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Read on for our 7 Top Tips to help you take ‘good’ care of your Cashflow!
Cashflow, the lifeline of your Business, keeping it flowing is critical if you are to succeed, more importantly, survive during these inflationary times, with cost-of-living pressures and higher interest rates eating into profits and for some, viability.
If you are a small Business you may be already feeling this pain.
For example, a recent survey found cashflow problems are already affecting two in five small Businesses, with $23,000 owed in unpaid invoices. Additionally, they often relied on personal funds as backup.
Are you one of those Businesses?
On that note, Small Businesses are being alerted to the need to stay on top of their Business ‘cashflow’ activities, specifically, debt management, your own and that of your Debtors. Key message, to carefully manage what’s coming in and going out!
Its been said many times, running a Business, managing finances is challenging but don’t leave it to chance, or wishful thinking.
Read our 7 Top Tips to help you take 'good' care of your Cashflow:
- Avoid overdue payments
Slow and late payments pose the greatest risk to small Business. In a tight economy, as we are now experiencing, keeping on top of invoicing and receivables is the difference in debt levels, what you are owed.
Tip: It’s essential to have a streamlined collection model in place, ideally one that prompts and collects payments rather than chasing them as overdue.
For example, electronic systems can monitor receipts and overdue accounts allowing you to better manage and avoid late payments. These invoicing and billing systems can also generate accounts at point of sale and offer various payment methods, including upfront deposits or advances. Remember you are running a Business that supports you financially.
An example, where you must outlay for goods, invoice clients prior to making an order rather than tapping into your finances (example, interior decorating).
- Pricing margins
It’s vital to monitor pricing/ profit, margins particularly in the current inflationary cycle. It’s critical to have true-cost pricing, you can’t keep absorbing increases, letting your profit margins be eaten away. Be diligent in keeping watch on this cycle.
Tip: Regularly check the cost of goods and products and determine realistic profit margins by setting prices not too low or too high. Pricing points are needed to keep you competitive and in the red. Offer value for money and your customers will keep coming back!
- Taxpayers are encouraged to have all their ‘paperwork’ before lodging their returns. This helps avoid delays with missing information, for example, where there are multiple sources of income.
- reminder that the income tax cuts, which started on 1 July 2024, don't apply to the 2023-24 tax return
- the importance of keeping accurate records and having records to substantiate any claims
- that there is updated web content for the Small business energy incentive including eligibility requirements and how to claim
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for an employer with a mixture of both closely held payees and arms-length employees, the due date for end-of-year STP finalisation for closely held payees is 30 September each year. All other employees are due 14 July each year.
If you have 20 or more employees the final date to finalise is 14 July
- that super guarantee contributions need to be paid in full, to the right fund, by 28 July
- June 2024 income tax installments are due on 28 July
There’s more and the ATO website provides regular updates.
Tax matters can be complex and understanding what’s within the tax laws can be confusing. If that’s you, you are not alone.
If you need help, contact Blackburn Accounting. We are here ready to make Tax Time less stressful and minimise your tax contributions within the ‘rules’.
In these challenging economic times, it’s tough going for many, small Businesses and households alike are experiencing it. Budgets are stretched to the limit!
If you are a small Business operator it’s very likely you are facing increased pressure to maintain profitability and sales and attract product growth. Not an easy task!
The key is what to do to survive these difficult times.
And there are those, you may be one of them, Businesses that are making it work.
It’s been said before, ‘successful people find a way through tough times’!
But more importantly the question is, 'how do they do it'!
Google ‘successful businesspeople’ and the word ‘entrepreneur’ appears, and with that certain characteristics and traits to describe them. Many enjoy huge success, and they are to be applauded for what they have achieved.
If you are a small Business operator you will probably recognise yourself with the same traits and qualities. You too are to be applauded. You may be one of the everyday small Business owners enjoying the success of running a healthy Business that supports you, a family and Team.
Traits of successful Business people include
- Effective Communication skills:- open, active listening, seek and take feedback
- Adaptability & flexibility: in thinking and actions, embrace change and challenges as opportunity
- Initiates ideas and action orientated to achieve outcomes
- Positive mindset: optimistic, self-confidence & motivation – belief in self, others and take action
- Strong leadership – leads by example, rolls up sleeves, make the hard decisions
Finding a Way through! Here are 8 Ways to consider
Planning for the future, your future!
Leaving your Business may or may not be in your thoughts right now but at some stage you will decide to leave your Business.
Being prepared for that occasion will make it easier. Whether it is to sell, retire or do something else, having a succession or exit plan in place will help you transition smoothly out of your Business. And who wouldn’t like that!
Succession planning makes sound business sense as it can be the answer or solution to an unexpected event, such as illness or death, helping take the stress and worry out of a difficult time. Early planning can also help to maximise the value of your Business.
For example, there was a large export manufacturing business and the Managing Director, David, was killed from an unexpected motor vehicle accident one morning. The director had no will and no succession plan. The role of Managing Director was allocated to his wife, his next of kin. The wife had never worked in the business and had no relationship with the staff or with customers. The business virtually collapsed without active management. Don't you fall into this situation.
Your Succession Plan must detail the key requirements and any associated legalities.
For example:
- Keeping the Business in the Family
- Buy-sell agreement
- Other options
Keeping the Business in the Family
Lessons in life and Business come from personal, learned experiences, peppered with successes, failures and everything in between.
And we know leaders come in all shapes and sizes and leadership has many styles. Amongst those are the ‘self-taught’ leader.
These are the self-starters, self-motivated that often morph or merge into leadership positions, often beginning on the job, at the coal-front of Business or as small Business owners. Many don’t start at the top but go about their tasks with commitment forging a pathway that fosters development and growth.
Characteristics, traits and habits include:
- self-directed
- self-belief
- interested and open to learning
- flexible
- resilient
A desire to go further, gain skills and knowledge, improve and succeed drives their endeavours, sometimes in small steps but still with purpose and an end goal.
If you are a small Business owner, ‘self-made’, you might recognise yourself.
And speak with ‘self-taught’ ‘successful’ leaders and many will share the following 7 ‘takeaways’.