How to Prepare for BBBEE Verification
Don’t Underestimate Your BBBEE Verification Preparations
Preparing for a Broad-Based Black Economic Empowerment (BBBEE) verification can be a complex process, and if not done correctly, can result in a poor scorecard. The risk of not ensuring you prepare adequately for your verification could mean thousands of rands lost in initiatives that do not yield any favourable results.
To avoid wasting your time and money and make sure you get the maximum benefit available, let us briefly go over what BBBEE verification entails and what it takes to do it right.
What is a BBBEE verification?
BBBEE is a South African government policy aimed at addressing the economic inequalities of the past by encouraging the participation of black individuals in the economy.
A BBBEE verification measures your business’s compliance against the BBBEE scorecard, which evaluates factors such as ownership, management control, skills development, enterprise and supplier development, and socio-economic development.
The higher you score on the scorecard, the greater the potential benefits available to your business.
Why is BBBEE Verification Important?
Achieving a good BBBEE score is essential for businesses looking to secure contracts, especially with government entities and large corporations that prioritize suppliers with a strong BBBEE standing. A solid score can also open doors to new business opportunities and partnerships.
However, to achieve this, your business must go through a formal verification process, which can be daunting. Sadly, many businesses fail to carry out the necessary preparations correctly or on time, leading to failed verifications.
With the right kind of professional guidance, this process is much more navigable and will lead to a better outcome.
What can cause my BBBEE verification to fail?
BBBEE verifications fail due to a number of reasons, but some of the common pitfalls include:
Not tracking targets correctly, which results in inadequate points being acquired.
Inadequate document preparation, which can result in points being lost due to the right documentation/evidence not being available during a verification.
Submitting evidence or spend that falls outside of the relevant verification period.
Failing to meet the minimum requirements or targets under each of the elements.
How to Prepare for a BBBEE Verification
Preparing for a BBBEE verification involves a thorough review of your business’s current practices and documentation. With the right kind of professional guidance, this is much more doable than trying to achieve it on your own.
Here are some key steps that are required as part of verification preparations:
1. Assessing Your Current BBBEE Status
The first step is assess your current BBBEE score. If your business has undergone verification before and you would like to improve your BBBEE score, then it is important to review your previous scorecard to identify any areas for improvement.
If this is your first verification, then it is recommended that you ask a professional BBBEE consulting agency for help. These consultants are experts in the field and can efficiently conduct an initial assessment to help you understand where you would score if you were to apply.
They will then provide solutions to help you find ways to improve your projected score so that, when you do apply for verification, you will get the result you are aiming for.
It is also important to consult an expert to ensure you are being scored under the correct scorecard. Failure to do so could lead to disappointment, as certain industries have BBBEE targets that differ vastly from the generic scorecard.
2. Gather Necessary Documentation
The verification process is unfortunately rather admin-heavy. This means it is heavily reliant on supplying specific documentation and evidence. Failure to do so will most certainly result in a failed verification application.
Some of the critical documents/evidence you will need include:
Ownership structures and share certificates for black ownership or trusts.
Employment records to demonstrate management control and employment equity. You will also need ensure that employees and/or management is available for interviews. In many cases, the verification agent will conduct interviews with some employees to confirm their positions.
Training records to show investment in skills development. It is crucial to ensure that your training spend falls within your verification period. Any training spend that is paid outside of the relevant period will not be considered.
Supplier and procurement records to verify enterprise and supplier development contributions. This means that proof of your suppliers’ BBBEE certificates must also be obtained, and must be within your verification period.
Proof of donations or contributions to socio-economic development. This includes signed agreements that must be submitted along with thank you letters and proof of spend.
Having these documents organised and ready will ensure a smoother verification process.
3. Implement Internal Management Controls
It is essential to ensure that your internal controls align with the BBBEE requirements.
For example, tracking your procurement spend with black-owned businesses or maintaining accurate records for employee training programmes can greatly impact your score.
You could use a BEE Manager tool to help you keep track of these metrics. A BEE Manager tool can provide real-time updates and streamline your BBBEE compliance efforts by centralising all necessary information in one platform. It can also provide you with scenario planning and a detailed scorecard based on your chosen targets.
4. Conduct a Pre-Verification Audit
A pre-verification audit is crucial, as it will highlight any gaps in your compliance before the formal verification begins. This is a critical step in preparing for the actual verification.
To ensure nothing slips through the cracks, many businesses wisely choose to work with a BBEEE consultant for assistance in this process.
A consultant will be able to guide you through a mock audit, identifying areas where improvements are needed, such as underperforming elements on the scorecard. This proactive approach ensures that you have time to address any issues before the actual verification, and will ensure that you are fully prepared for the day of verification.
A pre-verification audit typically includes:
Gathering the necessary documentation/evidence for the verification.
Measuring the different elements, such as ownerships and management control, against the targets given by the relevant scorecard and your actual data.
Ensuring that all evidence gathered is within the correct measurement period.
Ensuring that the required evidence can be provided for all elements.
Preparing employees and management for possible interviews.
Ensuring your financial documents are audited for the measurement period.
The Role of BBBEE Consultants
Navigating the BBBEE verification process can be overwhelming, especially for businesses unfamiliar with the requirements. In many cases, the complexity and attention to detail is underestimated, resulting in a disappointing outcome.
As such, a professional BBBEE consultant is invaluable. These consultants have the necessary expertise to assist you in gathering the right documentation, identifying gaps in compliance, and ensuring that you fully understand the scorecard requirements.
By working with a consultant, you can reduce the stress of the verification process and increase the likelihood of achieving a favourable score. Removing the BBBEE verification burden from your shoulders allows you to direct your time and resources to other important things, such as managing day-to-day operations and growing your business.
Preparing for a BBBEE verification is a complex job that requires a strategic approach and a deep understanding of the scorecard and its requirements, something only an experienced professional can provide.
With an expert handling the legwork, you can rest assured that you will have a smooth verification process that not only helps you stay compliant but also positions your business for growth in an increasingly competitive market.
At Grok, we have helped plenty of businesses achieve their desired BBBEE score and gain access to better opportunities. Contact us now to speak to one our seasoned BBBEE consultants today and get through the verification process with ease.
