Tasks to make your accounting easier

Tasks You Can Do To Make Your Accounting Easier

One of the biggest time suckers for a small business is trying to maintain your finances. That is why hiring an accountant to manage them for you is a smart move. You give yourself extra time and energy to focus on the important aspects of growing your business.

However, if you don’t utilise or support your accountant, you are not doing yourself or your business any favours.

With any outsourcing you choose to do, you want to ensure that your money is well spent and the service adds value to your business. Because accountants need to charge for their time, it is in your best interest to make sure you have all your ducks in a row. That way, they can get straight to the grunt work without having to chase you for more information.

Here are some key tasks you should be doing to help your accountant do their job effectively and efficiently.

 

Tasks To Make Your Accounting Easier

Organise Your Receipts

In this age of advanced apps and software, there is no excuse for keeping a shoebox piled full of receipts under your desk. Grab an app or use the capabilities of accounting software like Xero to save all your electronic receipts and organise them into categories.

Photograph hard copy receipts and add them to the folder, or assign them to your entries in Xero. You will save your accountant the hassle of endless hours of sorting and cut down on the billable hours you have to pay.

Meet Deadlines

A good accountant will give you plenty of warning in advance of tax time. They will tell you what they need from you to file your tax returns. Help them out by getting them what they need, when they need it. They have many clients and can’t receive everybody’s info back at the last minute. Plus, a late tax return can incur fines and fees which you don’t want to deal with!

Bill Efficiently

Talk to your accountant about the best-invoicing cycle to stay in the black and make sure you chase clients who are late to pay. Your finances can get out of whack if you have already paid for stock and employee wages, but then have to wait another month for the invoices to be paid by clients.

If you struggle to find time for this, consider an automated invoicing system that will remind you of any outstanding invoices and send reminders to clients on your behalf. Most online accounting programs have this function built in.

Communicate

Always keep your accountant up to date on any changes to your personal or business circumstances. They can anticipate problems or challenges that you weren’t aware of and assist you in coming up with solutions.

It is far better to be proactive than reactive. Also, discuss with them if you are intending to make any big financial moves in your business like buying a new significant asset or borrowing funds. Your accountant will be able to advise on the best way to handle it and if it is a smart financial move to make.

Manage Your Books Regularly

Set aside time every day to reconcile your Xero accounts, update your spreadsheets and records, produce your invoices and pay any bills that are due. Delaying these tasks for days or even weeks can lead to gaps or inconsistencies that will cause problems for your accountant and potentially your cash flow. Getting into the habit of dealing with this daily means there is less of a chance you will forget something important down the line.

Using cloud-based accounting software makes this part easy. You can create rules to reconcile transactions so that it would be a 5-minute job to get everything up to date. Plus, your accountant can log in any time to get an accurate snapshot of your finances.

Help Your Accountant To Help You!

If you have a scheduled catch up with your accountant, take the time beforehand to write down a list of questions or outline any plans you have for your business. Send this list to them ahead of the meeting, so they have time to get any information or documents ready for you.

Your accountant has a wealth of knowledge in many areas of business. That means they can provide you with sound advice on how to scale or grow your business. More than just numbers, they cover all the important parts of business.

If you would love to work with an Accountant that loves to work with you, then get in touch with us here at Accountants Plus. We make a point of getting to know your business so that we can always work in your best interests. Get in touch today.

Review your Goals

Why You Should Review Your Financial Goals

The end of the year is fast approaching, and you know what that means – holidays, Christmas trees and parties, right? Yes, while these things are all on the horizon, it also means the end of the financial year is only a hop, skip and a jump after that!

So, it is time to hit the pause button on all those holiday preparations and put aside some time to review the financial goals that you set for your business at the beginning of the year.

Reviewing your goals is a chance for you to get a snapshot of how your business has performed, allows you to figure out if you are on track, and adjust accordingly. You still have two quarters left to rev up and get those goals met. It also helps you to plan how to do things differently next year.

Let’s look into the review process a little further.

Review Your Financial Goals

Remember those goals that you set way back at the start of the year? The ones you were really enthusiastic about?

As part of your business plan, you should be setting goals, whether they relate to business growth, profits, expansion or other aspects of your business. This you know. But then you have to actually put those goals into action to make them happen.

Hopefully, you didn’t file those goals away and forget about them!

Take a look at the expectations you had for your business and check your progress.

If you met your goals, high five yourself! But then take a more in-depth look into the goals that you set. If you have reached them already, then you might have set a goal that was too easy, now is your opportunity to raise the bar for next year.

If you are miles away from completing your goals, try to figure out why. Were they unreasonable? Did you miss an important aspect of your planning? Is there a way that you can step it up now, to still achieve what you wanted to? Then, ask yourself how you can handle things differently next year to set yourself up for success.

Review Your Profits and Spending

Part of your review process should include looking at your numbers. Spend some time examining your income to see if it was what you expected. Brainstorm some ideas on how you can maintain your momentum, or increase it as we head into the last half of the financial year.

Once you have looked at your income, it is time to look at the outgoings. Try to examine them with an unbiased attitude. Did you spend your money wisely? Are there purchases or investments you regret making? Or, are there subscriptions, courses, or services you have signed up for but aren’t using?

These kinds of reviews clearly help you see where you need to build discipline, and what kind of worthwhile spending you might like to continue with. Be ruthless with your examination and remove anything from your business that you don’t need. If there is less spending happening, then you have more in the pot for investing in your business and paying yourself!

Get To Work

Although it may be tempting to spend the warmer months cruising towards the end of the year, don’t give up yet! You don’t need to write the year off, vowing to improve things next time around with a new set of goals.

Instead, focus on switching your attitude and trying to complete any goals that you didn’t quite get to yet. There is something incredibly satisfying about reaching those targets. After all, you set them for a reason in the first place.

Review Timeline

Instead of waiting for halfway through the financial year, or one week before its end, it can be helpful to review your goals on a more regular basis. That way if you are falling behind on your progress, it is easier to get caught up and on track before it is too late.

It is important to remember; whether you are reviewing your financial goals monthly, quarterly or annually, there is always something to learn from the process. Don’t be too hard on yourself if you haven’t managed to achieve everything you hoped. Use those shortfalls as a lesson, study them closely and come up with ways to do things better.

Financial reviews are an essential part of your business growth, and the perfect opportunity to refresh and empower your business. If you need some help with reviewing your financial goals, then get in touch with us here at Accountants Plus. We are not just accountants; we have plenty of business expertise that will help you to take your business to the place you want it to be.

Happy Accountant on Your Team

Why A Good Accountant Is On Your Team

Why A Good Accountant Is On Your Team

Accountants have a bit of a bad reputation. We aren’t sure why; we are actually a pretty cool bunch here at Accountants Plus! But unfortunately, it seems to be a reputation that comes with the territory.

Accountants really are an essential resource for your small business. That is not just us tooting our own horns. A good accountant can help you keep your business on track, position you for good growth and an even better return!

If you aren’t a money or finance person, it can be a mission to get your head around things like payroll, taxes, and financial reporting. Having a professional and qualified accountant to take care of these important parts of your business can really make all the difference.

We want to change the opinion people have about accountants and prove that we really are an integral part of your team. So let’s dispel some myths and look at how we can help you…

Common Misconceptions About Accountants

They Just Want To Make Money Off Me! Not true! The thought of a big accounting bill is of course intimidating. But before you sign on with someone, do some research into their fee and billing structure. Some accountants even offer a package where you are billed monthly and can spread the cost across the year.

They’re boring! Just because you find finances boring does not mean that we ourselves are boring! In fact, we pride ourselves on our friendly, helpful and personable service.

Bookkeeping Is Simple. I Don’t Need Any Help! Bookkeeping and accounting are very different things. It is not just a matter of tracking ingoing and outgoing money. You might do your own bookkeeping, and that’s great! But an accountant does far more. They take that day to day information and turn it into a regular financial statement report. That contains important data about your profitability and assets. They are also available on hand to help with any accounts, tax or payroll advice. While only 14% of small businesses outsource bookkeeping, 71% outsource the more complex tasks such as tax preparation.

They Only Do Taxes: While taxes and GST are some of the main roles an Accountant performs, they actually do far more than that. Their extensive knowledge in a wide range of areas means they can give practical and valuable advice. They can identify areas of weakness in your business and help you turn them into a strength.

Ways A Good Accountant Can Help Your Business

Help With Your Startup: There are a lot of crucial things to consider when starting up a business and if you haven’t done it before, you might miss something. Accountants can help with pretty much everything, including determining your business structure, creating business plans, designing processes to comply with industry regulations, even giving advice on which bookkeeping software to use.

Save You Time And Money: Your time should be spent on what you do best – delivering your products and services. Having someone else crunch the numbers and take care of financial obligations gives you back the time you need to do your job. Getting it right the first time can also help you avoid fines and penalties if you submit things late or incorrectly.

Help Grow Your Business. Over time, your accountant will come to know your business inside and out. They can be an excellent source of objective advice for important business decisions. When the time comes to grow and expand, an accountant who knows your business well is a vital resource.

Are you ready to have a good accountant in your corner? Then we are ready to be on your team! Give us a call today to see how we can help you and your business with more than just your taxes!

Things to check before buying a business

10 Things To Check Before Buying A Business

Buying a business that is already established can be an exciting opportunity… if it is the right business. You can get the benefit of a solid reputation, steady cash flow, loyal customers, proven processes and a reputable brand. But if you aren’t careful, you can end up with a bunch of negatives you weren’t expecting.

When you consider buying a business, it is essential to do your research to ensure you actually want what the seller is offering. It might seem great at first glance, but there could be some skeletons lurking in the closet upon closer inspection.

To prevent any nasty surprises, these are the things we recommend you investigate…

10 Things To Check When Buying A Business

Instead of jumping in blindly with both feet, there are five important questions that you need to ask before you even consider purchasing a particular business.

They are…

1: Why Is The Business For Sale?

This is the first and most important thing to look into. Is the owner selling the business for a legitimate reason, or are they trying to desert a sinking ship? There are many reasons that people decide to sell, just make sure a significant decline in the business is not the reason.

2: What Is The Business’ Reputation Like?

Does the business have a good name? If so, then it is likely to have the loyal customers and steady cash flow that you are after. If it does not have a good reputation, then you need to ask yourself why that is and can it be easily recovered?

3: Is The Business Profitable?

A business needs to make a profit, no matter how much you love what you do. Not just scraping by or covering costs, but a genuine profit that makes it worth your while to invest your blood, sweat and tears. If the business is not currently profitable, is there a way that you can easily turn it around? If not, it is better to walk away now.

4: Are The Conditions Right For Success?

Does the business fill a gap in the market, have local or national importance, or serve a very specific need? Any company needs to have the potential for success. So, the location needs to be right, the products or services need to be on point, and there has to be a need for it in the market.

5: What Is The Outlook For The Future?

Does the business have potential to grow and develop? If not, are the current conditions sustainable and will they satisfy your interest levels and your income needs? If the future looks uncertain or grim, then maybe consider a different business instead.

What Next?

If the answers to those five questions don’t make you run away in fear, then it is time to dig deeper into what’s on offer in the sale. These are the things you should check before proceeding further:

1: Financial Statements & Sales Records

Have an accountant look over the financial statements for the business. Here at Accountants Plus, we are experts in reading the story of how the business has been operating and if it is a profitable investment for you. We can also help you analyse the sales records to see which products or services are the most popular and profitable. This information, plus investigating peaks and troughs throughout the year, will allow us to give you an accurate cash flow forecast.

2: Inventory and Asset Lists

Understand exactly what your money is buying you. Getting saddled with thousands of obsolete stock items is not something you want. You will want to know what assets you are receiving and how old they are. Ensure you have the right assets to keep the business running, but be mindful of ageing assets. They could mean a significant cash outlay to update them in the not too distant future.

3: Legal Documents

Request copies of any legal documents like lease agreements, insurance policies, employment contracts, license agreements, and any other legally binding documents. Have a clear picture of existing obligations and how long they remain in place for.

4: Location and Demographic

Is the business well placed for foot traffic and walk-in sales? Has the surrounding suburb undergone any changes that could negatively impact on the business? Also, consider your potential for digitising, or going online if that has not been done already.

5: Existing Staff

It can be both a curse and a blessing to take on existing staff. They will allow the business to tick over seamlessly while you find your feet but can be resistant to change. Find out about the personalities involved and consider how that will impact your ability to take over the business.

There are a lot of things to consider when buying a business. One of the most important things is to follow your gut instinct. Deep down if you feel like it isn’t the right fit for you, then walk away now. If your instincts say yes, then get in touch with us here at Accountants Plus. We can help you to discover if that business you are eyeing up will be a sound financial investment.

The Financial Implications Of Business Expansion

It is exciting when your business begins to grow as surely that means you are successful. But where to from here? If you are planning to expand your business then there are some considerations to take into account, both practical and financial. Business expansion is something that you need to plan for and ensure that your brand is ready to handle it. Let’s look at how you can do that.

Why Expand?

Your business can grow in one of two ways. You can do it organically by simply building on your current offerings, selling more products, or approaching new clients. The other way is rapidly by investing money in a big move. Regardless of how you choose to do it, expansion means making a conscious decision.

So why are you making that decision? Is it to get a better market share, to increase your profits, to service a new kind of customer, or some other reason. Business expansion can achieve any of those things and also give your business more financial viability – larger businesses are usually viewed as more credible than their smaller counterparts by banks and investors.

Not only do you gain credibility, but you also gain security. With a wider offering you have more options. That means if one aspect or product is not performing as well as expected, then you have others to fall back on. You could also have a better exit strategy by having a larger, more stable business that is attractive to buyers.

So, how do you go about expanding?

Decide What Business Expansion Means For You

There are plenty of ways that your business can expand. You can simply do more of what you are doing now – increase your production, employ more consultants, or open a new location. You might choose to invest in another complementary business, create a new product line, move to the online space, or open a bricks and mortar store.

All of these ideas are great if your business is ready for it. But with any investment there is a risk. You need to ensure that you make the right investment at the right time.

Make A Plan

Any kind of growth exposes your business to a certain level of risk. That is why it is important to have a plan in place for how you are going to expand, the steps you are going to take and what time frame you are going to complete everything within.

Before you begin your plan for expansion, you need to have a clear picture of where your business sits currently. Know your numbers inside and out so that you are aware of how much money you have to work with. Once you know your position, you can start to form a plan for how you will move from your current state, to the future state you want to achieve.

The best way to do this is to set yourself some goals and targets. Break those larger goals into smaller chunks. Ensure those chunks have a very specific action that will add to your overall progress. They also need to be measurable and time bound so that you can track your progress.

Financial Forecasting

One of the biggest aspects of your plan should be financial forecasting. Really dig into what sort of profit this business expansion is going to produce and what costs are going to be involved. It is highly likely that your costs are going to be higher, so you need to make sure that you will be able to cover them.

Consider what your daily and monthly cash flow will look like and if you have a buffer in case of emergency. Examine what higher staff numbers would do to your cash flow and if you would need more revenue to cover these costs. Don’t forget to factor in any large purchases or expenditure while expanding.

The bottom line is that your business needs to remain profitable the whole time. We would highly recommend getting in touch with your accountant to check that your figures are realistic and that you have covered everything that you should. If you need assistance with analysing your numbers then here at Accountants Plus, we are experts in business expansion. We can give plenty of advice on the best way forward for your brand and make sure your business stays profitable throughout the process. Get in touch to book a free advisory call now.

Cover Your Bases

Larger businesses have more components, so tend to be more complicated than smaller businesses. Watch out for these common pitfalls…

  • Cashflow – Unless you have a planned fund for your expansion, you may need to borrow money to finance your plans. Be cautious that you can keep up with your expenditure and loan repayments.
  • Quality Control – Increased production can sometimes lead to a drop in quality. Keep your customers happy by being strict with your quality control.
  • Loss of Control – When your business grows, you will probably need to embrace the art of delegation. It can be hard to let go and ensure all tasks are still completed to a high standard.
  • Increased Resources – Larger businesses need more equipment, more staff and more resources. There will be an element of management and budget needed to control them.
  • Too Fast – Expansion can put pressure on your team, your resources and your finances. Going too fast can mean that your progress will not be sustainable.

Expanding your business can be exciting, but it also needs a lot of careful consideration. Make sure you do your homework before diving into a business expansion.

Ice cream in winter Accountants Plus

Surviving The Quiet Periods Of A Seasonal Business

It’s great to be in business for yourself, right? You can set your own hours, take holidays whenever you like, and work with an unprecedented level of freedom and flexibility that is second to none. Of course, it’s not always sunshine and roses; with pros, come cons. A potential downside to working for yourself can be cash flow issues during those loooooong quiet periods. If your business tends to boom seasonally, don’t stress! There are ways you can ensure you have money for the whole year. All it takes is a bit of planning.

Here are some tips to ensure you keep you head above the water, and your bank balance above the red line, during quiet periods.

Set A Budget

The FIRST thing you should do is to create a budget and a cash flow forecast. When you know your numbers, you know where you stand. To create a budget, record all of your incomings and outgoings so you can see at any given time what is leftover. Also, put together a forecast document, which details the guaranteed income you know is coming in, as well as adding a section for your predicted income.

You will then be able to see if the earnings you make (or predict to make, based on your research and history) during your high season will cover you for the quieter periods of the year. If your findings indicate that you will be quiet and low on cash, you can work towards filling the quiet period with other things.

Consider Your Staffing

If you cannot handle the workload during your high season then you will want to employ staff to help you out. But before you undertake this process, explore the employment options. Will you have enough work for this person to do all year round? Or is it better to employ someone on a fixed term contract, or even a casual contractor.

Don’t invest in a full-time wage if you don’t need full time help all year round. You may even consider outsourcing certain aspects of your business. During your busy period you want to maximise your earnings and focus on the work that brings in the revenue. So, you don’t necessarily want to be wasting time crunching numbers. Outsourcing certain business admin tasks to an accountant (like us) or a virtual assistant will free up your time so you have more hours to spend on your core business.

Get Prepared

If you know that your business booms at a certain time of the year, then be ready to hit the ground running when that time comes. Complete all of your busy work in your quiet periods to ensure you can efficiently handle the influx of work.

That means tidying your office, having your stock on hand organised and ready to sell, having your filing up to date, having robust systems in place, having your staff on deck (and fully trained), and having your marketing nailed. Don’t waste your time where you could be making money doing these things. Complete them well ahead of the rush period so you can capitalise on this profitable time.

Offer A Complementary Product or Service

You will always have your core business, but you may consider offering a complementary product or service during your off season. For example, if you run a business that sells ice-cream in summertime, you might decide to serve hot chocolate and coffee in winter. It may still be considered a quiet period, but you will have some money coming in.

Do Your Marketing Early

Set your marketing campaigns to run just before your busy period. Then your target market will be informed of your product or service and be ready to buy. You won’t have any downtime, as they will be on your doorstep ready to go when the season starts.

We also suggest remaining in touch with your customers during your quiet time. Just because they aren’t buying from you now does not mean they won’t do so again when your high season kicks off. Use the down time to maintain a good relationship with them and to keep your business fresh in their minds.

Offer Off-Peak Bonuses

Give your customers an incentive to buy from you during the quiet times. Offer discount coupons, or a free gift with purchase that can only be used during your offseason. You could also offer early bird discounts for those that want to pre-book. Just be mindful that the deals you offer don’t cut into your profits too much. There is a fine line between quality and quantity.

Collaborate

Not all businesses are your competitors; some can be your allies. Teaming up with another complementary business can be good for both of you. Just make sure that their busy period does not conflict with yours. Try and align yourself with a brand that is busy when you are quiet, and quiet when you are busy. That way you can boost each other up.

It can be as easy as offering vouchers or referrals to each other during quiet periods or stocking some of each other’s products and taking a commission. You could also offer consulting services to other businesses in your industry to help them up skill.

Just because your business is booming one minute and is quiet the next does not mean you should be out of pocket. As you can see, there are lots of ways to combat the slumps of a seasonal business. If you need help putting together a plan for getting through those quiet periods, then don’t hesitate to get in touch with us here at Accountants Plus. We have plenty of expert knowledge around finance and budgeting, and can provide informed business advice to get you on your way to a more balanced and profitable year.

Business Goals for a New Year

Setting Financial Business Goals For A New Year

Another year is coming to a close, and a new one is about to start. Yep, you guessed it. Time to set some goals. But what does that mean? When you set goals, do you ever track your progress? Or do you simply rely on blind luck to help you succeed?

If you are going to the trouble of setting a financial business goal, you want to do it properly. Let’s face it; there is no point setting a goal if there is no hope of achieving it, or if it won’t benefit your business in the long run. So let’s explore how you can set the right kind of business goal that will push your financial growth forward.

What Is a Financial Business Goal?

It is essential to understand what this kind of goal is before you try and set it. A financial business goal is more than just a sales target. It is a goal that you set with your business purpose in mind and should ultimately progress your business down the path to financial success.

Because finances are a big part of making or breaking your business, you need to consider them when goal setting. But they should not be your only focus. Here is what we advise you to consider…

Money, Money, Money

It is nice to have money flowing into your bank account. It allows your business to keep operating in the way that you want it to and it pays the bills. But it should not be all about the money.

If you only think about financial gain, then your business purpose will fall by the wayside. You will lose the things that make your business special and those personal touches that draw your clients in. Don’t let the cash blind you and transform your business into something it isn’t.

It can be exciting to see your business grow, but not if you need to sell your soul to get there. All financial goals should be made with your purpose and vision in mind to prevent you from growing faster than you can handle, and also to prevent you from tarnishing your brand. It can be really hard to pull your business back from a negative space that is only concerned with profit.

Set goals that drive growth, but remain true to the reason you started your business and support the clients you serve. Then the money will follow.

Map Out Actionable Goals

Saying that this year you want your business to double the previous year’s revenue is a great goal to have. But how are you going to achieve it? Just because you want it to happen doesn’t mean that it will.

You need to set smaller goals that will help you achieve your larger goals. Have some substance behind the plan to double your revenue, and it becomes an achievable goal. Forecast your numbers and work out what you need to do to get there. Do you need to focus on your biggest profit makers, attract more leads, convert more clients, or review your rates?

Once you understand what you need to do, assess your resources. Do you need more staff members, more stock to sell, or better systems and processes?

When you have a plan for how you will double your revenue, then it is time to break that down into manageable monthly tasks. You will then need to track your progress as time goes. Keep yourself accountable and don’t let your monthly tasks slip.

People always have the best intentions when they first set a goal. But when things get hard, or they are overwhelmed, the goals tend to slide. Focus and constant progress are the key to turning those goals into reality.

Choose The Right Business Goals

Setting financial business goals is definitely important. But they should be set alongside other goals that support your finances and your business as a whole. Consider:

  • Branding: Your business will need visibility and the right image to land your ideal clients.
  • Customer Service: Great customer service encourages trust and repeat business from your clients. It also gives an opportunity for your happy clients to leave positive reviews and pass on referrals.
  • Your Team: Your business will not be able to grow to new levels without the support of your team. Allowing your team to develop with training, support and growth opportunities will show them you value their contributions and encourage their loyalty.

Your business goals should provide you with the opportunity for growth year after year. You don’t need to conquer Everest immediately. Keeping your annual goals realistic and manageable will allow steady growth and success. If you manage this growth correctly, then you will see the financial benefits.

Business Cash Flow

Business Cash Flow Tips For When Your Money Seems To Disappear

Does your business bank account feel like a bit of a black hole? Money seems to go in there, but it never ends up in your pocket. It just seems to disappear without warning. If you had one of those years, it is time to have a bit of a look at your finances and business cash flow. Turn that black hole into a well-oiled profit-generating machine.

I know, sometimes that is easier said than done. So, let’s have a look at how you can review your finances and see where the money is leaking out.

Where Did My Money Go?

Often you choose to start a business because you love what you do. But it is a bit of a shock when you discover that running a business is more than being able to make money from your passion. There is a lot to understand when it comes to business cash flow and finances. It can seem like your money just disappears, but we promise you that it is going somewhere.

These are the key things to keep an eye on…

Stay On Top of Things

With finances, it is essential to stay on top of what is happening on a day to day basis. If you bury your head in the sand and leave things for too long, then you don’t have a clear picture of what is happening in your business. How will you know what money you have to spend if you don’t know what your commitments are?

Keep Accurate Records

You can do this by hiring a bookkeeper, tasking it to your accountant, or by using a great online software. Record your daily transactions so that you can keep a handle on your income and your expenses.

Keep The Business Cash Flow Rolling In

Cashflow is really important in small business, and the best way to keep on top of your cash flow is to send your invoices out on a regular basis. Don’t wait to send them all out at the end of the month. Invoice your work as soon as you can. If you are time poor, then get assistance from a bookkeeper, virtual assistant or team member.

Chase Your Debts

It is one thing to send out your invoices, but you also need to ensure that the money comes in for them. Don’t let the debt age too much; otherwise, your business cash flow will suffer. Try to stay on top of your outstanding invoices.

Sometimes a business will genuinely have forgotten about or misplaced your invoice, so a simple reminder can get the money in the door. In other cases, you might need to take more drastic action and request the assistance of a debt collector.

Know Your Costs

It is really important to know where your money is going. Keep track of all your costs and review them regularly. Are there areas that you can save money, do things more efficiently, or cut costs?

Forecast

Do you have any big expenses coming up? Forecasting for them will ensure that there aren’t any scary surprises. Try to set money aside for these expenses so that you don’t have to magic up hundreds or thousands of dollars when the time comes!

Call In The Experts

If you don’t have a good understanding of the ins and outs of your finances then you should really call on the help of an expert. Speak with your accountant as they will be able to do an in depth analysis of your profit and loss, and your financial statements.

They will be able to notice any holes in your processes, address any negative trends, and generally examine what is working and what isn’t. Your accountant can also help keep you on track with your tax and GST obligations, ensuring you only pay what you need to and don’t receive any penalties.

Now You Are In The Know

Once you have a clear picture of your finances, you will know exactly where your money is going and what you have left to spend. It will become apparent that there isn’t a naughty little elf stealing your money! Once you know what is happening to it, you can make a budget and a plan to use your funds wisely. That way you can ensure your costs are covered, and there is enough leftover to pay yourself!

Please don’t hesitate to get in touch with us here at Accountants Plus if you need some help understanding your business cash flow, or if those funds really do seem like they are disappearing without reason. We have a range of services available to help you manage your finances effectively.

Five bad money habits

The 5 Money Habits That Are Financially Derailing Your Small Business

As accountants, we want to see our clients succeed with their businesses. Liquidating hopes and dreams is not fun for anyone involved! Although there is a lot WE can do to help get you on the right track, there are some critical money mistakes that are often made in business that YOU want to try and avoid to ensure upwards growth and business success.

Listed below are our top five ‘no-no’s when it comes to money habits in small businesses.

Not Saving Money

Aye caramba! Not saving money is probably the worst mistake you can make in business. You need both operating capital and a separate savings account/ accounts for things such as: putting aside money for taxes throughout the year and having funds at the ready for when a great investment opportunity pops up. When you don’t have a dedicated savings plan in your business, you run the risk of digging too far into your operational accounts and being caught short when it comes to paying bills, staff, and even yourself! It can be one of the quickest ways to run your business into the ground.

Low Returns on Large Investments

Another common mistake and a bit of an all-round money-wasting black hole is continually spending money on things that don’t make (as much) money in return. This is especially important in small businesses that are not yet established. Bigger companies have the funds to take risks like running a new, edgy marketing campaign. It could be a huge flop and a waste of $200k, but hey – they have the capital behind them to shake it off and move forward. While we understand the importance of taking a leap of faith in business, it needs to be calculated. Start small, record your stats and build up a clear picture of what is working and what isn’t. From there you can develop a business plan to accommodate. Return on investment tracking is easy, not to mention incredibly smart, business. Yes, Facebook advertising might be all the rage, but are you getting more back than you put in? You might be surprised when you discover what your best business generators actually are. Once you find out, you can put a little more money and effort into that area and reap the rewards as your business kicks up a notch.

In a similar vein – try not to get caught in the ‘instant money’ trap. This is where you take a quick sale with no potential for repeat business in the future, rather than taking the time to build a sales pipeline that will help give you ongoing business. This will look different for every business type (services and products), but the concept is the same. Too much instant gratification could leave you with no future income.

Getting Too Creative With Your Bill Payments

‘To be paid by the 20th of the following month’ catches a lot of businesses out. It is important to establish robust payment schedules to ensure you are on top of your business debt. Knowing exactly how much you owe and have owed to you can get mighty confusing! You always want to know how much you actually have in your accounts after everything has been paid and accounted for each month. Make it a point to pay in the current month, so you don’t catch yourself out.

As an added bonus – Did you know that if another company decides to check your credit rating, your credit rating goes down! The whole thing works on a risk matrix system, so if you haven’t been paying your bills on time and someone decides to check up on you, the algorithm sees that as a little mark against your name. Yikes!

Money Tunnel Vision

An example of money tunnel vision in business might be: You have always wanted to make a business that sells homemade baby clothes. One day your dream is realised, and you open the doors to ‘Baby Made’. Things are going along quite steadily; you have a loyal customer base, and sales have been going so well, you’ve been able to turn the business into your full-time job! Talking to customers, you’ve started to notice that people are enquiring a lot about buying toddler sizes. Ha. Funny. You don’t currently stock/ make them because you are ‘Baby Made’, a store that is focused on baby clothes…. WAIT A SECOND. It is so important to diversify in business! Listen to your customers – is there a trend appearing? If they like you, they buy from you, and they are suggesting something else they want to buy from you – you pretty much can’t go wrong! If you don’t listen, guess what? They are going to go someplace else that can cater to their needs and you could lose them altogether!

Did you know that it is reported that millionaires have at least seven income streams! SEVEN! It sounds crazy, but it is very smart business. It is always good to have other options to fall back on, and/ or to help build up another area you are working on. You could achieve this by diversifying something you already offer, like the example above, or by having another income stream in an entirely different arena (stocks, bonds, private music tuition, yoga instruction – the list goes on).

Not Recording ALL Your Expenses And Transactions

Those $4 coffees, and business related parking costs you forget to record, really add up! Over an entire year, you could be missing out on hundreds, even thousands, of dollars. We want to know all your expenses so we can get the best out of your finances through tax deductions. The best way to track your expenses is with an EFTPOS/ credit card linked to your business account. If you happen to use cash, or a non-business card, remember to add it to your expense tracking and keep the receipt so we can process that transaction for you. Also, talk to us! We can help you work out all sorts of things that you might not be recording in your business, that you are eligible to be claiming tax back on.

If you have been cringing while you read through some of these, don’t worry. We are done with our scary list of small business money no-nos for now! Take some comfort in knowing that we all make one or two of these mistakes when we are finding our feet in business. Hopefully, something you have read here might help you with your small/ medium sized business money habits moving forward.

Remember, we are financial growth and good money habit experts, and we are here to assist you with advice and support if you need us!

Calling all Employers

The adult minimum wage will rise from 1 April 2015: it will go from $14.25 an hour to $14.75 an hour.

Don’t forget there are some savings as well though…ACC levies will decrease by an average of 5%.

Have you budgeted these factors in for the new year?