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Maximising your accounts receivable

Freeing up working capital can help businesses fund growth, reduce debt levels and lower costs. One way to improve working capital is by managing your accounts receivable.

Many businesses fall into the trap of poor accounts receivable management, for various reasons from extending credit to customers, to ignoring payments terms to guarantee a new sale. These behaviours and behaviours like these can quickly cause disastrous effects on your cash flow.

There are a number of strategies you can practice to improve your accounts receivable process, including:

Customer credit approval policies

One great strategy is to create a clear customer credit approval policy before entering into any business deals with a customer. By assigning credit limits, payment terms, discounts and return policies to specific customers, you are protecting yourself from getting caught out. Introduce a system to determine a new customer’s creditworthiness, such as background and credit history checks.

Criteria for approving or rejecting requests for credit

Reviewing your credit approval process is an essential component of business, as a customer’s financial situation may cause a change to warranting a reviewal of their credit terms.

Sound invoicing procedure

One of the necessary strategies to maximise accounts receivable is to establish a solid invoicing and billing procedure, as generating timely invoices is a major aspect of collecting account receivables on time. Do your research and create a strategy that works best logistically for your business; perhaps it includes a staff member taking on this role, or perhaps you will look for automated options. Sending electronic invoices is ideal as it fast tracks the process due to reduced delivery time.

Efficient collection process

Developing a collection process for all staff to follow will increase efficiency, ultimately resulting in improved management of accounts receivable. You can do this by training all staff on the necessary process for collecting money owed, and train them in how to deal with difficult or non-compliant customers. They should be aware of how to apply discounts, how to negotiate payment plans, and how these aspects should be sufficiently documented.

Posted on 16 February '18 by , under money. No Comments.

Understanding various kinds of super fees

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

  • Administration fees: fees covering the costs of operating and managing your super fund account.
  • Exit fees: fees incurred for leaving or switching super funds. While this is a common fee, not all funds charge it.
  • Investment fees: fees incurred due to the cost of managing where your money is invested. These fees can fluctuate, depending on where your money is invested.
  • Activity-based fees: fees incurred for any activity you require your super fund to perform outside of the ordinary management of your account, such as a family law split fee.

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.

Posted on 16 February '18 by , under super. No Comments.

Minimising the risk of fraud

The Australian Taxation Office is urging all businesses and individuals to take care in relation to avoiding the risk of fraud.

With a focus on criminals lodging fraudulent returns in order to obtain unwarranted refunds through accessing banking information that is not their own, the ATO recommends businesses and individuals practice the following:

Discussions with staff and clients

Keep your employees and your clients about safe behaviours to protect them from being vulnerable to criminals, such as not clicking on downloads, hyperlinks or opening attachments in unsolicited emails.

Protection on devices

Ensuring the devices you use for confidential information such as transferring funds and purchasing goods and services are all up to date with protective software, such as malware detectors and firewalls. Also, ensure autofill forms are not saved or used.

Proof of identity

Before taking on new clients, ensure they provide numerous pieces of proof of identity. You should also question discrepancies before lodging their tax returns.

Internal security

Ensure all employees have access to only what they need in order to perform their role within the company. When employees cease employment, cancel their AUSkeys.

Posted on 16 February '18 by , under tax. No Comments.

How to avoid failing

In any business environment, there are constant challenges that can see you fail or can be tools for success. Channelling these challenges and turning them into strengths is necessary.

Consider the following failures business owners commonly make and reflect on how these apply to your business:

Multitasking

For a lengthy period, the ability to multitask has been seen as a sort after skill. With the growth of technology and its emergence into every aspect of our lives, research is now suggesting that the ability to single task is becoming more and more important. The ability to focus in on one project at a time, without being distracted by things such as emails, phones or social media is extremely valuable. Being present and not being distracted means you are more likely to perform any one task better.

Values

Most businesses start out small and with strong core values. However, as the business grows, many owners become too focused on profit and growth, rather than remaining true to these values. This attitude will see you lose your core, loyal customers, who have been with your from the start. You may not care, as you are bringing in lots of new customers at great numbers, but if your customers are not loyal to the business, you will lose them just as quickly as you gained them with the fast-paced consumer environment that has been developed over the past couple of decades.

Money management

Poor management of money will see any business plummet. Most businesses will experience periods of negative cash flow, particularly seasonal businesses. It is not the issue of negative cash flow that will see a business fail, but rather the inability to prepare for these lulls.

Hiring

The team you hire should be seen as an extension of yourself. They should share your vision for the business and should be passionate about supporting the business grow. Hiring people with the best skills and a great attitude is the first step, but keeping them long term involves nurturing their professional growth and continued respect for the value they bring to the business.

Posted on 6 February '18 by , under business. No Comments.

Understanding the First Home Super Saver Scheme

With much controversial discussion surrounding the First Home Super Saver Scheme, understanding exactly what the Scheme entails is necessary.

The scheme was announced in the 2017-18 Federal Budget as a means to reduce the pressure surrounding housing affordability across Australia.

The formalities of the scheme are as follows:

As of 1 July 2017, individuals can make voluntary contributions, both concessional and non-concessional, into their super fund. As of 1 July 2018, individuals can release these contributions, as well as their associated earnings, and use this money to help purchase their first home. Individuals eligible for this scheme are able to use up to $15,000 per financial year, with a total maximum of $30,000 for all years you have earned super.

To be eligible for the First Home Super Saver Scheme, individuals must meet the following criteria:

  • Must be at least 18 years of age.
  • Must not have previously owned property in Australia, or have previously released First Home Super Saver funds.
  • Must have the intend to live in the property you use the funds to purchase as soon as practicable, for at least the first 6 of the 12 months of owning the property.

Posted on 6 February '18 by , under super. No Comments.

ATO cracking down on developers avoiding GST

This year, the Australian Taxation Office has placed a greater focus on property developers and are particularly watching company directors with a history of GST obligations avoidance.

As of May 2017, the Government announced new requirements on those purchasing newly constructed residential properties or new subdivisions to remit the GST directly to the ATO as part of the settlement process. The ATO has placed a strong emphasis on making sure this occurs legitimately, ensuring property developers do not get away with failing to meet their GST obligations.

These proposed requirements were addressed in consultation in November 2017 and are to be implemented as of 1 July 2018. The impending changes will mean that developers no longer have a three-month period to remit GST; hence they no longer have time to be dishonest and avoid GST evasion through phoenixing.

For contracts already entered into, there will be a two-year transitional period, allowing developers involved in these contracts a grace period to adjust to the extensive reforms. Contracts entered into prior to 1 July 2018 will not be affected by these reforms, provided they are settled prior to 1 July 2020.

Posted on 6 February '18 by , under tax. No Comments.

Setting clear marketing goals

Setting clear and direct marketing goals is an ideal strategy for promoting your business and business growth.

There are a number of different goals you can set to ensure you are optimising your marketing opportunities; consider the following:

SWOT analysis
Before setting any goals, it is important to understand the purpose behind your marketing strategy; that is why you are doing what you are doing and what you wish to achieve by doing so. A great way to do this is to conduct a SWOT analysis, which will allow you to identify the strengths and weaknesses of your business, as well as the various opportunities and threats.

SMART goals
Setting SMART goals is one of the most powerful marketing tools you can employ for your business. They allow you to set, track and measure how successful you and your team have been at achieving what it is you wish to. SMART goals need to be specific, measurable, achievable, relevant and timely.

Research
Research is a necessary aspect of any marketing strategy. By being thorough and informed before establishing SMART goals or beginning on a specific marketing campaign, you can eliminate any foreseeable challenges along the way. Types of research you should conduct may include:
– What your competitors are doing
– Your business’s past marketing goals and how successful they were
– Your customer base
– Your product and product performance
– Different platforms and which would be the best for you to use
– How you will measure success

Review
As if the case for any goal you set professionally, you should be reviewing how well you and your team are going at implementing the marketing goal or strategy. Developing tools to assess your success is a great method to track or review whether the strategy is as strong as it ought to be. Ways to do this may include:
– Holding team meetings
– Surveys from clients or customers
– Using a tool such as Google Analytics

Posted on 2 February '18 by , under business. No Comments.

Maximising your SMSF returns

Many Australians opt for a self-managed super fund but fail to understand how to truly make it perform optimally.

If you have an SMSF and are serious about maximising your returns, consider the following:

Risk

Without taking risks, you won’t be able to experience great profit. However, there you still need to be cautious of where you invest your money. After taxes, at the moment, property and real estate are not the best of investments, but this hasn’t always been the case. Many individuals with a SMSF are interested in cryptocurrencies. At the end of 2017, they were performing extremely well, however at the beginning of 2018; there was a significant drop in the worth of this currency.

Do your research

Knowing what kind of risk-taking will work for you will come down to you doing your research and investigating what options are best. Subscribing to mailing lists where investment trends are discussed, as well as keeping up to date with technical and compliance news relating to SMSF are great strategies for maximising SMSF returns.

Speak to a professional

If in doubt, it’s always best to speak to a professional. They can assist you in making the right decision regarding your SMSF and give you personalised advice. A financial advisor can also assist you in managing your fund, organising and strengthening your portfolio and advise on technical issues.

It’s never too early

No one in their retirement reflects on their life and wishes they had of started worrying about their nest egg later in life rather than earlier. Paying attention to your super and retirement options from a young age is important if you want to be comfortable in your retirement phase.

Posted on 2 February '18 by , under super. No Comments.

ATO reforms on deductible gift recipients

The Government has announced a reform of the Deductible Gift Recipient (DGR) status to strengthen governance arrangements, reduce administrative complexity and ensure trust and confidence in the sector.

The reforms are as follows:

  • From 1 July 2019, non-government DGR’s must be registered as a charity with the Australian Charities and Non-for-profits Commission. Non-government DGR’s that are not already registered will automatically be registered as of 1 July 2019 and will have a 12 month transitional period to assist with compliance.
  • The four DGR registers currently administered by other government departments will be integrated into the ACNC’s charity register, and duplicative reporting requirements will be abolished. DGR endorsement assessments for the registers will be undertaken by the ATO. Eligibility for the register of cultural organisations will be extended to include organisations that promote Indigenous languages.
  • External Conduct Standards will be enforced by ACNC to strengthen the oversight of overseas activities.
  • There will be additional funding to support additional reviews of charity and DGR eligibility based on risk.

Posted on 2 February '18 by , under tax. No Comments.

Cash flow tips to improve your business

Poor cash flow is one of the biggest reasons why small businesses fail.

A healthy cash flow allows you to operate your business free of hassle; allowing you to pay your staff and bills on time. Having enough working capital to meet your business’ needs can help you stay out of debt and in business.

Consider these three tips to improve your business’ cash flow:

Create a forecast
Predict your sales and outgoing expenses for the year. You may do this by looking at last year’s sales figures and adjust accordingly. When estimating inflow, account for GST rebates, tax refunds, additional equity added to the business via owners, government grants, loans paid back, etc. Calculating outflows means you need to factor in administrative and operative costs. Also, consider expenses such as buying new assets, ‘one off’ fees, loan repayments and so on.

Reduce overheads
Consider leasing major assets instead of purchasing them to avoid tying up money in assets that will depreciate over time. Look for ways to cut back on spending such as lowering electricity bills and seeking better deals on insurance and internet costs. You may choose to negotiate payment terms with your suppliers, for example, extending your time frame to pay quarterly.

Control your invoicing
Issue invoices on time and be prepared to follow up on them if you are taking cash flow seriously. Send the invoice separate from other documents and make sure it is sent to the right person. For speedy payments, make it easy for customers/clients to pay you by providing multiple payment options. Automate reminders in your accounting software to notify overdue customers.

Posted on 24 January '18 by , under money. No Comments.