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The 5 Questions You Should Always Ask Before Making Any Investment

The recent banking and financial crises in Ghana have left many people in utter dismay. According to recent reports, more than GH¢8 billion of investor’s hard-earned money got locked up through bad financial investments. This has culminated in untold hardship among many Ghanaians and businesses.

Types of Investment Income: (Image Credit: WallStreetMojo)

Types of Investment Income: (Image Credit: WallStreetMojo)

They could have avoided all these terrible mistakes if investors have taken their time to do their homework. The greed of seeing their money doubled in a short time led them. Instead of patiently doing the homework, they rushed with their money and got hurt when the investment/financial institution crashed.

Does that mean you should never invest again? No. It means you should investigate before you invest. Here are the 5 questions you should always ask before making any investment.

  1. Is the Investment Seller Duly Licensed?

Who is selling the investment? Is it a bank, savings & loans, microfinance, mutual fund, or a finance house? Make sure shareholders have registered the investment firm with the Registrar General’s Department and granted an operating license by the Bank of Ghana (banking & financial institutions) or SEC (investment firms).

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Finance & Investment Firms Should Be Licensed by the Ghana Securities and Exchange Commission

If they are trading through brokerage firms, check if their brokers also have the due license to operate. Don’t fall for scams. Ensure you do the verification and background checks before proceeding to look at the investment itself.

  1. Is the Investment Product Duly Licensed?

This is a critical one of the key questions you should always ask before making any investment. Every investment product sold in the financial and money market has to pass through a process of verification by the Securities & Exchange Commission (SEC). Upon approval, SEC will license the investment product and it will become a security. A financial security means that the investment has a high amount of surety of keeping the principal invested.

Is the Investment Seller Duly Licensed?

Is the Investment Seller Duly Licensed?

Also, SEC provides details of the security/investment product to the financial market for the public to make well-informed decisions. It is the information gained in the licensing process that serves as a reference for investors to make their investment decisions.

  1. Do you Understand the Investment?

No matter how promising an investment looks, never invest if you don’t know how it works. How does the investment works? Do you understand how the financial institution will grant you a return on your investment? Have you read the investor disclosure and investment documents carefully?

Do you understand the investment? Questions You Should Ask Before Making Any Investment

Do you understand the investment?

It will surprise you that most people read nothing. They just invest in ignorance. Use the Bank of Ghana Treasury Bill as a standard for analyzing all other investment returns. Don’t get scammed in any investment. Remember, “If it is too good to be true, it is!”

  1. Who is your Investment Advisor?

Professional investors have an investment team. The team selects, analyzes and scrutinizes the investment carefully before any transaction takes place. You should also get an independent and external professional investment advisor before you decide. Licensed professional investment advisors/brokers are always present in the market, studying trends, reading SEC regulations and looking at the newest deals. It will be better to pay for professional guidance than ignorantly invest your way into huge financial losses.

Who is your Investment Advisor?

Who is your Investment Advisor?

  1. What is your Risk/Reward Ratio?

Every investment you make has a risk and reward potential. The more you read, understand and gain clarity about the investment seller and the product, the more you reduce your risk. Financial education helps to lower your investment risk and increase rewards. However, keep in mind that the higher the probability of huge returns, the higher the risk. That’s why you have to understand the investment before you take action.

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Why Not Pivot: How to Turn Your Failed Business Idea Into a Great Success

A lot of business ideas die and do not get executed because the entrepreneurs fail to pivot. Most of them end up killing the idea rather than pivoting.  Pivoting in this sense simply means, making changes to your idea based on feedback. It means to revive your old business ideas. By re-strategizing, you can turn your failed business idea into a great success. 

Most often than not, when entrepreneurs try to implement their ideas and it does not go according to planned, they kill that idea and move to another one.  The sad thing about the situation is, these ideas can be saved, reviewed and refined.

When an idea fails during implementation, it is not necessarily a bad thing- the failure just means you have data now to analyse which will help you determine how to make it work some other time around. It is therefore very important to do your market and product research and pivot based on the feedback you get from the research.

Review the idea, analyze and consider ways to turn your failed business idea into a great success!

For example, you have an idea to start a laundry shop in a particular neighbourhood but based on your market research you realize the people in that community are rather looking for a trusted business to clean their homes. It does not mean you have to discard the idea, you just have to take the feedback and possibly pivot your idea to cleaning homes rather than clothes.

Businesses usually pivot several times before getting it right. This implies pivoting is not a one-time event but a continuous activity that happens during the life time of the business. The next time you hit a dead end when implementing your idea, pivot rather than discard the idea.

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Sage ESS:This Will Make Your Employees Lives a Lot Easier

This week, we want to focus on how our clients are saving cost by using paperless processes to streamline their Claims, Overtime and Leave Management — using Employee Self Service (ESS) in Sage Payroll/HR software.  

  What exactly is ESS?

ESS is that module or functionality which streamlines your HR processes by giving your employees user-friendly tools to update their personal details, bank details, apply for leave, submit claims and overtime, do performance reviews and view payslips online. It eliminates manual personnel administrative work and enhances interaction between HR and personnel while giving you more time to focus on other equally important issues –moving your business forward.

Making leave-processing seamless

This online module integrates with our Sage Payroll and HR systems, thereby saving you  capturing time by allowing your employees to apply for leave online. Capturing, approving and maintaining your employees’ leave becomes a streamlined, paperless process. It also lets you customize approval workflows and escalations to effectively manage the leave process, this helps reduce your company’s financial liability which usually is a resultant of tedious manual leave management processes.


But just as it lets the right people in, it keeps the wrong people out

Sage Employee Self Service (ESS) enforces stringent, internationally-accepted standards of access control to authenticate users. Access is role and based allowing users to be given access to function they will perform.This means your data is always protected.

Let’s Delve into What Sage ESS actually offers 

With just a few clicks, you can enable or disable these handy features:

Leave processing 

Employees can view their leave balances as they appear on the payroll/hr database and apply for leave on the system.

Online personal and family information 

Your employees are able to view and update their personal information such as:

  • Names and contact numbers,
  • Banking details,
  • Emergency contact details,
  • Statutory information such as ID number, tax number, addresses.
  • Details of family members, next of kin, beneficiaries, etc.

Online Payslips 

Sage ESS saves a history of each employee’s payslips, an employee can view all of these whenever they want to on their respective portal. This helps prevent the situation where payslips emailed or hand delivered to the wrong recipient.

Expense claims processing 

ESS automates travel reimbursements or expense claims. Your employee simply completes a form on ESS, the request is authorized, and the transaction  automatically updates the payroll and reflected on their payslip. Your Payroll Administrator need not capture these transactions hence speeds up payroll processing and reduces entry errors.

Online overtime processing 

Your employees can capture overtime through the Sage ESS system. As soon as the request has been approved, the hours are automatically reflected on your payroll. You can customize overtime forms and allow employees to make file attachments where necessary.

Online performance reviews

Employees can complete 360° performance and competency reviews online. Scores and comments captured will automatically reflect on the HR system.

Remember, Sage ESS promises these benefits:

  • Interactive portal for Supervisors and Management to control employee master file updates such as changes to bank accounts
  • Management and Staff accessing their current and history payslips, on their respective portal, from the comfort of their offices and from any internet enabled device.
  • In addition to payslips, employees will be able to run their own payroll (leave, claims and overtime requests) anytime and anywhere
  • Payroll reports will be accessible anytime, anywhere to Managers aand supervisors provided they are authorized to have access

Let’s progress discussions on this topic:

0302 235 149/ 0302 247 736 | |

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Will Accountants Be Replaced by Computers?

Accounting and Auditing may in the next few years be disrupted by emerging innovations such as robot process automation (Bots) and mechanical robotics   (Daniela Rus, “The Robots are Coming,” Foreign Affairs, July/August 2015)

 The use of computers for business operations has come to stay. In fact, computers have already become ever-present in our world of business today, and in the near future mechanical robotics will as well be seen sitting in the chairs, in our offices.  

The debate about whether or not machines will replace accountants in the near future is the result of the sudden increase in demand for various business software solutions like Sage Evolution Premium and SAP Business One for business operations the world over.   


Accountants Blog img


Accounting Software experts argue that the profession stands on the cusp of technological development however conservative accountants disagree and argue that programs like VIP Premier Payroll & other sophisticated tax systems work quite well, but have no ability to make deep decisions especially when confronted with unstructured data.  

Valid arguments they are!  Maybe in the near future, we will see fewer accountants of one type and more of the other. ‘If history tells us anything, there were speculations of job losses when spreadsheets and computers were introduced into the accounting  process, but instead we saw significant growth of jobs in the accounting departments. It is certain that how we perform the work and the skillsets will change, but this will create new opportunities.

The future of accounting hinges on outputs and not inputs. Business owners will invest in any legitimate resources that can enhance the bottom-line results even if it’s just simple software.    


SAP Business One - All platforms



Over the past 10 years, a lot of businesses have shifted from manual accounting processes to automated operations. For instance, the advent of Sage one accounting, VIP Payroll and SAP Business One, is saving companies more money while doing more work. No need to hire more accountants. But as with any transition, there will be a distribution of adoption, so some people will scream saying that their jobs are at risk, but more likely is that they got blindsided and failed to invest new skills. 

“To be on the safer side means rising to the change and embracing the transition with a smile – invest in tech skills and stay open for the opportunities that come along with this evolution”     


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I believe that development in technology has only brought even greater opportunities to accountants.  Despite the smart business operations performed by a computer, a company will also need a brain which can devise strategies required to bolster its financial growth.

 The onus, therefore, lies on accountants to be agile, versatile and open to changes. They will need to fasten their belts and fly even higher.      

 Be open to tech knowledge in accounting. Enroll in our flagship programme:   Practical Accounting Training.  


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Don’t work too hard, work smart – SAP Business One

SAP Business One will put you into action
Don’t work too hard, work smart

SAP Post - lady tired


Our customers say it is less expensive but highly effective. SAP Business One is trusted by over 55, 000 companies in 150 countries. It is the best thing happening to businesses now – boosting the bottom-line performance of small and midsize enterprises, from accounting and purchasing to supply chain and CRM.  

SAP Business One - All platformsSAP Business One

is recommended for those who wish to position their small or midsize enterprise on the frontline of today’s competitive world of business. It is affordable, reliable, easy to implement and carefully designed to give you maximum satisfaction.
Your competitors are working hard but SAP Business One (SAP B1) makes you work smarter instead of working your energies out. It is streamlined to automate your business management processes. Inside SAP B1 architecture are features that allow you to:

1) Capture all your business information in a single, scalable system.
2) Give employees on-the-go access to the software via an intuitive mobile App.
3) Deploy on-premise or in the cloud in as little as two to eight weeks.
4) Provide best answers to your most pressing questions with an Integrated Business Intelligence (IBI).


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SAP Business One

was designed to give startups an opportunity to catch up faster with giants, by providing them with the means to gain greater insight into business, to make perfect business decisions.
Established in 1972, SAP is the world’s third largest independent software manufacturer with partners all over the world. Multisoft Solutions Limited a total business management software solutions provider remains one of the trusted partners in Ghana.


SAP & Multisoft Solutions


If you desire to be in total control of your business and manage your metrics for optimum outputs SAP Business One is here for your good.

Read more
Request a Free Demo from Multisoft Solutions Limited, a Silver Partner of SAP.


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Multisoft Solutions Partners with SAP

Our vision has been to be a one stop shop for Software developers and users of Business Management software solutions. We are a consortium of highly skilled professional accountants with vast array of experience in the software space. Our areas of specialization is drawn from our team of qualified accountants, payroll/tax consultants, database administrators and software developers. Anchored on our vision is our desire to leverage across all facets of our skills to deliver turn-key solutions to our clients.

Over the years, we have built formidable partnership with the best in the industry. We believe that working together and sharing expertise with our local and foreign counterparts puts us ahead of our competitors in terms of providing “rest-assured” solutions to our clients.

We have established ourselves as the best accounting and payroll software vendor and implementation partner in our sub-region and gained international recognition.


SAP is the acknowledged market leader in enterprise application software, they are revered for their robust solutions across industries and various localizations. The SAP solutions portfolio supports core business areas such as Finance and Products, as well as Customer and Supplier management.

Among the vast portfolio that SAP offers, Multisoft Solutions is focused on SAP Business One ®. The SAP Business One application offers an affordable solution that is capable of running the entire business, from accounting and financials, purchasing and inventory, sales and customer relationships and project management, to operations and human resources.

SAP Business One® offers…

A Complete and Customizable Solution  

SAP Business One is a single, integrated solution that provides clear visibility into your entire business and complete control over every aspect of your operations.

Every business is different, and we acknowledge that! SAP Business One is designed with flexibility in mind. Whether deployed on premise or in the cloud, you can access SAP Business One at anytime, anywhere via any mobile device.

What’s more? SAP Business One offers real time reports in dual currency. Which means your ledgers would be kept “sacrosanct” in their respective currencies. Say good-bye to conversion difference “wahala”.

Your employees can start using it from day one. As your business grows, you can customize and extend SAP Business One to meet your evolving needs.

A 3600 view of your business

SAP Business One provides powerful analytic and reporting tools. It includes a complimentary and fully integrated version of SAP Crystal Reports® for SAP Business One, so you can gather data from multiple sources and generate timely and accurate reports based on company-wide data. Integrated with Microsoft Office, SAP Crystal Reports lets you choose from a variety of report formats and control access to information displayed.

Industry-specific solutions for your expanding business

Take advantage of the extensive industry functionality, best practices and processes built into SAP Business One. As your business grows, you can extend SAP Business One to meet your specific  industry challenges using the Business One Studio ®, software development kit, or over 500 add-on solutions built by  partner developers.

Consumer Products & Inventory

Consumer Products & Inventory

Meet customer demand and develop new revenue streams with SAP Business One for industrial manufacturing industry. Shrink supply chain costs, accelerate cycle times, minimize scrap and re-work and ultimately speed time to profit.

Manufacturing & BOM


Professional Services

Deliver consistent, high-value services to your clients with SAP Business One for Professional services and consulting firms. Improve resource planning, project management, billing and more.


Give your customers the products, information and personalized shopping experience they want – across any channel with SAP Business One for retail. Harness real-time customer and POS insights, engage shoppers, and optimize everything from merchandising to your supply chain.

Wholesale distribution 

SAP Business One for wholesale distribution offers improvement in everything from demand planning to inventory and supply chain management, with flexibility.

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Succession Planning for Family Owned Businesses

Succession planning for family owned businesses seemed to be ignored! Has contemporary HR addressed the succession planning challenges facing family owned businesses??

Contrary to popular belief, there is ample evidence that family businesses perform better than non-family businesses. In fact, ongoing research has shown that family businesses don’t only outperform non-family run competitors but they are also better managed.

Regardless of its size, the family business shares a number of significant qualities that bring special benefits to the community and economy in which they operate. For example, they tend to be more labour intensive and less capital intensive which results in a higher capacity for job creation with less employment volatility.

Other benefit of the family structure are:

  • Innovation can be achieved at relatively lower costs because it uses  internal sources of capital andreinvestment of profits
  • Foster entrepreneurial instinct at the family level as they often act as incubators for new companies.
  • Family businesses also take a longer-term view of their strategy and are less concerned with short-term shareholder value, which holds them in good stead during tough economic times.

But despite all of these positive characteristics, why do Ghanaian family owned businesses follow the founder to the grave, are there any lessons to be learnt?

While the answer is not as easy as one would hope, succession planning for family businesses is a critical factor to the future success of them. The ultimate challenge to the founding family is its ability to ensure continuity of the business into the next generation, and at the same time retaining the collaborative harmonious family relationships.

Change, and in particular succession, is driven by the biological clock. In addition, factors such as leadership, management and departure or exit style of the founder, the size of the business, its structures and conflict management procedures all impact on the succession process.

Succession planning for family owned businesses is a journey that must be planned. It must address both the transfer of business ownership and management continuity. This is hardly the case in Ghana, we see the transfer of ownership without any conscious effort at ensuring the continuity of the business.

Some of the key characteristics of the family businesses structure that need to be modified to allow for a smooth and successful generational transition include:

  • The highly centralized decision-making system of family owned business must be replaced by a culture supported by formal policies and procedures; there must be an accepted way of doing things.
  • The entity must diversify its dependence on one or two key individuals for its survival and growth. In most cases, founders  stuff their kith and kin in the board so much that they dilute the board’s effectiveness , resulting in weak infrastructure that directly affects decision making
  • Succession planning must be embedded into the day to day running of the business and must not be relegated to the tail end.
  • Structural defects within the family (divorce, polygamy and unwarranted familial pressures)usually impact the operations of the second generation. It is the duty of the founder to address these defects before passing on the reins else it endanger the continuity of the business.
  • Our inheritance system makes it even more difficult for an entrepreneur to choose a heir to carry the business forward. Under the paternal system of inheritance, the business is handed over to the eldest child or the child of the eldest wife. Under the maternal system; it is the founder’s sister’s eldest child. These may not always be the best choices, as the individual may not have the ability, education or skills to successfully lead the business into its next stage.
  • A final dimension is the influence from Son-in-laws and daughter-in-laws, this group have a strong influence on the chosen successor but may not hold the same values and morals that have served the family well.

A famous saying about family owned business is that “Father, founder of the company, son rich, and grandson poor). The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and empty bank account.

The succession planning for family owned businesses is a process that should ideally be seriously underway by the time the business leader is in his or her late forties or early fifties, and the children in their mid to late twenties. As you get older, your influence will naturally wane.

Yes, it takes time and resources to complete this process but it could mean the difference between a thriving business that continues to bless you and future generation, or a sad statistical footnote. It’s important to remember that it is never too early to start the succession planning for family owned businesses.

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7 Financial Reports Every Business Owner Needs To Run A Successful Business

Running a successful business seems to be the goal of every business owner. However, it doesn’t come on the silver platter! Business financial reports are like X-rays that help business managers, entrepreneurs and investors to know the financial health of the business. Business owners who want to stay in control and make a difference must appreciate the purpose and value of financial reporting.

Research has shown that the most successful businesses are run based on numbers. The numbers in your business are the key indicators of your business health and the future of the business. Ability to run a business based on financial reports is great skill!

So what are the top 7 financial reports for a small business owner?

  1. Customer Transaction Report:

This is the first financial report that every business has to keep track of and know. The Customer Transaction Report is simply an overview of your customers, sales generated through each customer and outstanding debts to be paid. This report gives business managers a glimpse into the effectiveness of the account receivable, sales and marketing functionality of the business!

Items to pay attention to in the receivables cycle:

  • The longer an invoice goes unpaid the less likely it will ever be paid
  • 26% of invoices 3 months old are uncollectable
  • 70% of invoices 6 months old are uncollectable
  • 90% of invoices 12 months old are uncollectable
  • On average, businesses write off 4% of their Accounts Receivable!
  1. Supplier Transaction Report:

This is the report that provides snapshot of your suppliers. Every business—manufacturing, wholesale, retail or service based—need a kind of input to serve their customers. This report provides information about your suppliers, the outstanding debts due the company and the purchases made from each supplier. The report is most useful if its total matches the ending accounts payable balance in the general ledger.

The report can also be used to track the following:

  • How much you owe your suppliers.
  • How long you’ve owed your suppliers.
  • Which of your suppliers you owe the most money.
  • The credit limit your suppliers are giving you
  1. Inventory Valuation Report:

Accounting for your small-business inventory seems like a straightforward matter, but actually it is not. The method you choose can affect your taxes, the value of the total business, your ability to borrow money and your cash flow.

You must examine the implication of the valuation methodology prior to deciding on which way to go. Most small business software’s will allow the three common options; average cost, First in First out (FIFO) and Last In first Out (LIFO).  Always talk to your advisor prior to embarking on the journey.

The Inventory Valuation Report analyzes the list of your items or goods, its movement from the supplier’s business through your warehouse to your final customer. The value of the item as it travels the process is dependent on the adopted valuation methodology.

The report can be used for the following:

  • Identify goods present
  • Reason for shortages
  • Delivery problems
  • Identification of slow selling goods.
  1. Cash Flow Report:

I’m always amazed when I run across Chief Financial Officers who don’t believe a cash flow statement is the most important part of the financial package when it comes to small business management.  Small businesses run on cash and knowing where cash is and where it’s gone is among the most important things a small business owner must know.

Cash flow is simply the money coming into a business from sales and other receipts and going out of the businesses in the form of cash payments to suppliers, workers, etc. Cash receipts and cash payments in a trading period are not necessarily the same as the accounting revenues and cost applicable to that same period, reason being that customers need not pay cash for goods sold until sometime afterwards while the firm may not pay for materials and services used until afterwards.

The cash flow report provides an overview of the cash inflow and cash outflow in your business. The cash flow report entails the cash at hand, cash in bank and all credit card transactions.

Your cash flow report enables you to track the following:

  • Tells you if you’re running out of money while you’re profitable
  • Tells you if the owner is taking too much money out of the business.
  • You will see the results of building inventory, letting receivables grow or paying suppliers more quickly
  • How capital purchases take out money
  1. Tax ReportDefinition:

 A VAT return shows how much VAT is due on Sales (output VAT) and how much VAT can be reclaimed on Purchases (input VAT) dictating how much is paid or reclaimed from GRA for a given period.

Any company that has a turnover in excess of the threshold as specified in the Income Tax Act (2016: GHC200,000)  will need to contact GRA with the view to be VAT registered and complete a VAT return. Small business accounting software’s like SageOne have these returns built into the system. Just concentrate on the accuracy of the data capture (capture your sales and purchases) and the system will generate the returns for you.

  1. Bank Reconciliation Report:

A bank reconciliation is used to compare your cash records to those of your bank, to see if there are any differences between these two sets of records for your cash transactions. The ending balance of your version of the cash records is known as the book balance, while the bank’s version is called the bank balance. It is extremely common for there to be differences between the two balances, which you should track down and adjust in your own records.

If you were to ignore these differences, there would eventually be substantial variances between the amount of cash that you think you have and the amount the bank says you actually have in an account. The result could be an overdrawn bank account, bounced checks, and overdraft fees. In some cases, the bank may even elect to close down your bank account.

It is also useful to complete a monthly bank reconciliation to see if any customer’s cheques have bounced, or if any cheques you issued were altered or even stolen and cashed without your knowledge. Thus, fraud detection is a key reason for completing a bank reconciliation.

  1. Withholding Tax Report:

Withholding tax is the tax to be deducted from the ex VAT invoices of your supplier. The deduction ranges from 3% to 20% depending on the nature of the supply or the tax status of the supplier.

The tax is deductible from Suppliers who supply services to a company as independent contractors or consultants.

Image: Income Tax Login

The law requires a person effecting payment to another person to deduct the exact tax at source and pay it to the Commissioner no later than 15th of the following month. A withholding agent who fails to withhold tax is personally liable to pay to the Commissioner the amount of tax which has not been withheld.

With the help of Sage One Accounting, You will be able to get quick access to these financial reports and make wise and intelligent business decisions that will help your business grow.

Contact Multisoft Solutions to set up Sage One Accounting for your business.

Management Information Systems

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The Difference Between Cash Flow and Profit

Without controversy, the dream of every entrepreneur or CEO is to grow his or her business and make it profitable. However, not knowing the difference between cash flow and profit has rather caused many businesses to grow rapidly and then fail at the end.

Before you grow your business, you really have to understand the difference between cash flow and profit. Your cash flow statement is different from your profit & loss statement. Cash flow is the movement of cash in and out of the business as a result of operational, financial and investing activities. Profit, however, is the difference between your sales and expenses for a period.

Below are three ways a lack of knowledge by business owners on the difference between cash flow and profit can cause their rapidly growing business to fail?

First Way: Profitable Business but Bad Cash Flow

A business can be very profitable with growth possibilities but have a bad cash flow. A quote from stated, “The vision starts the business, profitability helps the business grow, and cash flow is the day-to-day driver.”

You are running a production company where you’ve paid your suppliers and borne the cost of manufacturing the goods. You went ahead to supply the products to your customers and probably made about 30% or 40% of profit. However, you wait for the cheque and it comes 45 days later!

What does that mean, your business is profitable? Yes, you made a decent profit, but there was bad cash flow. And bad cash flow can kill your business. That simply means you’ll have to wait for your customers to make payments before going ahead with the next production!

Another avenue your growing business can fail if you lack knowledge on the difference between cash low and profit is when you are expanding your business. This is really dangerous. Be careful when growing your business, if you don’t take care, business growth can lead to business failure!

Second Way: Expanding for Profitability but Being Cash Handicapped

Let’s take an example: Assuming Mr. Edward has a shoe production company. His company produces 1,000 shoes per month with net expenses of  GH¢12,000.00 and net sales of GH¢ 20,000 per month. This means he makes a net profit of GH¢ 8,000.00 per month.

Well, his business is growing. Now he wants to expand his business and double his profit. This requires that, he doubles his inventory, enlarge the office space, hire more employees and increase other production costs.  To implement this growth strategy, Mr. Edward must have the physical cash available to invest in the business expansion. From there he can make his target profit.

But this is often not the case, most businesses fail to develop a strategic plan and analyze their cash flow position before embarking on the expansion. Most entrepreneurs just invest in more inventories without properly planning other cash needs. So, before they realize, they are left with utterly no cash in hand to cover the day-to-day operational costs. If this is not handled well, the growth can lead to business bankruptcy.

Third Way: Making More Sales but More Cash Flowing Out

It is amazing how this happens. Many business managers and entrepreneurs fail to find the net cost and the net profit of each product. They don’t add up all the small costs to the product before coming out with the final price for the product.

So what happens? For example: A business makes sales of GH¢ 5,000.00 but realize that GH¢ 4,800.00 has gone out of the business leaving a gross profit of GH¢ 200.00 which may not be enough to cover other operational expenses that were ignored. They made a lot of money but more cash was going out!


All business owners must first of all know that there is a difference between cash flow and profit. You can be making profit but still have little cash available to run your business. To avoid this, develop a strategic plan at all times taking into account a realistic cash flow forecast, good working capital cycle management and decent profit margins for all your products.

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The No. 1 Problem Facing SMEs in Ghana and How to Deal With It

Small and medium sized enterprises (SMEs) have been the backbone of Ghana’s economic and social development for the past decades. They are the major driving force for business development, employment creation, production of goods and services and internal income generation in Ghana.

According to the Registrar General’s Department as noted by Graphic Online, 90% of registered businesses in Ghana are SMEs. An SME Research Report by Ghana Web indicated that SMEs contribute an estimated 70% of Ghana’s GDP and account for approximately 85% of employment in the Ghanaian manufacturing sector. It is therefore implicit that to maximize the developmental potential of Ghana, the companies classified as SMEs must be assisted to develop.

So, what is the No. 1 problem facing SMEs in Ghana today?

The No. 1 problem facing SMEs in Ghana today is access to credit.

In Aryeetey E.T’s study (recorded in Garriba Fuseini’s MPhil Economics Thesis) on 133 manufacturing firms in Ghana, he noted that “an overwhelming 60 percent complained of access to credit as the major constraint to expansion”. The study also confirmed the success rate in accessing credit as: 69.1% for medium sized enterprises, 45% for small enterprises and 33.7% for microenterprises.

Well, why do SMEs need credit?

The answer is simple: To get business projects off the ground, expand operations, invest in technology, employ more labour, increase productivity and improve competitiveness locally and internationally.

So what is the main factor keeping and preventing many SMEs from accessing credit? The lender’s inability to trust SME business management and their ability to pay back loans given to them! The banks, state and NGO financing institutions want to be sure SMEs can manage funds and pay back the loans with the required interest on time.

How then do we deal with the problem of access to credit?

The main way to deal with the problem of accessing credit is to get back to the basics—simply boost lender’s trusts and confidence in SMEs. Banks and Financial institutions are in the business of making good return on investment for their shareholders, so they will only provide financing to SMEs they deem creditworthy.

If you go to the bank for a loan, the first thing they will require of you is your business’s current financial statement. Your financial statement provides a picture of your business performance. The financial statement is a report card that informs lenders that you can pay the loan back on time with the interest.

But you know what?

Over 70% of SMEs in Ghana do not keep proper accounting recordsThey do not take accounting seriously but surprisingly take accessing credit seriously. To bridge this gap, finance houses have moved away from lending based on business performance to collateral based lending. To boost performance based credit worthiness, SME’s must give the lending insight into their business through proper accounting records and accurate financial statements.

To start the journey towards proper book keeping, SMEs must invest in training on business accounting and finance. The more SME business managers are grounded in basic accounting principles and analysis of financial statements, the more they can manage their businesses well, increase credit worthiness and get access to funding.

There is also a need for SMEs to invest in proper accounting software that can automate the accounting and cash management process. Accounting and payroll software help make the business information management process easy so that SME managers can focus on core activities such as  marketing, sales and operations—the integral part of every thriving business.

So to overcome the No. 1 problem facing SMEs in Ghana—access to credit—business managers and SME entrepreneurs must endeavor to keep proper accounting records, engage in training on accounting and financial analysis, invest in quality accounting software to manage the accounting cycle and then keep up to date with statutory reporting requirements of their business. Once the basics are well handled, the rest will take care of itself and accessing funds will be an easy process.

What do you think about the number problem facing SMEs? What was your experience accessing credit for business growth? Share your comments below? You can also contact Multisoft Solutions (email: or call: +233 030 2235149) to get tailored accounting services and software for your business requirements.