Accounting Myths That Could Be Burying Your Business
Gerrit Weideman • August 25, 2025
Running a business is more than chasing profits. While many entrepreneurs keep a close eye on expenses and bank balances, false ideas about Accounting creep in and distort the bigger picture. These myths sound like common sense, but they can quietly damage growth, cash flow, and decision-making.
Depreciation Is More Than a Paper Loss
It’s tempting to dismiss depreciation as a non-cash expense, but it reflects the real decline in value of your assets. Ignoring it can leave you overestimating margins and making risky choices, like cutting prices or expanding before you’re ready.
Profit Doesn’t Equal Cash
On paper, your business might look profitable, yet cash in the bank tells another story. Late payments, slow-moving stock, and loan repayments can drain liquidity. Without careful cash flow management, a “profitable” business can collapse.
Bank Balance Doesn’t Mean Stability
A full account today doesn’t guarantee smooth sailing tomorrow. Taxes, supplier invoices, and payroll may already be waiting to drain that number. A cash flow forecast provides the forward view your bank app can’t.
Tax Planning Isn’t Just for Year-End
Leaving tax considerations to the end of the year limits your options. Smart Accounting treats tax as an ongoing process, shaped by everyday decisions from salaries to asset purchases.
Accountants Offer Strategy, Not Just Compliance
Accountants aren’t just there to file returns. They help you uncover hidden costs, monitor sustainable margins, and understand break-even points-insights that are vital for growth.
Growth Needs Management, Not Just Sales
Bigger orders and faster turnover can choke cash flow if expenses, staff, and stock spiral. The key question isn’t just “Can we grow?” but “Can we grow profitably?”
Accounting is not about ticking boxes. It’s about clarity. By busting these myths and working with an accountant throughout the year, you gain sharper numbers, smarter insights, and the confidence to grow sustainably.
07 October – Monthly Pay-As-You-Earn (PAYE) submissions and payments 20 October – End of Filing Season 2025 for Individual taxpayers 24 October – Value-Added Tax (VAT) manual submissions and payments 30 October – Excise Duty payments 31 October – VAT electronic submissions and payments and CIT Provisional Tax payments.
“Accounting is the language of business.” (Warren Buffett) Increasingly, banks and other organisations are requiring businesses to submit up-to-date management accounts when applying for finance. This is because these compact financial reports enable business analysis even when the latest annual financial statements are not yet available. Management accounts also offer owners and managers timely, accurate and actionable financial insights that facilitate performance evaluation, smart management decisions and informed planning – all of which can transform how your business operates and grows. What are management accounts? Management accounts are a set of summarised financial reports. They’re similar to annual financial statements but they aren’t as formal, and they’re produced much more frequently – usually monthly or quarterly. They’re all about providing relevant financial data for informed business decision-making. As such, there’s no fixed format. Instead, management accounts should summarise and combine the financial reports you need to make smarter decisions. These financial reports might include some or all of the following.
“Taking bold action on climate change simply makes good business sense. It's also the right thing to do for people and the planet.” (Richard Branson) Climate change impacts the fundamentals of business operations. Rising heat affects productivity, floods and storms damage infrastructure, droughts disrupt supply chains, and new regulations increase compliance costs. Many leaders still believe their sector will be spared, but no industry is truly insulated. Just as one-third of startups fail because they never properly defined their target market, businesses that fail to assess climate risks may find their models undermined by forces beyond their control. The message is clear: failing to future-proof your business, will result in extremely hard times ahead. Start with the risks you’re facing The first step is to identify which climate risks could most directly affect your operations. These can be physical (think floods, wildfires, and extreme temperatures), or transitional, such as regulatory changes and shifts in customer expectations. According to the latest prediction models, South Africans can expect a hotter, more erratic climate with the country warming at about twice the global average. This means more very hot days that will hurt worker productivity and equipment reliability. On top of this, the country is also experiencing heavier downpours with increased flood damage. These damaging floods, such as those seen KwaZulu-Natal in April 2022 and the Western Cape in September 2023, will result in enormous insurance and economic losses and prolonged business disruption. Despite the flooding, the country is also not in the clear when it comes to water stress. The 2015–2018 Cape Town “Day Zero” drought was devastating for car wash businesses but a boon for borehole drillers. Day Zero may have been avoided, but there will be more droughts in the future. All of these issues can lead to stock and agriculture failures, infrastructure collapse and process interruptions. A lack of water, for example, creates cleaning and hygiene issues as well as lower staff productivity. Insurers in SA have been reporting increasing weather losses and rising catastrophe claims, which will continue to feed through to higher premiums and excesses and tougher underwriting in high-risk zones. You can only build a realistic plan once you understand exactly where your exposures lie. Build a climate profile for your business Once you understand the risk categories, create a profile detailing how they intersect with your company. You need to consider your location, your sector, your suppliers and your employees. A warehouse on a floodplain carries different risks from a retail store in a heat-stressed city. Manufacturing firms may depend on inputs that are vulnerable to drought or fire, and employees may struggle in adverse weather conditions. Many exposures sit within the supply chain, where a small disruption upstream can ripple through global markets. For example, higher than usual temperatures may result in crops failing, or greater costs for HVAC and cold logistics services. Have you factored in these costs being passed on to your business? This profile should be updated regularly, as conditions, regulations, and technologies evolve and more is learnt about the severity of future weather patterns. Segment your strategy Not every part of your business will need the same response. While operations may require investments in resilient infrastructure or more efficient energy use, supply chains might need diversification or tighter contracts with suppliers to ensure continuity. Products and services may need to change as customers shift their preferences toward sustainable options. Segmenting your approach enables you to focus on the areas that matter most. Use data to drive decisions Climate planning is most effective when it’s based on evidence rather than assumptions. It is vital that any planning you do is based on the data from climate models, insurance assessments, and financial analyses. Tracking information like rising temperatures, energy costs, and new compliance regulations will turn climate risk from an abstract concern into a measurable factor in your strategy. In South Africa, municipal climate plans are being adjusted to redraw floodplain rules and heat-safety requirements. Is your business going to even be compliant when they come in? Talk to your stakeholders Your customers, employees, suppliers, and investors are able to offer different perspectives that could keep you ahead of any climate disasters. Customers can tell you what matters most in their purchasing decisions, employees may note practical changes to streamline daily operations and suppliers can share concerns that could highlight problems you had not foreseen. Talking to all of your stakeholders is more important than it’s ever been. Climate planning is an ongoing process Preparing for climate change is not something you can set and forget. It requires regular review and adjustment as risks, regulations, and technologies change. Businesses that take structured action now don’t just reduce their exposure – they’ll also become more attractive to capital investment and build long-term resilience. Climate change is already reshaping the way companies operate. The question is no longer whether it will affect your business but whether you are ready to respond. Speak to us if you need help allocating budget for climate resilience strategies.
