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Unlock the value of your company’s balance sheet

7 September 2021 10:01 AM
Tags:
Stats SA
Momentum
Sponsored Content
Business Liquidation

With rising economic challenges, how can you keep your company afloat, and protect employees from job losses

Stats SA recently published the latest Quarterly Labour Force Survey, showing how the country’s unemployment rate rose to a record high of 34.4% in the second quarter of 2021. This is the highest since the survey started in 2008 and the highest in the world, as tracked by Bloomberg.

Business liquidations also drive employment levels. Stats SA data shows that close to 1,000 businesses were liquidated in the first half of 2021, with total liquidations increasing by 46.2% in the second quarter of 2021 compared with the second quarter of 2020.

Running a successful business in the current environment and re-energising Covid-fatigued employees is a big challenge. According to Momentum Corporate research, nearly 30% of leaders find leading in these times very difficult.

Emda Fourie, Head of employee benefits consulting - Momentum Corporate Advice and Administration

But a fresh pair of eyes can help to unlock alternative solutions before throwing in the towel.

Leaders are looking for ways to reduce balance sheet risks. This means that companies move some of the risk items off their balance sheets to free up some money or assets.

Emda Fourie, Head of employee benefits consulting - Momentum Corporate Advice and Administration

For example, if your company still subsidises retirees’ medical aid premiums, this will reflect as a liability on the company’s balance sheet. Another area is the pensioner liability where the company retains the ultimate responsibility for the pension and therefore has to hold funding on their balance sheet to secure the pensions. Mining houses also have to carry the financial liability of rehabilitating mining sites - a statutory obligation.

There are various solutions for removing these and other risk items from your balance sheet - one of the most cost-efficient being, to outsource these liabilities to an insurer.

Cleaning up your balance sheet is also a great first step for preparing to move to a more cost-efficient retirement funding solution, like an umbrella fund, which drives long-term cost savings for both employer and employee.

Whatever your employee benefits strategy, it’s key to look beyond the balance sheet and find solutions that address employees’ changing financial, mental and physical needs. If your employees are energised and invested in the success of your business, your chances of success, even in the current environment, are significantly better.

Emda Fourie, Head of employee benefits consulting - Momentum Corporate Advice and Administration



7 September 2021 10:01 AM
Tags:
Stats SA
Momentum
Sponsored Content
Business Liquidation

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