Enterprise development is worth 15 points on the generic scorecard and 25 on the QSE. The revised codes are talking of combining ED with Preferential Procurement and calling the new element Supplier Development which will then be the most valuable points section on the scorecard.
ED has always been an integral part of the BEE codes. It helps grow the economy and create employment. The link between procurement and ED is also very important. We believe that a business has a better chance of succeeding if it is supported via extra business, than simply providing seed capital.
One of the ways to perform ED with a supplier has been to assist with cash flow – specifically by arranging early payment of invoices. Many large corporations have red tape to the extent that it can take many months to be approved as a vendor and up to three months to be paid. Small businesses simply cannot afford to finance their big customers. They need the cash flow to purchase raw materials, pay expenses – rent, salaries and wages. Almost by definition if the business is small and in need of ED support it has no, or limited, financing or overdraft. We know of small businesses whose biggest dream, but also nightmare is that they will win a big contract with a large company. Due to cash flow constraints they cannot supply. That is why the BEE codes suggested that a company that pays ED suppliers early – less than 10 days from issuing of invoice to payment would earn points on the ED scorecard.
Other great ways of doing Enterprise Development is to offer discounts on products or services or spending a small amount of time assisting a business with expertise. The Enterprise Development benefit matrix from the Codes of Good Practice contains many other good ways of earning points on Enterprise Development.
Let us re-look at the definition of ED:
“…with the objective of contributing to the development, sustainability and financial and operational independence of those beneficiaries”.
Lately we see too many ED activities that do not meet this definition. A company will identify a potential beneficiary that meets the requirements for being a beneficiary – i.e at least 25% black owned (with various other clauses not important to this discussion). The company will then select an aspect on the Enterprise Development benefit matrix and claim points. Verification guidelines require that the beneficiary agree to being appointed as an ED beneficiary and supply a “request for assistance letter” and “thank you” letter.
If you visit your local supermarket (let’s assume it meets the definition of being a beneficiary) and you pay your invoice at the till, i.e within 10 seconds of receiving the request, can this really be seen as you performing ED because you have paid for your goods COD? We generally say that if your usual terms to your supplier is 30 days, and he approaches you and explains his financial constraints, and you then decide to change your financial policy towards him and ensure that he receives payment within 10 days, then you will earn ED points.
We have seen many situations where large companies that meet the definition of being a beneficiary are given some form of ED assistance that fits onto the benefit matrix. All companies will, naturally, accept any form of cash flow benefit because it makes business sense. We would ask whether the beneficiary could genuinely state that they are receiving ED assistance. We have seen these standard form letters – we even designed them, but we expected them to be used to state the truth!
Put another way would a large listed company that has an annual turnover of many billions be prepared to put out a SENS announcement stating: “
“We would like to thank XYZ company for appointing us as their enterprise development beneficiary. The assistance received dated 31st August to the value of R1 596.87 will assist us to develop our business further. This assistance will contribute to us becoming sustainable. We hope that we will eventually become financially and operationally independent”
The acid test is:
- Does the business meet the definition of an ED beneficiary?
- Are you doing something different to your usual treatment of him and other similar suppliers?
- Do your activities meet the definition of ED as above?
Contact our consultants now to help make B-BBEE a simple, easy exercise.
|New Supplier Development Element is going to be vital|
Your BEE Scorecard is required by customers for their BEE Scorecard. A good BEE Scorecard will help them achieve highly on their BEE Scorecard which in turn results in additional business. Government tenders use a formula to take into account a good BEE Status. The ultimate result is that your good BEE Status will give you a major advantage, satisfy customers and beat the competition!
Supplier Development which is a consolidation of Procurement and Enterprise Development is one of the new elements that the DTI has announced for the revision of the BEE Codes of Good Practice. We suspect that the supplier development element will become the single most valuable element on the scorecard. The effect of this change means that if you want a good BEE score you must place a large amount of emphasis on this aspect.
The EconoBEE BEE Procurement and Enterprise Development Conference allows businesses to move beyond the difficulties with Preferential Procurement and Enterprise Development and gain a competitive edge by saving a tremendous amount of time and money and of course earning more BEE points.
Instead of getting frustrated at verification agencies, join us for an informative full day course and let us show you how to improve your BEE status. During the course we will show you tips and tricks to earn more points without spending massive amounts of administration time. Help you implement small projects to gather supplier data faster all while avoiding the dreaded fronting certificate. The best news yet is all of the points and advice will give you absolute control to earn the points you want in a time frame suitable for your business.
Quite simply the BEE Procurement and Enterprise Development conference will give you:
- The tools to effectively manage BEE Procurement and Enterprise Development
- The knowledge to perfectly execute BEE Procurement and Enterprise Development and gain 35 BEE points (on the generic scorecard) to secure the next tender
- More time to spend on other business activities
Earn 35 BEE points on BEE Procurement and Enterprise Development and use your BEE Status to your advantage.
Book early (two weeks before your attendance) for our BEE Procurement and Enterprise Development conference and receive a complementary license of EconoBEE V3 worth R3 500. 10% discount for 3 or more delegates from the same company.
|Cost||R3990 incl VAT|
|Venue||15th November 2012 – CPT – Belmont Conference Centre|
22nd November 2012 – JHB – Montecasino Conference Centre
29th November 2012 – DBN – Makaranga Garden Lodge
|Time||8:30 for 9:00 to 17:00|
|Booking ||Download our brochure and fax to 011 483 1195 or fill in our online form|
Contact 011 483 1190
|More info||Online details on www.econobee.co.za, email firstname.lastname@example.org or contact 011 483 1190|
Book now and gain the business you deserve.