXP has brought in an advisory board comprising top-level executives to train accountants in the attributes required to successfully scale up a business, including marketing, technology, practice management and leadership.

If you want to be one of the entrepreneurs selected to participate, visit the Edge Growth website.

You will be required to register your details and complete the pre-qualification information before April 12 2021.

This article was paid for by FNB.