How to use BEE to increase your Bottom Line!
The Basics of BBBEE
Whilst most business owners are scared off by BEE terminology, BEE is rather a simple government policy, which is mostly referred to as Black Economic Empowerment.
It is important to know that BEE is not forced apon any entity by law. HOWEVER, any entity wanting to do business with the Government or any Organs of State has to be BEE Compliant First.
The process of becoming BEE Compliant is known as the BEE Verification process.
This is a process where the entity has to come into contact with an SANAS Accredited BEE Verification. Agency.Together with the BEE Agency the entity has to undergo an partial or full audit to determine its BEE Compliancy Levels.
This comprises three easy steps.
- Completion of Documentation and BEE Verification planning.
- Gathering of Evidence according to the 7 elements of relevance.
- Verification of Evidence and calculating BEE Compliancy.
The BEE Scoring Levels
Once this is done, a BEE Certificate of that specific entitys' BEE Compliancy and Procurement Recognition is then issued. The BEE scoring levels is explained below. This BEE certificate is then valid for one year from the date of issue
Categories of BEE Companies
When deciding whether your entity needs to be verified or not it is important to know and understand the three categories which a business may fall under, This determines the BEE planning process the entity needs to do, as well as the pricing of Accredited BEE Verification.
According to the Last Financial Statements i.e. the annual turnover, the following is categorised:
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Exempted Micro enterprise, this is when the natural turnover is less than 5 Mil (may be the case of a start up company) Please note that in the Tourism Industry the annual turnover needs to be less than 2.5 Mil. A full audit is not necessary, only relevant supporting documentation eg. Cipro Registration and Certified Copies of ID's of owners.
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Qualifying Small Enterprise, this is when the annual turnover is less than 35 Mil but more than 5 Mil. A partial on site audit is done, this is where 4 of the 7 chosen elements are verified and a site verification is also conducted.
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In case of a Generic, a full on site audit is necessary, this means that all seven elements are verified as per the Generic Scorecard, a site verification as well as interviews are conducted.
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The 7 Elements of BEE Verification.
During a BEE verification the verified entity has to submit physical proof of activity, spending and contributions in the seven elements of empowerment. The elements are:
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Proof of shares in HDI hands. A share certificate for example will need to be submitted for this purpose.
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Proof of HDI's in top/senior management. Interviews will be held to confirm seniority, job description, salary etc.
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Submission of a EE report and the involvement of PDI's in the organisation on different levels and categories.
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Proof of training spend on HDI's such as inhouse programs and accredited programs such as ABET (reading and writing) and mentorship programs.
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Proof of purchases from suppliers that are BEE compliant as a percentage of total procurement spending.
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Aiding SMME's and emerging entities owned by HDI's to trade in the mainstream economy.An example is setting up a CC and contracting such an entity to provide products.
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- CORPORATE SOCIAL INVESTMENT
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Social contributions towards own employees, employees families and communities such as paying employees children's school fees and contributions towards black sports teams.
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When sufficient planning is implemented, BEE does not need to be perceived as a threat to ones business but rather that of an opportunity.
Please see our CONTACTS page to contact an agent in your area to assist.
