Do You Know What Reimbursements Your Employees are Claiming For?

It's unfortunate, but employee expense claims are a common form of business fraud. Are you across all your employees' claims for reimbursement?

The best thing you can do to minimise expense claim fraud is to implement a process for reviewing and authorising expenses and reimbursements. Many business owners simply trust people to do the right thing and be honest.

While most employees are reliable, having good systems in place will mean that the dishonest actions of a minority do not jeopardise your business.

Examples of Expense Claim Fraud

• Fictitious expenses based on faked or altered documents or even booking confirmations that were never actually paid for.
• Asking for reimbursement for the made-up cost of goods or services provided for free.
• Collusion with someone in another business who can provide falsified documents to show purchase and payment.
• Personal expenses labelled as business expenses.
• Duplicated claims, for example, an employee might claim for legitimate travel expenses in one month and then claim the same expenses two months later.
• Purchasing an item using the business credit card and providing a personal card to receive the refund when goods are returned.
• Inflating legitimate expenses, such as meals or meeting costs, paid for in cash.

Steps to Proactive Expense Management

• Get a policy in place that includes limits on categories such as travel, office supplies or business meetings, and a clear authorisation process.
• Randomly check all expenses to ensure no staff members are collaborating.
• Get digital credit cards for employees who need to purchase items on behalf of the business regularly. Some solutions allow you to set monthly budgets and limits for specific categories.
• Make it easy for employees. Using a phone app means there is no excuse not to get a photo of the invoice or receipt, and the authorisation process is built into the app.

Mistakes in claims happen, and not all expense claim errors are fraudulent. But by having a procedure in place, you'll soon pick up an innocent mistake compared to deliberate fraud.

Talk to us if you’d like to know more about apps, such as Divipay and Expensify, that provide a systematic process for proactive expense management.

Making it easier to get paid

Making sure you get paid on time is crucial to your success.

The process of making sales and generating revenue lies at the heart of any business model. But you can't manage your cashflow effectively or raise any profits if customers don't actually pay their invoices.

The easier you can make it for customers to pay you, the faster you'll see cash coming into the business. That’s good news for your financial position, your ability to cover your operational costs and your capacity to fund the growth and expansion of your business.

So, how do you speed up those payments and make sure you get paid on time?

Set out clear payment terms

Your payment terms are the starting point for healthy payment times.

These terms set out when you expect to be paid and form a legally binding contract with the customer.

You may expect immediate payment on receipt of the invoice. Or you might set out a specific number of days that the customer has to pay the invoice (generally 30, 60, 90 or 120 days, depending on your industry). This is sometimes called ‘trade credit’ and allows your customers to pay for goods and services at a later, pre-agreed date – helping them to spread the cost.

Your payment terms should also include details of any late payment penalties.

If the customer doesn’t meet your agreed payment times, most businesses will add a 1% to 1.5% monthly late payment fee to the outstanding bill. This acts as a great incentive for the customer to pay the bill, before the penalty fees start mounting up.

Invoice customers as soon as you can

In a business-to-consumer (B2C) environment, your customers will generally pay for their goods and services immediately. But when you’re working in the business-to-business (B2B) world, you’ll need to send your customer an invoice, asking for the money to be paid.

A customer can’t settle their bill until you send them an invoice. So, it’s vital to send out the invoice as quickly as possible, so you can minimise the gap between doing the work and being paid for the work.

In some industries, the project will be broken down into multiple invoices, paid across a period of time. This makes it easier for the customer to pay, and means you (as the supplier) don’t have to complete the project before receiving the money you’re owed.

Ideally, you want your invoices to go out as early as possible. This allows your payment terms to kick in and makes it easier to predict when cash will be coming into the business.

Be organised about your payment admin

Getting paid is a process – and the more organised you make the process, the quicker the payment will be received.

When you send out the invoice, make sure you send it to all the relevant people in the payment chain. This will usually be:

• Your main contact at the client – the person who you usually deal with
• The person who will approve the bill – the person who will green-light the payment
• The finance team – the person (or people) who will actually action the payment.

It’s also a good idea to quote any relevant purchase order (PO) numbers that the customer has raised, and to give a very clear description of the work done, or the goods purchased.

Embrace the available payment technology

Invoices used to be hard-copy printed bills, but in the digital age the vast majority of companies will send out e-invoices.

Electronic invoices are easy to raise (usually from your accounting software or project management app) and can be emailed out instantly.

Doing everything in the digital realm also makes it easier to keep records and keep track of payments.

Many e-invoice systems will also let you add a variety of different payment options for the customer.

You could just include your bank details and wait for the customer to make a direct payment to your account. But you can also include payment buttons in the e-invoice that give customers the option to pay via digital payment gateways, like Stripe or GoCardless.

Offering more ways to pay makes the whole process more convenient for your customers. And it will generally result in faster payment times as a result.

If you want to speed up your payment times and boost your cashflow, please do get in touch. We can help you streamline your payment processes and embrace the latest in payment tech.

Coping with the skyrocketing cost of living

Whether it’s refilling your petrol tank or paying at the supermarket checkout, the higher cost of living is hitting every household hard.

Across the world, everyday essentials are surging in price, up 7.2% year on year across the OECD. Unfortunately, experts predict that prices will keep rising for at least the rest of the year.

What can you do to try to keep up with the increasing cost of living?

Here are our 12 top tips

Look for ways to earn more

• Grow your business’s profitability (talk to us about improving your profits) or ask for a pay rise.
• Take in a boarder or flatmate.
• Sell your unwanted items online.

Cut back where you can

• Prepare more meals at home and spend less at cafés and restaurants.
• Create a budget and keep your spending under control.
• Reduce the amount of meat you buy.

Find ways to use your car less.

• Cancel your credit cards and your buy now pay later accounts.
• Review all your ongoing expenses like utilities, insurance and subscriptions – cancel, switch providers or get better deals.

Invest in your future

• Think about investing in ways that are likely to outperform inflation – both shares and the property market have historically provided returns higher than inflation.
• Start a new business, launch a new product or service, or try a side hustle.
• Teach yourself about money and finances using free tools online and books from the library. Better money management will help you make the most of what you’ve got.

If prices rise by 7% this year, it won’t be easy to increase your income by the same amount. But if you can increase your income by 5%, then make up the rest through savings, while also investing for the future, you can still come out on top once inflation settles down and prices stabilise.

Worried about budgeting, cash flow or forecasting?

Talk to us. We have years of experience through many economic cycles, including previous periods of high inflation – and we’re always here to help.

The importance of business development

Business development is one of the most important areas of focus for any ambitious business.

If you want your business to grow, that’s going to mean having a razor-sharp focus on new opportunities and strategies.

That could mean exploring new markets, or nurturing new partnerships. It might mean diversifying to create new revenue streams, or coming up with new ideas to boost your profitability.

Ultimately, good business development comes down to having good ideas – ideas that broaden your reach, sales, revenues and external relationships.

As the founder or CEO, it's important to put business development at the top of your to-do list.

Put time aside for business development

Business opportunities don’t just appear out of thin air (sadly). To come up with an opportunity for a business partnership, or to bring in a big new client, you’re going to have to do some serious work. So, it’s a good idea to put business development (BD) time aside in your diary.

By blocking out time to devote to BD, you can step away from the everyday operational tasks and get into a more creative and objective mindset.

• Where do you want the business to be in 6 months?
• What do you need to do to achieve this goal?
• Are there relationships you could build to bring this plan to life? 

Asking these questions and getting a more concrete idea of the answers will form the basis for your BD plan – and that’s the route map you can then follow.

Work on your BD plan and strategy

Once you have some positive BD ideas to work with, it’s important to get your goals and your strategy down into some form of plan. As with any kind of growth initiative, your BD activity needs to be well planned, so you have a clear idea of what you want to achieve.

Give each new strategic idea a clear timeline and assign jobs, activities and roles to the relevant people in the team. Cost out each project too, and assign a budget so you can be sure that you’re getting the best return on your investment (both financially and from a time perspective).

Most importantly, though, track your progress against your BD goals. Agree on a target, set a date and measure your progress and performance against that timeline.

Build relationships with potential partners and customers

Relationships lie at the heart of your BD activity.

You might be getting to know the executive team at a possible new partner’s company. Or you may be reaching out to a new customer audience with a brand-new product.

Getting to understand what makes these people tick is so important to warming them up as a potential partner, customer or supplier.

Trust is the real key here. 

People are more likely to engage with your business when they trust you as people and as a brand. So, spending time nurturing relationships and networking with other businesspeople and targets is time well spent.

Record, track and analyse your BD performance

With your goals, targets and timelines locked in, you’re ready to start putting this BD plan into action.

But to know if you’re making headway, it’s a good idea to track your performance.

If you’re using project management software or a client relationship management (CRM) app, it’s easy to add notes, record your progress and tick off the key actions in the project. 

You can put the financial reporting tools in your accounting software to good use. Track cashflow for the project, increases in revenue and monitor your sales and marketing expenses etc.

Get ambitious with your BD ideas

No business stands still. Your aims and goals as the owner will change. Your market will evolve and new competitors will appear. Economic conditions and business opportunities will change.

To keep your business at the cutting edge, it’s vital to keep your BD focus alive and well.

Remember to:

• Define your goals and make it clear what you want the business to achieve
• Align your BD activity with the company’s main growth plan
• Log your ideas and potential opportunities and add them to your BD plan
• Warm up your targets and potential partners and keep notes on your progress
• Track your BD performance against your targets, budgets, revenues and timelines
• Keep revisiting your plan and flexing your BD activity to the current market.

If you want to expand your business development activity, get in touch with us. We’ll help you integrate the appropriate apps to support your business development.

Key Elements of Operational Foundations

While the context of this article focuses on start-ups, if you have an established business, it's a good time to review the operational aspects of your business.

The complexity of your operational model will vary greatly, depending on the kind of business you’re running. A small two-person design agency will have a simpler operational set-up than a wholesale food production business, for obvious reasons.

For start-ups, this stage of the journey is about pinning down those key operational needs and getting an effective strategy together for how your business is going to work, in the real world. 

For established businesses, reviewing the key elements of your operational foundations can help identify areas to improve efficiencies and cost savings. 

Your premises or workspace

Every business needs some kind of workspace, whether it’s your own home, an office or a factory space.

This is the place where the actual work will be done and the central hub of your operations, so put some careful thought into what space will be needed.

In terms of location, the type of business will also dictate whether you can be based where you are, or should you be where your customers are.

A two-person design agency could feasibly operate from a co-working office, a startup incubator space or from a spare room/garage/summer house in the founder’s home. 

The wholesale food production business, however, will need factory space to house it’s production equipment, a chilled store for the food, an office for the admin staff and managers, and space for delivery vehicles and incoming supplier deliveries etc.

Your equipment and tech

You’ll have set aside some of your initial funding to buy the basic equipment and technology needed for the business. This will include all the machinery, plant, office furniture, IT, computing and telecommunications equipment required to run the business, plus any vehicles you’ll need.

Once you have your premises ready to roll, you can start moving your equipment in and actually ‘setting up shop’ in your brand new workspace.

Your key suppliers

Most businesses will rely on some form of supply chain to keep the business ticking over.

The design agency will probably need paper, printer ink and (no doubt) a lot of coffee to stay operational.

And our food production business will need raw ingredients, cardboard boxes and product packaging to be able to produce their key products.

Your next step is to source the suppliers you need and set up contracts with these external companies.

You may have pre-existing contacts in the industry, or you may be starting with a clean slate.

Either way, it’s important to build up a trusted supply network, where you’ve negotiated a good price and decent payment terms.

Ultimately, your business can sink or swim based on the stability of your supply chain, so these relationships will be crucial to your success.

Get the logistics and delivery elements in place

Getting the finished product/service to your end customer is the main goal of any business, so the final piece of your operational puzzle will be sorting out your logistics and delivery systems.

For a small service-based startup, like the design agency, the end offering is likely to be either wholly digital or a mix of print and digital. The end delivery process is relatively straightforward and will mostly consist of getting the final signed-off assets to the customer.

For a complex manufacturing or production startup, like the food business, the delivery systems will be a vital part of their offering. As a food business, you’ve got to meet all relevant food hygiene timescales and standards, and get your fresh, high-quality food products safely to your customers.

A delivery system should be customised to each company’s specific needs, so it’s sensible to put plenty of thought into making this system efficient, cost-effective and productive.

If you know someone in the early stages of planning out a business idea, please feel free to share this article with them.

Or, use this information to conduct a review of your established business to make sure your business operation foundations are in order and properly aligned with your business model.

Employees Leaving? Here’s What You Need to Know About Final Payments

Employees leaving your business? While some termination payments are simple, many are complex, and it's essential to get the payroll and tax correct so you don’t disadvantage employees or make costly errors.

Most small businesses in Australia employ people. One of the most common payroll errors is incorrect processing of termination payments when employees leave.

With the introduction of Single Touch Payroll Phase 2, getting payroll correct is more important than ever, as the data is reported directly to other government agencies. If the payroll detail is not accurate, it could affect employees' benefits or income tax.

Final Payments

Final payments for employees can range from very simple to highly complex. It depends on the circumstances of the termination, the industry, the modern award or registered agreement, age and other factors.

Before you pay an employee who is leaving your business, you’ll need to gather information to ensure accuracy.

• Final date worked and reason for termination – resignation, retirement, abandonment of work, dismissal, redundancy, end of contract or medical invalidity.
• Check termination provisions in the relevant award.
• Check the National Employment Standards for the minimum notice period and redundancy pay if applicable.
• If you usually pay annual leave loading, this is also paid on termination.
• Amount of leave owing, and if there are any accrued rostered days off or time in lieu.

A termination payment can be made up of several elements:

• Final ordinary hours.
• Unused annual leave, loading and long service leave.
• Redundancy payment.
• Pay in lieu of notice.
• Unused rostered days off.
• Superannuation.
• Ex gratia payment.
• Other payments made in case of death, invalidity, or compensation or as required by certain awards.

Taxation of Termination Payments

Taxation can also be complex for final payments.

Some payments are taxed at marginal rates and others at a flat rate. Special codes must be included in some termination pays to notify the ATO of payment types. For some payments, there are thresholds that must be observed that will affect the termination payment's tax rates and taxable amount.

Getting Help

The best general authorities for learning more about termination payments are the Fair Work Ombudsman and the Australian Taxation Office. For more complex payroll and termination payments, our payroll specialist can help, or we can refer you to an employment law expert if needed.

Fixing termination payroll errors can be costly and time-consuming, not to mention problematic for the employee if categories or taxes are incorrect.

Talk to us before paying employees, so you get it right the first time.

Big Changes to Superannuation

There are some big changes to super happening in the coming months.

Here are three of the key changes.

1. GIVING CASUAL & PART-TIMERS A GO

From July 1 the $450 monthly income threshold that workers currently need to earn before they’re eligible for compulsory employer super contributions will be removed.

This means a large number of casual and part-timers will now be eligible for compulsory employer super contributions.

As the part-time share of employment is over 30% in Australia, this has been widely welcomed by the super industry and is estimated to help about 300,000 people, mostly women.

2. GOING TO 10.5 PERCENT

On 1 July 2022 the super guarantee rises to 10.5 percent.

This is important to know because if you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, you must then pay the superannuation guarantee charge (SGC) and lodge an SGC statement to the ATO.

The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible.

3. FLEXIBILITY FOR SENIORS

Other recent legislation passed removes the work test for super contributions for 67-75 year-olds.

Previously people aged 67 to 74 were prevented from contributing to super unless they were employed.

The new legislation means 67-74 year-olds no are no longer required to meet the 40-hour work test, provided their contributions are made via salary sacrifice contributions.

It’s important to note that people aged between 67 and 75 who wish to make personal deductible contributions to super will still be required to meet the 40-hour work test.

Another law change lowers the age threshold for the super downsizer scheme from 65 to 60.

Downsizer contributions are made to super funds from the proceeds of selling your home. The reduction in the age threshold provides greater flexibility for older Australians to contribute to their super.

There is a nil cashing condition applied to downsizer contributions, which means funds must be preserved within the super account until conditions of release are met. For more information about downsizing, visit ato.gov.au.

Let us help you get it right and sort out the tax and superannuation obligations for your team.

Do Your Independent Contractor Agreements Measure Up?

Contractor Agreements - As a business owner, it's vital that you classify workers correctly to minimise the risk of being penalised later for wrongly classifying contractors when they should be classified as employees.

It’s a common area of concern for business owners who engage contractors. Many Fair Work Ombudsman cases have resulted in severe penalties and back payments imposed for engaging someone as a contractor when they should have been paid as an employee.

What’s Required in Contractor Agreements?

You should have a comprehensive agreement with every independent contractor.

The contract should include:

• Details of the nature of the working relationship to demonstrate that a genuine contractor relationship exists.
• All rights and obligations of both the contractor and the business.
• Terms and conditions of the agreement.
• Whether superannuation applies.
• The main factors used to assess the worker as a contractor such as independence, ability to delegate work, the basis of payment, the use of tools and equipment, the degree of control or the ability to take on other work.
• The date of the next review of the contract.

Many factors are involved in assessing whether a worker is deemed to be an employee or contractor, and the relationship can change over time.

There is no single overriding factor in deciding if a worker is truly an independent contractor. Therefore, each working relationship must be assessed separately and individually.

Time to Upgrade Contractor Agreements

If a lawful agreement clarifies the terms of engagement and addresses all aspects of the working relationship, this will reduce the risk of later being penalised because of wrongly classifying a worker. But for the contract to be relied upon in court, it must address all aspects of the working relationship in enough detail that there is no room for misinterpretation of terms.

Now is a great time to review and upgrade any agreements you have in place with contractors. Do they measure up?

Talk to us about getting reliable agreements in place for all your independent contractors.

Access the ATO Contractor Decision Tool here.

Become a digital business

In the online, connected world that we now live in, it’s important for your business to become a digital business.

Digital technology has revolutionised the options you have available as a small business. There are a wealth of cloud-based solutions and apps to help automate your admin, enhance your productivity, open up your business data and market the company online.

Making the technology work for you

Becoming a digital business isn’t about using technology for tech’s sake. It’s about seeing the huge value and potential of applying digital processes and software tools within the company.

By moving your systems, processes and customer interactions over to digital, your small business can quickly become more streamlined, more efficient and more profitable. And with the ineffective elements of the business removed, you’re ready to grow, scale and expand.

Key benefits of digital transformation include:

Cloud accounting at the heart of the businesss

Cloud accounting moves your bookkeeping and financial management online. This gives you access to your accounts, reporting and key performance indicators (KPIs) through your web browser, on any internet-ready device. You can literally run your finances, invoicing, credit control and bank reconciliation from anywhere with Wi-Fi. And that helps you keep in control of the numbers..

Automation of low-level tasks

The manual tasks involved in company admin begin to eat into your business time. Many digital business tools have elements of automation built in, to help you automate the key time-consuming tasks and become more efficient. Automated bookkeeping, automatic bank reconciliation and automated payment collection all put hours back in to the business and help you do more.

Fintech and payments

Keeping on top of your finances isn’t just about accounting. Financial technology (fintech) tools help you ensure that money is flowing into the business, cashflow is being managed sensibly. And online payments are being made, and collected, automatically – helping to maximise your financial health.

Job management and productivity

Planning and running your operations and project work can be tough. But with software project management and workflow apps connected up to your central system, you’re always on top of the workload and resourcing. Talk to us about which app would work in your business. 

Digital marketing and social media

Most consumers and business customers will begin a search for products/services online. So having a good website, a bold online presence and the right social media channels in place is vital for your sales and marketing strategy. By positioning your brand in the digital space, you make yourself relevant, easy to find and connected to your ideal customer base.

If you’re planning a digital transformation process for your small business, come and talk to us. We’ll help you review your systems and processes, identify your key business needs and recommend the software tools and apps that will build your ideal digital system.

Get in touch to start embracing the digital future.