MSD Chartered Accountants

MSD Chartered Accountants 25 years experience in auditing, accounting, taxation and consulting services across wholesale, reta

Revenue can be growing while the business quietly becomes less profitable.If your expenses are rising faster than your s...
21/09/2026

Revenue can be growing while the business quietly becomes less profitable.

If your expenses are rising faster than your sales, that growth may be creating more pressure instead of more value.

Here are 5 areas to check:

1. Payroll
As the team grows, salaries, benefits and overtime can increase faster than revenue if productivity does not improve with headcount.

2. Software and subscriptions
Small monthly tools add up quickly. Review what is actually being used and whether multiple systems are doing the same job.

3. Supplier and input costs
Price increases from suppliers can slowly compress your margins if your own pricing stays unchanged.

4. Vehicles, fuel and operating costs
Fuel, maintenance, insurance and logistics can grow significantly as the business becomes busier.

5. Admin and overhead
Rent, professional fees, insurance and other fixed costs can expand without directly producing more revenue.

Try this quick expense check:

Compare the last 12 months with the previous 12 months:
✔ Revenue growth %
✔ Payroll growth %
✔ Operating expense growth %
✔ Gross profit margin
✔ Net profit margin

Then ask:
Are your expenses growing because the business is becoming stronger, or simply because it is becoming more expensive to run?

If revenue grew 15% but expenses grew 25%, the business may be moving backwards despite looking busier.

The goal is not to cut every cost.

It is to understand which costs create value, which have become inefficient, and where margins are quietly being lost.

Save this post and compare your expense growth against your revenue growth this month.

Debt can help a business grow.But when repayments start controlling your decisions, debt stops being a tool and starts b...
17/09/2026

Debt can help a business grow.

But when repayments start controlling your decisions, debt stops being a tool and starts becoming a risk.

Here are 5 warning signs your business may be carrying too much debt:

1. Debt repayments are putting pressure on monthly cashflow
If repayments are leaving too little cash for payroll, suppliers or operating costs, your debt burden may be too high.

2. You are borrowing to cover normal expenses
Using debt to fund expansion is one thing. Using new debt to pay rent, salaries or old debt is a very different signal.

3. Interest costs are eating into profit
Revenue may be growing, but if finance costs keep climbing, more of your profit is going to lenders instead of back into the business.

4. You have very little room for a bad month
A business carrying heavy debt can become vulnerable quickly when a large customer pays late, sales drop or an unexpected expense appears.

5. Debt is stopping you from investing in growth
If every spare rand goes toward repayments, the business may struggle to hire, market, upgrade equipment or take advantage of new opportunities.

Try this quick debt check:

Write down:
✔ Total monthly debt repayments
✔ Monthly interest costs
✔ Cash currently available
✔ Average monthly operating profit
✔ Debt due within the next 12 months

Then ask:
If revenue dropped by 15% for three months, could the business still comfortably meet its repayments?

Debt is not automatically a problem.

The real question is whether the business is using debt to create more value than it costs.

Save this post and review your debt before the next repayment becomes a cashflow problem.

Revenue growth can look impressive on paper.But if your profit is not growing with it, something underneath the surface ...
14/09/2026

Revenue growth can look impressive on paper.

But if your profit is not growing with it, something underneath the surface may be weakening.

Here are 5 places to check:

1. Gross margin
If revenue is up but your cost of delivering the work is rising even faster, each sale may be contributing less profit than before.

2. Operating expenses
More staff, software, rent, vehicles and admin costs can quietly absorb the benefit of higher sales.

3. Pricing
You may be selling more without charging enough. More volume does not always mean more profit.

4. Discounting and low-margin customers
A growing customer base can still hurt profitability if too much revenue comes from heavily discounted or expensive-to-service clients.

5. Productivity
If the business needs significantly more people, time or resources to produce each additional rand of revenue, growth may be becoming less efficient.

Try this quick check:

Compare the last 12 months with the previous 12 months:

✔ Revenue growth %
✔ Gross profit growth %
✔ Operating expense growth %
✔ Net profit growth %
✔ Net profit margin %

Then ask:

Is profit growing at least as fast as revenue?

If revenue is up 20% but profit is flat, the business may be getting bigger without actually becoming stronger.

Growth should create more value, not just more activity.

📌 Save this post and compare your revenue growth with your profit growth this month.

Cashflow problems rarely arrive all at once.They usually show up as small warning signs first.Sales are coming in. The b...
11/09/2026

Cashflow problems rarely arrive all at once.

They usually show up as small warning signs first.

Sales are coming in. The business may even be profitable. Yet cash feels tighter every month.

Here are 7 signs your business could be heading for cashflow trouble:

1. Debtors keep growing
Revenue looks healthy, but too much of it is still unpaid.

2. You rely on next month’s income to pay this month’s bills
That usually means your cash buffer is too thin.

3. Supplier payments keep getting delayed
If this is happening regularly, cash outflow may be outpacing cash inflow.

4. Your overdraft has become permanent
Short-term finance is useful. Dependence on it is a warning sign.

5. Expenses are growing faster than revenue
Turnover can rise while margins and cashflow weaken.

6. Tax and VAT payments keep surprising you
This often means committed cash is being mistaken for available cash.

7. You can’t confidently predict your bank balance 30 days from now
If cash is managed reactively, problems only become visible when they’re urgent.

Try this quick 30-day check:
Write down:

✔ Cash in the bank
✔ Debtors expected to pay
✔ Supplier payments due
✔ Payroll and fixed costs
✔ Tax and VAT obligations
✔ Loan repayments

Then ask:

If no unexpected money came in, could the business comfortably meet every commitment?

If not, the warning signs may already be there.

Healthy cashflow is not just about more sales. It is about collecting faster, controlling costs, protecting margins and planning ahead.

📌 Save this post and run the check before cashflow pressure becomes a crisis.

You don't need to spend hours analysing spreadsheets to understand whether your business is improving.Set aside 30 minut...
31/08/2026

You don't need to spend hours analysing spreadsheets to understand whether your business is improving.

Set aside 30 minutes once a month and review these eight areas:

1️⃣ REVENUE
Compare this month with last month, your budget and the same period last year. Don't just ask whether sales increased—ask why.

2️⃣ GROSS PROFIT MARGIN
If revenue increased but gross margin fell, higher sales may be hiding rising costs, excessive discounts or poor pricing.

3️⃣ NET PROFIT
After everything is paid, how much did the business actually earn?

4️⃣ OPERATING EXPENSES
Look for unusual increases. Which costs grew faster than revenue?

5️⃣ DEBTORS
How much are customers currently owing, and how much is overdue?

6️⃣ CASH POSITION
Don't only check today's balance. Consider payroll, suppliers, tax and other commitments due soon.

7️⃣ TAX PROVISIONS
Has enough cash been set aside for upcoming VAT and tax obligations? Money reserved for tax isn't available operating cash.

8️⃣ NEXT 90 DAYS
What major payments, investments, contracts or risks are approaching?

Now finish the review by answering three questions:

What has improved?
What deteriorated?
What action will we take this month?

That's the important part.

Financial reports are valuable only when they influence decisions.

A monthly review helps you identify falling margins, rising expenses and cashflow pressure while there's still time to act.

📌 Save this as your monthly checklist. Put a recurring 30-minute meeting in your calendar and treat it like any other important business appointment.

"Expenses are too high. We need to cut costs."It sounds sensible—but cutting the wrong expenses can make profitability w...
27/08/2026

"Expenses are too high. We need to cut costs."

It sounds sensible—but cutting the wrong expenses can make profitability worse.

Imagine spending R50,000 per month on marketing that reliably generates R250,000 in profitable sales.

Removing it saves R50,000.
But what happens to the R250,000 it helped generate?

This is why businesses need to distinguish between waste and productive expenditure.

When reviewing costs, divide them into three groups:

1️⃣ VALUE-CREATING COSTS
These directly support revenue, efficiency or customer delivery.
Examples might include productive staff, effective marketing, essential software or equipment.
Don't automatically cut these. Ask whether the return justifies the cost.

2️⃣ NECESSARY COSTS
These keep the business functioning but may not directly generate revenue.
Examples include insurance, compliance, rent and administration.
Ask whether the same outcome can be achieved more efficiently.

3️⃣ LOW-VALUE COSTS
These consume money without producing enough benefit.
Unused subscriptions, duplicated software, unnecessary overtime and recurring services nobody reviews often fall here.
These should be investigated first.

For every significant expense, ask:
✔ What business outcome does this create?
✔ What would happen if we removed it?
✔ Can we measure its return?
✔ Could we achieve the same result for less?
Cost control isn't about making your business cheaper.

It's about making every rand work harder.

📌 Save this post before your next expense review. Don't ask only, "What can we cut?" Ask, "What are we paying for that no longer creates enough value?"

A client paying you R100,000 a month sounds more valuable than one paying R40,000.But revenue alone doesn't tell you wha...
24/08/2026

A client paying you R100,000 a month sounds more valuable than one paying R40,000.

But revenue alone doesn't tell you what that customer is worth.
Consider two clients:

Client A: R100,000 revenue
Requires extensive staff time, regular rework, discounts and takes 60 days to pay.

Client B: R40,000 revenue
Standard delivery, minimal support and pays within 7 days.

Which is more profitable?

You can't answer until you calculate the cost to serve each client.

For your largest customers, consider:
• Direct labour or production costs
• Staff hours spent servicing them
• Discounts given
• Delivery and travel costs
• Rework and errors
• Additional administration
• Payment delays and collection effort

Then ask:
What is actually left after servicing this customer?
Try ranking your top 10 clients using four measures:
1. Revenue – What do they spend?
2. Gross profit – What remains after direct costs?
3. Time – How much of your team's capacity do they consume?
4. Payment behaviour – Do they pay reliably and on time?
You may discover that some smaller customers are significantly more valuable than your largest accounts.

This information can change how you price, allocate resources and choose which customers to pursue.
The goal isn't simply to acquire more clients.
It's to build a portfolio of profitable clients who fit your business.

📌 Save this post and rank your top 10 customers. The one generating the most revenue may not be the one generating the most value.

You can have record sales and still struggle to pay your own bills.Why? Because invoiced revenue isn't the same as colle...
21/08/2026

You can have record sales and still struggle to pay your own bills.

Why? Because invoiced revenue isn't the same as collected cash.

Imagine your business invoices R500,000 this month, but R150,000 remains unpaid.

You may have made the sales, completed the work and even paid the costs of delivering it—but R150,000 of your cash is still sitting with customers.

That affects your ability to pay salaries, suppliers, tax, invest in growth or build reserves.

So don't only track what customers owe. Track how long they take to pay.

Start with your debtor ageing report:
0–30 days: Current
31–60 days: Needs attention
61–90 days: Increasing risk
90+ days: Immediate action required

Then improve the process:
✅ Invoice immediately. Waiting 7 days to send an invoice effectively gives the customer 7 extra days of credit.

✅ Set clear payment terms. Put the due date on every invoice rather than assuming customers know when to pay.

✅ Send reminders before invoices become overdue. A reminder 3–5 days before the due date can prevent unnecessary delays.

✅ Follow up consistently. Assign responsibility for collections and review overdue accounts weekly.

✅ Use deposits or progress payments where appropriate. Don't automatically finance an entire project from your own cashflow.

One metric worth tracking is debtor days: how long, on average, customers take to pay you.

If you reduce collection time from 60 days to 40 days, you've released 20 days of cashflow without making a single additional sale.

That's why improving collections can sometimes be more valuable than increasing revenue.

📌 Save this post and open your debtor ageing report. How much of your money is currently sitting in the 60+ day column?

Most businesses don't lose profitability because of one enormous expense.Profit often disappears through dozens of small...
19/08/2026

Most businesses don't lose profitability because of one enormous expense.

Profit often disappears through dozens of smaller costs that gradually become "normal."

That's why every business owner should conduct an expense audit regularly.

Start with these five areas:

1. Subscriptions
Software, cloud storage, memberships and apps are easy to accumulate.
Pull three months of bank statements and list every recurring debit. Cancel what isn't being used or producing value.

2. Supplier costs
If you've used the same supplier for years, don't assume you're still getting the best terms.
Review pricing, payment terms, minimum orders and alternatives. Even a small saving on a major recurring cost can materially improve annual profit.

3. Overtime and staffing inefficiency
Don't simply ask whether payroll is too high.
Ask whether you're getting productive capacity from those hours.
Repeated overtime may point to poor scheduling, inefficient processes or understaffing in the wrong area.

4. Finance costs
Review interest, bank charges, merchant fees and vehicle or equipment finance.
These costs are easily ignored because they're spread across multiple transactions.

5. Discounts
A 10% discount doesn't necessarily mean 10% less profit.
If your margins are already tight, it can remove a much larger percentage of the profit from that sale.

Try this:
Export your last 90 days of expenses.

For every recurring cost, mark it:
KEEP – directly supports operations or profit.
REDUCE – necessary, but could be cheaper.
REMOVE – no longer creates enough value.

Don't cut costs blindly. Cut waste.

📌 Save this post and schedule a 30-minute expense audit. The easiest profit improvement may already be hiding in your bank statement.

How much does your business need to sell every month before it actually starts making money?If you don't know, you're se...
17/08/2026

How much does your business need to sell every month before it actually starts making money?

If you don't know, you're setting sales targets without knowing where the finish line is.

That's what your break-even point tells you.

Let's simplify it.

Imagine your fixed monthly costs are:
Salaries: R100,000
Rent: R25,000
Software/admin: R10,000
Insurance/other: R15,000
Total fixed costs = R150,000
Now assume your average gross profit margin is 40%.
Your approximate break-even revenue is:
R150,000 ÷ 40% = R375,000

That means the first R375,000 of monthly revenue is effectively covering the cost of operating the business.

Only after that point does additional revenue begin contributing towards operating profit, assuming the cost structure and margin remain consistent.

Why is this number so useful?

Because now you can make better decisions.
If your monthly target is R500,000, you know how much sits above break-even.

If you're considering hiring another employee at R30,000 per month, you can calculate how much additional gross profit—and therefore sales—you need to support that hire.

If sales fall 15%, you can immediately see whether you're approaching the danger zone.

Calculate yours:
1️⃣ Add your fixed monthly operating costs.
2️⃣ Calculate your average gross profit margin.
3️⃣ Divide fixed costs by the gross margin percentage.
Then compare your break-even point with your actual monthly revenue.

Don't just ask:
"Did we hit our sales target?"

Ask:
"How far above break-even did we operate?"

📌 Save this post and calculate your break-even number. It's one figure every business owner should know.

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