Business Development

Complimentary Webinar: Thursday May 20 at 2pm AEST

It's the time of the year that every business owner dreads - tax time. But don't panic, there is still plenty of time to get your tax strategy in place and make the end of financial year a little less stressful.

Complimentary Webinar: Wednesday May 5 at 2pm AEST

The long awaited Henry Review was released on Sunday, May 2.

How can ASIC records affect anything to do with tax? What’s ASIC got to do with tax?

Last week, I set down my procedures for collecting money. I started with setting up the account correctly, sending an invoice promptly, sending three statements and then using the telephone to collect money.

Some of you may say, "Well, this process is too long. I can't wait 75 days to ring about an overdue account." I can understand that type of thinking but patience in collecting money is worth it in the long run.

The ANZ Bank has released a new online business planning tool that uses data from merchant EFTPOS transactions to identify sector or local sales patterns, market share, turnover to provide insights into customer behaviour in local and regional areas. The aggregated information can be used to analyse changes in sales and market share and understand local industry business trends.

The first step in collecting your money is in the preparation of the invoice. Some invoices have detailed terms on conditions of the sale on the back. Generally, this is unnecessary but it will do no harm. Consult your solicitor for advice on this subject. Your invoice should contain the following:

• Who are you invoicing: Is it a company, an individual, a partnership, a government department, a charity, a club or some other entity?
• Include your contact details.
• Record customer information. E.g. address, ABN number.
• A description of what was bought. Include more than just the product codes.
• How do you want to be paid? The more options you have, the easier it is for your customer to pay you.
• State your trading terms clearly. The most common trading term is 30 days. This means the payment is due on the last day of the month following date of invoice.
• Format your invoices to make them easy to post. Normally, the company's name and address is printed for a window envelope.

Understanding the cash flow cycle – and budgeting for all your costs – is critical for the health and growth of the business.

One of the most crucial challenges for small business survival is cash flow, says Nick Reade, ANZ General Manager for Small Business. “Cash flow issues can make or break any business, big or small. Understanding the cycle – how money flows in and out of your business – is the most important skill for small business operators. Without cash you can’t operate a successful business,” he said.

Having positive cash flow in retail during challenging economic times is critical if you want to stay in business. It is even more important if you want to grow your business because it heightens the risk of sliding into a negative cash flow.

If you are experiencing cash flow tightness, then it would be hindering your ability to grow and expand your business as well as maintain your business. Yet in reality cash flow problems are one of the easiest areas to improve as you are only dealing with six areas of your business that need to be improved. These are pricing, accounts receivable, accounts payable, inventory (stock), COGS (Cost of Goods Sold) and general expenses.

So far in formulating a credit policy we have looked at the following:

• Developing a policy to increase sales, not reduce them
• Determining who are your low risk, medium risk and high risk customers
• Setting up the account for these three groups of customers and stating who receives automatic credit, who needs to be checked, who needs to pay a deposit and who needs a formal contract prepared by a competent solicitor
• When and to whom you need to withdraw credit and threaten to do so

WHAT’S THE WORST THAT COULD HAPPEN?

Controlling and managing risk can be one of the great unknowns in business. Each year, many businesses get burned because they didn’t plan and anticipate the risks and put a business continuity plan in place. A recent Symantec survey found that 30 per cent of Australian and New Zealand* busineses don’t have a formal disaster prepardeness plan.