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Why it’s important to plan for BEE

Why it’s important to plan for BEE

It is very important to keep in mind that Broad-Based Black Economic Empowerment (B-BBEE) is not a once-off process but a continuous process that has to be implemented and monitored throughout the financial year.

Required contributions

The following elements require contributions to be made within the financial year:

  1. Skills Development
  2. Enterprise & Supplier Development
  3. Socio Economic Development

If a contribution was not made in a financial year you will not be able to use it when you are verified on that specific financial year.

BEE and your budget

With the higher targets that need to be spent on the abovementioned elements, it is important to include B-BBEE expenditure in your yearly budget. As you spend throughout the year it will be easier to reach your targets and to ensure that the correct amount is spend on the different indicators.

We all know that December and January are very quiet months for most businesses. This makes it even more difficult to then spend the required amounts before the end of February (in most of the cases – depending on when your financial year end is) as most entities do not have the required cash flow.

Let us take Skills Development as an example. The target for a Generic Entity is 6% of their payroll. If the entity has a payroll of R3million, they will have to spend R180,000.00 (and keep in mind this is a rather small payroll for a Generic Entity). With the correct planning it will be easier to spend R15,000.00 per month on training, rather than having to pay the full R180,000.00 before the end of February. The same principle can be applied to the amounts that have to be spent on Enterprise & Supplier Development as well as Socio Economic Development.

Planning your Suppliers

Planning is also important when dealing with your suppliers. You need to make sure that your current suppliers are in possession of a valid B-BBEE Certificate or are in the process of obtaining one. Should they not have a B-BBEE certificate, you must pressure them to obtain one to the benefit of your own compliance. Their B-BBEE certificate has a big impact on your business’s rating and at the end of the day, it can mean the difference in a rating level for you.

Obtaining a B-BBEE certificate is not something that you can do overnight, but it has become a process that you need to implement in your business on an annual basis which requires careful planning and budgeting to gain maximum benefit.

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