JobKeeper – Good news in the details

The good news is that the JobKeeper payment is also available to business owners that operate as Sole traders, Partnerships, Trusts and Companies. Those business owners may be entitled to the JobKeeper Payment scheme under the business participation entitlement. However, not-for-profit organisations are not included.

Your entity may be eligible for the JobKeeper Payment scheme if you:

  • have a non-employee individual who is actively engaged in the operation of the business and,
  • meet the eligibility requirements.

A limit applies of one $1,500 JobKeeper payment per fortnight for one eligible business participant. If your entity also has employees, you may also be able to claim additional JobKeeper payments of $1,500 per fortnight per eligible employee.

What happens after you enrol…

  • After you enrol, there will be other notification conditions which you will need to meet. More information will be available soon.
  • When you have worked out that your business is an eligible entity and your individual non-employee is an eligible business participant you need to enrol.
  • Your entity can enrol for the business participation entitlement from 20 April 2020 using an online form, which will be available on the ATO website.
  • Your entity needs to enrol by the end of April for payments in either the fortnights starting 30 March 2020 or 13 April 2020.
  • Additional information on notification and reporting requirements will be available soon.

See more details via this link to the ATO website, https://www.ato.gov.au/General/JobKeeper-Payment/Sole-traders-and-other-entities/.

Should you have any queries or need any assistance, please do not hesitate to contact us on 61 3 9349 3499 or at admin@adpartners.com.au.

 

JOBKEEPER – THE DETAILS

JOBKEEPER – WHAT YOU NEED TO KNOW!

Legislation to establish the framework for providing financial support to businesses and employees, through wage subsidies such as the JobKeeper Payments, has passed Parliament and received assent.

FAST FACTS:

JobKeeper payments are payable to qualifying employers for a maximum of 13 fortnights in respect of each eligible employee on their books on 1 March 2020 who is retained by the employer.

  • Qualifying employers will receive a payment of $1500 per fortnight for each eligible employee.
  • JobKeeper scheme commenced on 30 March 2020 and ends on 27 September 2020. (six month period).
  • The Bill also allows for a period up to the 31 December 2020. At the time of writing, the Legislative Instrument has not been released and may be different in its final form.
  • If an entity’s aggregated turnover for the income year is likely to exceed $1 billion or exceeds $1 billion for the previous income year, then a 50 per cent decline in turnover is required to be eligible for JobKeeper payments. For ACNC-registered charities, the threshold is 15 percent while it is 30 per cent for all other entities, including sole traders.

The business’s GST turnover, with some modifications, will be used to calculate the actual drop in turnover percentage. The turnover test period must be:

  • a calendar month that ends after 30 March 2020 and before 1 October 2020; or
  • a quarter that starts on 1 April 2020 or 1 July 2020; and
  • the relevant comparison period must be the period in 2019 that corresponds to the turnover test period.

The Tax Commissioner will have the discretion to determine that a business qualifies for the payments, even if for some reason the business is unable to satisfy the stipulated criteria of reduced turnover.

The ATO can consider additional factors put forward to demonstrate a business has been impacted such as where the business was not operating a year before, or if the previous year’s turnover was not representative of its usual turnover.

Alternative tests to satisfy the criteria in certain circumstances may also be provided by the Commissioner, for example, if a business has ceased or its operations have significantly reduced.

 As the applications will require employers to make an estimate about expected fall in turnover, Treasury has advised there will be some tolerance if the actual fall is slightly smaller than that estimated by the employer. 

 

Access to JobKeeper for nominated eligible business participant

JobKeeper also addresses the lack of access to the Cash Flow Boost by business owners operating as sole traders or through partnerships, companies or trusts and not drawing wages.

The Rule provides for payments to sole traders as long as they do not receive JobKeeper from another source, as well as the ability to nominate a single individual beneficiary of a trust, a single partner in a partnership, or a single director or shareholder of a company to receive JobKeeper, subject to the eligible business participant test. These businesses will also receive JobKeeper payments for their eligible employees.

 

There are similar eligibility requirements to the Cash Flow Boost, such as having an ABN at the 12 March 2020 and reporting taxable supplies or business income before 12 March 2020 or a later date allowed by the Tax Commissioner.

 

Nomination and notification

The employer must notify the Tax Commissioner that they have elected to participate in the JobKeeper scheme by the end of the second JobKeeper fortnight for an entitlement arising in the first or second JobKeeper fortnight, or by the end of the fortnight for an entitlement arising in any other fortnight.

The employer must also notify an eligible employee or eligible business participant in writing within seven days of notifying the Tax Commissioner of their details. Such an individual must agree to be nominated by the employer or business.

Further, an employer cannot be entitled to a JobKeeper payment for an individual if another entity is entitled to a JobKeeper payment for the individual.

Payments to eligible employees or eligible business participants should be made via payroll systems and reported to the ATO via Single Touch Payroll. This will support the online claim process when it is available. If Single Touch Payroll reporting is not yet in place, JobKeeper payments will be claimed through a manual process.

 

Payments and reporting

The Tax Commissioner will pay the JobKeeper payment 14 days after either the end of the calendar month in which the fortnight ends (that is, monthly in arrears) or when the Tax Commissioner is satisfied the entity is entitled.

An entity that has qualified for the JobKeeper scheme must notify the Tax Commissioner within seven days of the end of a calendar month (the reporting month) if the entity is entitled to a JobKeeper payment for a fortnight that ends in the month, by reporting:

  • the entity’s current GST turnover for the reporting month
  • the entity’s projected GST turnover for the following month.

 

PAYG withholding and superannuation

Payments made to employees are taxable and PAYG amounts should be withheld. Where an employee is paid more than $1500 per fortnight, the employer’s superannuation obligations will not change. It will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment.

 

Record-keeping obligations

Records must be kept substantiating eligibility and payment claims. Failure to do so will disentitle the entity from receiving payments, and the ATO will be able to claw-back payments already made. The ATO has been given the power to issue guidance about the form and contents of records that must be kept.

 

Other considerations

On the practical front, payroll systems and accounting records may need modification, and businesses will also need to understand the interaction of JobKeeper with state payroll taxes and changes to the Fair Work Act. There will also be a series of administrative issues such as payment mechanisms (including application against existing tax debts), notification processes, record-keeping and reporting requirements.

The significant discretion given to the Tax Commissioner will also give rise to many applications, requiring clear ATO decision-making guidelines and a streamlined appeals process. On top of the manual claims process for non-STP reporters, compliance activities and increases in calls from agents and taxpayers, there will be a significant burden on ATO resources.

 

Further information

  • Treasury COVID-19 site
  • ATO COVID-19 site

Contact us at AD Partners for any queries, questions or concerns you may have and of course any support you need. We are here for all our clients and extend the hand to all other businesses.

tonyd@adpartners.com.au

 

Update – Business rent relief and the new code of conduct (2020)

Small business rent relief

Prime Minister, Scott Morrison has announced new rental waivers and deferrals for commercial tenants hit by the impact of the COVID-19 crisis which comes into effect from 3 April 2020 and will continue until the Commonwealth JobKeeper Program remains operational.

Stay on top of these changes and how they affect your business by reading our  summary below …

 

The Code includes a number of key points as listed below:

  • The purpose of the Code is to impose a set of good faith leasing principles between the parties to aid cashflow for small and medium business whose business has been impacted by the COVID-19 pandemic.
  • The Code will apply to tenancies eligible for the Government’s JobKeeper Program with an annual turnover up to $50 million.
  • The rental relief will come in two forms: both waivers up to a maximum of 50% and deferrals, also up to a maximum of 50%.
  • The waivers will have to account for no less than 50% of the reduction in business of the tenant.
  • The deferrals (optional) to be spread over the remaining period of the lease and no less than 24 months.
  • Landlords cannot terminate leases or draw on a tenant’s security.
  • Tenants must remain committed to the terms of the lease.

As always the devil’s in the details so accounting advice will be of high importance when negotiating terms..

A full transcript of the mandatory code is in the link below

Link to Copy of the Code, https://www.pm.gov.au/sites/default/files/files/national-cabinet-mandatory-code-ofconduct-sme-commercial-leasing-principles.pdf

 

7 Tips to Protect Your Assets

7 TIPS TO PROTECT ASSETS

 

Directors face many areas of potential exposure, some of them are very serious and may have a significant adverse effect on the director.

 

The following tips can assist you to protect your hard-earned wealth:

  • Know and understand how your business structure works— have a strong discipline about the manner in which the structure is administered.
  • Carefully read and understand all contractual documentation such as terms of loans, lease and supply agreements etc—and negotiate before agreeing to them.
  • Limit any personal guarantees—keep a register and put a maximum limit on any guarantee given.
  • Never own assets—transfer any assets you do own as soon as possible and before taking on any potential risk.
  • Have a good reason for the transfer other than “asset protection”.1
  • The best approach is to ensure any asset transfers are for full market value and actual real consideration (not via journal entries).
  • Ensure the at-risk person does not make any direct financial contributions to assets or servicing of debt—the non-at-riskperson holding assets needs their own income to service the debt.

 

Note 1 –

Arguably assets transferred for asset protection purposes may satisfy the “main purpose” test in Section 121 of the Bankruptcy Act 1966 of the transfer being to defeat creditors, and may be void in the event of bankruptcy even if transferred years prior (Wallace v Wallace [2016] FCCA 963 (31 May 2016)).

Tips kindly provided by our friends at Worrells Solvency & Forensic Accountants

6 tips to survive and thrive in 2020

6 tips to survive and thrive in 2020

  Here are 6 tips to help in a crisis…

#1     Conserve cash wherever possible (sorry for stating the obvious).

#2     If you haven’t already, now is the time to prepare and review your cashflow forecast.  For some, inflows may be scarce, so critically analyse the outflows.

#3    ‘Hoping’ things will turn out is not an option for business owners.  Start looking for new opportunities now – We can help here.

 

Business tax-calculator

 

#4    Digital advertising is far more accessible than ever  – stay on the front foot with your product or service to establish or maintain your brand.

#5    Email list – Now is the best time to communicate with your clients, so if you haven’t formed a strategy around this, you really should – Again we can help.

#6    Stay positive and healthy – it’s the things we forget to do that are the most important.

Stay safe

The team at AD Partners

 

Your business structure – complex or simple?

A complex structure that involves various layers will have more compliance issues attached to it, than a simpler structure.

For example, a structure consisting of a company and a unit trust with two discretionary trusts as unit holders may provide the ideal structure for a smaller business that will also make some investments. However, such a structure requires that four entities be accounted for in addition to the business owner’s individual returns. In addition, trading between the structures will add an extra layer of complexity.

By contrast, if your business is held in a single unit trust and you are the sole beneficiary, it will be far simpler to manage. However, you may not experience the same benefits when it comes to tax minimisation and asset protection.

Where does this leave you when choosing a structure? Do you just leave it to your accountant? Do you just pick whatever sounds like the right thing?

Unfortunately, there is no one-structure-fits-all-scenario. Therefore, your particular circumstances need to be taken into account.

Trading businesses generating income are best kept simple. I am an advocate for the KISS (Keep It Simple Stupid) philosophy where possible. This is where it comes to the fore. As a general rule, the smaller the business the more likely a sole trader or partnership structure may be the best option. The larger the business (and depending on access to family members who can be beneficiaries), the more likely a company or trust structure would best suit.

The complexity tends to become a reality when there are business partners and there is an investment or asset holding in addition to the trading entity.

If you own an asset or plan to purchase an asset in connection with your business, you would be best advised to hold that asset in a separate entity, whether or not you have partners. Without partners, a simple discretionary trust may suit your requirements so you can access CGT concessions. With partners, an additional entity, such as a unit trust, may best suit your requirements, with each partner owning their share of units in their own discretionary trust.

Finally, keep in mind that simple or straightforward structures will enable easier access to borrowing from financial institutions. Banks have a tendency to shy away from structures that they do not fully understand. That is not to say that it is not possible with a more complex structure, however, it is something that you need to be consider before finalising your structure.

If you would like some assistance with understanding what is the best structure for you and your particular circumstances, Please get in touch for a complimentary discussion.

Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started

Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.

Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started 

Defining your values – it’s YOU.

Values are the guiding principles that dictate your behaviour and actions. In both your personal and professional life, your values can help you determine whether or not you’re on the right road to reaching your goals. They are your GPS.

Your values influence the choices you make, in both your personal life and how you conduct your business.

Examples of some personal values are: the fundamental importance of family, maintaining a healthy work/life balance and that all people should be treated equally.

Examples of some business values are: being environmentally friendly, giving back to the community, or a commitment to innovation, such as Apple based on its motto, ‘Think Different’.

Why should you have values?

Some of the key benefits include:

  • They help you find your purpose in life and what’s important to you. If you don’t know what’s important to you, how can you know what you want from your life? When you answer this question, it will become so much clearer for you.
  • They help you clear out the clutter. Whether in business or in life, we are consumed by so much around us. You get caught up in things that you may really not want or need or even believe in. Your values will help get rid of all that unwanted baggage.
  • They help you make the right decisions, both personally and professionally. Your values will keep you focused if you are true to them. People makes decisions based on emotion far too often and therefore stray from their core values. Be clear on your values. Be clear on what you want. Always make the right decision.
  • They help guide you to act in accordance with what’s important to you. You will naturally do and say the things that matter most to you. Your core values are who you are and when tuned into them, you will act accordingly.
  • They help you to react in difficult situations. Like decision-making, when we are faced with a difficult scenario, we can act on impulse or with emotion, therefore not thinking about our response. Before reacting, stop, think and consider your values and what’s important to you. Your answer may well be very different.
  • They help you to gain compatibility with all personal and business relationships. You will be drawn to people of similar values as you will rate them highly and similarly, and others will be drawn to you. You will work better with people aligned to your values and your relationships will also be stronger on a personal level.
  • They help to increase your overall confidence. When you know what’s important to you, then other people’s opinions and thoughts do not matter. Your values will give you stability and therefore confidence to do what you want to do.
  • They help with your overall happiness. You will have a purpose, clear out the clutter, make right decisions, react well in difficult situations, improve relationships and become increasingly more confident. How can that not help with your overall happiness?

Inconsistency with values

The problem is that many people and businesses say they have certain values but, when push comes to shove, their actions are incongruent with the values they claim to uphold. For example, a builder who says he prides himself on his work, but who cuts corners to make a higher profit, values money more than he values his workmanship. Similarly, a builder who purports to value high customer service standards, but leaves a job half-completed to attend to another from a customer who gives him multiple jobs, also values money more than he values true customer service.

S. G. Night said is best, ‘The truth is in your actions.’

Unfortunately, there are many of us that struggle with this concept, whether that is because of the fear of missing out, greed, or simply wanting to please everyone and putting their values ahead of yours.

So how can you determine your true values, rather than just listing a range of attributes you’d like to have?

Dr John Demartini, a human behavioural specialist, educator and best-selling author, explains that values arise from our voids, in other words by what we perceive as most missing. What you perceive as most missing (void) in your life therefore becomes what you perceive as most important (value). The bigger the void, the more important the value. The more important a value is, the more discipline and order you will have associated with it.

To determine what these are, Demartini has developed the Demartini Value Determination Process – a 13 question assessment centred around what you do, how you do it and how you think and feel about it.

Demartini’s 13 questions are:

  1. Look carefully and specifically at how you fill your personal or professional space.
    What are the three items that you fill your space with most? What three items stand out in your space?
  2. Look carefully and accurately at how you spend your time. What are the three things that you spend your time on most? You will make time for things that are really important to you and you will run out of time for things that aren’t.
  3. Next, look at how you spend your energy and what energises you the most. What are the three things that you always find energy for? You will always have energy for things that are truly highest on your values list and that inspire you.
  4. How do you spend your money and your resources? What are the three things that you spend your money on most? You will feel reluctant to spend money on things you perceive to be unimportant.
  5. Where are you the most ordered and organised? Where do you have the highest degree of order and organisation? What are the three things that you are most organised in? Where are you most organised?
  6. Where are you most reliable, disciplined and focused? What are the three things you are most reliable on? Whatever is highest you value, you will be disciplined to do.
  7. What do you inwardly think about most? What are your innermost dominant thoughts? What are the three things that you dominate your thoughts on?
  8. What do you visualise most about how you would love your life to be that is gradually showing fruits and coming into reality? What are the three things that you visualise, envision, or daydream about most and bringing about?
  9. What do you internally dialogue with yourself about most that is meaningful and that is gradually coming true or into your life? What are the three things that you internally talk to yourself about most that are manifesting?
  10. What do you most talk about in social settings? What are the three things that you converse with others about? What are the three things that you keep wanting to bring into conversations?
  11. What inspires you or are you inspired about most? What is common to the people who have inspired you? What is common to all the things, insights, experiences or events that have repeatedly inspired you?
  12. You are most willing to stretch yourself and persistently act towards goals that have the most meaning to you. So, what are the three most consistent long-term goals that you have persisted working towards that have stood the test of time?
  13. What topics of study inspire you the most? When you enter a bookstore, which section do you make a beeline for? Which topic of magazines do you subscribe to? Which section of the newspapers do you turn to first? Are there nonfiction TV shows or film documentaries that you seek out?

Your values are YOURS and yours only.

You know them and all you need to do is to understand how they can help you determine your what, why and how.

Please share your values – we’d love to hear about them.

Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started

Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.

Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started 

Defining your mission statement – the how and why.

The first step in choosing your destination is defining your mission statement.

A business mission statement defines your goals, ethics, culture and behaviour. A complete mission statement defines what the business does, not only for its owners, but also for customers, employees and the community as a whole.

A personal mission statement, on the other hand, is what you want to focus on, accomplish and become in your personal life. It is what guides your actions, behaviours and decisions towards what is most important to you.

As the owner of your business, the two will most likely be closely aligned.

Some examples of mission statements within the building industry include:

  • Bunnings: Our ambition is to provide our customers with the widest range of home improvement products at the lowest prices every day, backed with the best service. Our team members are the heart and soul of our business.
  • Lend lease: To create the best places. We work closely with clients, investors and communities in Australia, Asia, Europe and the Americas to create unique places. Places that leave a positive legacy and inspire and enrich the lives of people around the world.  We do this through putting safety first and delivering innovative and efficient solutions which provide long term sustainable outcomes for a range of stakeholders.
  • Metricon: We’re all about building homes where you’ll truly love to live.

The benefits of having a mission statement which defines who you are, what you do and the values that guide you are:

  • Marketing your business to potential clients – differentiating yourself from your competition by specialising in a certain field or product or target client. Becoming the best at what you do.
  • Assist you in your business planning – as it sets the scene as to why you do what you do. It can help your business attract finance, investment and/or business partners.
  • Gives you purpose and motivation – far beyond just making a profit. It will help guide you to determine the types of products and services you will provide.
  • Helps you with your decision-making – providing you the framework within which you will operate. It’s your compass, your map, your steering wheel.
  • Provides direction to help you through the challenges that business will throw your way – by keeping you focused on what you want to achieve. Sometimes, the easy decision will create a short-term fix. Your mission will help you make the long-term beneficial decision to ultimately get to where you want to go.

If you don’t have a mission statement, on the other hand, you will find yourself having to spend time and resources rectifying poor communication and unwanted cultural behaviour whether that be with clients, employees or other stakeholders. Communication is extremely important in business and it is incumbent upon the owners of the business to clearly communicate to internal (employees and contractors) and external (clients, suppliers, banks and so on) parties their desires for their business.

If all parties do not know what the owner wants to achieve, the business will likely not get there, despite the owner’s efforts. Poor communication will lead to poor decisions and ultimately, poor results – whether that is labour-centric (processes) or material-centric (supplies/suppliers). Both can have significant adverse effects if not managed well and the key to that is communication.

So how do you define your mission? Start by answering the following questions:

  • Why did you decide to go into business for yourself? What were the drivers which led you to make that decision? Was it centred around your own personal desires or that of family, or did friends influence you?
  • Who is your ideal customer? Who do you want to provide your services to? Is it private clients or other businesses? Is it residential or commercial? How will your service make a difference in their lives?
  • What do you want your business to be known for? How do you want your customers and the general public to view your business? How will you influence that view?
  • What are the essential products and services you will provide? How will they be different to your competitors? How will you position yourself in the market? Will it be based on price (low-end) or quality (high-end) or a mix of both?
  • How will your level of service differ from that of your competitors? What will you do differently? How will you be better? Do you know their strengths and weaknesses? How will you take advantage of that?
  • What type of business owner will you be? Will you lead by example? Will you delegate responsibility and authority? Will you empower your employees? Will you mentor your employees?
  • How will you interact with your suppliers? What type of relationship will you have with them? Will you want to have a close relationship with few or a distant relationship with many? How can they help? How can you help them?
  • Will you use technology to your advantage? How will this work? How will it benefit you? Will your processes be more efficient?

Answering the above questions will confirm to you why you are in business and what it is exactly that you really do.

Once you have an idea of why you do what you do and what your business stands for, it’s time to put it into a single statement – a mission statement.

A mission statement will require your time and effort, however, it will be well worth it.

After working through the questions above, I recommend you speak with all the people connected to your business, not matter how big or small your business is. You will gain some great insight into what it is you do well and, if the conversations are honest, some things you might need to work on. They are just as important to you in your business. You should take advantage of the things you do well and work hard to improve on those things that you do not do so well, because they are important to the success of your business. That is where you will derive the most benefit and see an upward spike in your business.

Take the time to do this thoroughly and completely. While a mission statement is generally rather short (that is, only up to a few sentences), it is important for you get the right words together to truly define your mission. Use words wisely to best describe your mission. Less is more, but only if it tells your story.

Once your mission statement is complete, it should be a part of all your marketing and advertising. It should be what drives your business and excites your customers.

Sometimes we simply go through the motions thinking we know what, why and how we do what we do. Don’t just exist – focus on what’s truly important to you and drive every decision and every action to achieve what it is that really matters to you.

We’d love to hear your story and if you think we can help, don’t hesitate to get in touch.

Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started

Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.

Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started 

How well do you manage your work in progress?

Work in progress is when you have been given an order for a job and you are in the process of working through it towards completion. Depending on the size of the job, this period can be quite lengthy and so you will need to manage the process well. After all, the sooner you complete the job, the earlier you can invoice and therefore get paid.

Here are some helpful hints to consider when managing work in progress:

  • Record all the details of the job/order. You have a licensing requirement in building to provide the customer a written quote that stipulates all relevant details of the job. My recommendation would be to have a quote for every job you do, irrespective of size, to eliminate any potential confusion or miscommunication. Ensure you detail the specifics of the job, including:
    • Start and finish dates (where possible)
    • Any payments received
    • Any progress payments to be made and timing of these payments
    • Any additional requirements to be able to complete the job (for example, reliance on contractors or the client)
  • Manage potential delays caused by the client by ensuring they are very clear on expectations of the job process and timing of payment or payments.
  • Manage potential delays caused by contractors by ensuring they have booked your job in for the designated days/weeks and that they know whose responsibility it is to provide relevant materials and equipment.
  • Manage potential delays caused by the work area in terms of location, access and power availability by planning for all those issues beforehand.
  • Manage potential delays caused by external factors such as monitoring for bad weather or being aware of other public works in the area.
  • Invoice immediately at all agreed points in time.
  • Order materials and supplies when you are ready to commence, allowing for any lead times.
  • Identify any potential bottlenecks, such as not having the right tradespeople on site at the right time, and look for alternatives, such as scheduling the job well and having others you can call on when needed.
  • Ensure that you have the right levels of materials and supplies to complete the job, as delays in receiving goods will delay completion and therefore payment.
  • Schedule all relevant labour to ensure they are ready and available when required, as other commitments could delay completion and therefore payment.

If you would like to discuss these or other strategies, do not hesitate to get in touch.

Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started

Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.

Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started 

How well do you manage your debtors?

Your sales income is the main cash flow driver of your business and converting that into cash is one of the most important processes in your business.

Clients who receive sales on credit are referred to as debtors. Managing payments due from debtors can consume both time and effort if proper controls and procedures are not in place from the outset.

Your customers are key to your business, however, until you receive payment for your services, effectively you have given them a donation, and you are not a charitable organisation.

Here are some helpful hints to consider when managing debtors:

  • Establish payment terms and clearly communicate these at both quotation and invoice stage. You can also provide a reminder a couple of days prior to completing the job.
  • Implement internal or external debt-collection systems to ensure all payment terms are met. Hire an internal debtor’s clerk or use existing administration staff. Use an external service if your internal structure does not allow for it.
  • Send out regular reminders and follow up on late payments.
  • Meet regularly with your customers, particularly regular customers.
  • Review payment terms for regular customers who continue to fall outside the agreed terms.
  • When you become aware of a potential delay in a job, communicate with the customer and discuss alternatives, if possible.
  • Only agree to a completion date with your customer when you are certain you can meet the deadline.
  • Send out invoices as soon as work is complete, not at the end of the week or month.
  • Send out invoices via email, not snail mail.
  • Provide incentives to pay early, if appropriate.
  • Offer alternative forms of payment, such as cash, cheque, credit card and EFT.
  • Where commissions are payable, pay them on amounts when collected rather than on sale/invoice.
  • Identify slow-paying customers and make contact early to discuss any issues.
  • Monitor non-paying customers and keep in regular contact.
  • Enter into payment arrangements for non-paying customers.
  • Stop supply, if possible, for customers who have not met any agreed progress payments.
  • Send letters of demand for long outstanding debts. If necessary, use a professional debt collector.
  • Consider not performing any future jobs for customers who have been unreliable with payments.

Always remember that a good customer is one who pays. If you are not collecting payment from them, then your business is funding their business as well as your own.

If you would like to discuss these or other strategies, do not hesitate to get in touch.

Are you in need of finance or funding to help grow your business? Do you clearly understand the cost of money? Contact us for a free 30 min strategy consultation. Click here to get started

Let us review your business and funding requirements to help you grow your business and achieve your business goals – big and small.

Want to take your business further with your cash? Book a 30-minute cashflow consultation and I’ll give you a copy of my book “Build It & The Money Will Come”. Click here to get started