Time to produce a BEE Scorecard
With the recent gazetting of the BBBEE Codes of Good Practice some of your customers have started asking you about your BEE Status. As time goes on companies will need your BEE Scorecard more urgently and may start looking for alternative suppliers.
In a short period of time any company that does business with any other company in South Africa or directly with government will need a BEE Scorecard for themselves and from all of their suppliers.
Every time your customer requests your BEE Scorecard you risk losing business by not responding. This also gives your competition a very good opportunity of getting more business by giving your customer a better BEE Scorecard.
Give your customers a BEE Scorecard and stop running the risk of losing business.
What do you need to do?
The first step is to respond to your customer’s requests: You should start off by saying to your customer that you intend becoming BEE compliant by following the seven elements of empowerment (Ownership, Management, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Socio-economic Development). QSE’s (Qualifying Small Enterprise – companies with turnovers below R35 million) need to comply with any four but should still mention all seven. Small companies (below R5 million) are automatically compliant and should give their customers a statement describing in detail how and why they are compliant.
“Many companies requesting this information do not expect you to respond with good BEE scores as most recognize that this is a long term strategy and certainly not a project that can be achieved overnight.”
Once you have made contact with your customer you can now start working towards a BEE Scorecard and making your company BEE Compliant.
The best starting point is to read up on the BBBEE Codes, speak to experts and attend courses to get sufficient knowledge to start working on your BEE Scorecard. A well presented introduction course should take no longer than half a day and should leave you with enough information about BEE to help you answer most questions.
After you have been through the BEE codes you should understand how the calculations work, the important definitions and a general overview of how each one of the seven elements of empowerment works. You should also start thinking about projects that your business currently runs or is considering.
“Common projects are staff training, donations to charity, developing a colleague’s business and buying from good BEE contributors.”
The next step is to look at the BEE Scorecard. This is the most valuable BEE document. The BEE Scorecard gives your company targets to achieve and points to earn from participating in certain projects that contributes towards BEE. It allows your company to measure how compliant you are by taking into account various aspects of your business. This is why it is officially called the Broad Based Black Economic Empowerment scorecard.
You now need to start calculating how compliant your company is. We designed EconoBEE Scorecard (easy to use BEE Scorecard Rating software) for this exact purpose. Our software will explain everything that is relevant to you about the BEE Scorecard, help you collect and store documentation and help you provide proof. Ultimately EconoBEE Scorecard will print a summary scorecard (in certificate format) or a detailed profile giving details of all aspects of the BEE Scorecard, you will also sign it off as being accurate.
Look at each element:
Ownership – Who owns your company? Do you issue Economic Interest? Do the owners have full rights to the shares? Have the owners bought and paid for the shares? Are they paid for in full?
Management – Who is the senior management in your company?
Employment Equity – Do you have junior/middle and senior managers? What percentage of your employees are black? Do you employ black females at junior/middle or senior management?
Skills Development – Do you spend money on training your staff? Is it possible to spend additional money on training? Can you formalize in-house training? Is your training logged and calculated on an annual basis?
Preferential Procurement – Are your suppliers BEE compliant? Do you have a supplier assessment form? Have you asked your suppliers for their BEE Scorecards? Did your suppliers respond?
Enterprise Development – Do you invest in other black businesses? Did you make a profit last financial year? Can you spend additional money on investments with black businesses?
Socio-economic Development – Do you donate to charities? Do you give charitable donations to needy black people? Can you spend more on charity?
After you have answered these questions on the BEE Scorecard you are almost complete. Make sure that you have claimed points in the correct elements. You need to check that each element has been calculated correctly. Collect proof for all aspects on the BEE Scorecard where you scored points.
Write a brief report on your BEE Scorecard. This is a summary of all the elements on the BEE Scorecard where you scored points or where you believe you can potentially score points. You should describe how you achieved the points. This is a very useful document as this is what helps your customers interpret your BEE Scorecard. You must also include your goals and achievable targets so your customers see that you are intending on improving on your BEE Scorecard.
The rating: You need to compile all of this information so that you can sign it off with confidence that it is correct. There is a very good chance that your accounting auditor will purchase BEE Scorecard software and help you with the authenticating of your BEE Rating.
The finalised BEE Scorecard will be rated and accredited by a rating agency/or your auditor (no rating agency has been accredited and it is impossible to get an accredited rating until they are accredited). This will be in the form of a certificate which gives a customer your BEE contributor level. Rating agencies are simply going to be used by companies to audit the pre compiled BEE Scorecard. A rating agency is not allowed to consult with you to help you improve your scorecard – anyone who rates you is not allowed to consult and a consultant is not allowed to rate you.