Renae Pitargue, Author at BUSY01 and First Class Accounts Ovens and Murray - Page 2 of 16

All Posts by Renae Pitargue

Making Data Meaningful

Making data meaningful for your business

Making data meaningful for your business

In today’s world the fast pace of business requires business owners to be able to react quickly to conditions.

This means having the ability to compile, analyse and act on data is increasingly important. Having access to your business data allows you to forecast and potentially identify trends and patterns before they emerge.

So, what is data?

When it comes to business, data includes the facts and figures that your business processes every day.

Over time, your business will obtain data.

For example, if your business is already using cloud software for bookkeeping and accounting, payroll, project management or CRM (customer relationship management), you likely have access to a goldmine of data. And that data gives you valuable insight into your sales, revenue and expenses, profit, payroll, and other business details that can help you make smart business decisions.

If you aren’t recording accurate data for your business, you can only rely on gut feel and assumptions about your business’ past performance to inform and guide your future business decisions.

It’s important to remember that your business data only becomes meaningful when it has context, relevance and purpose.

Data is only powerful if there is context

You want your data to be able to provide insight into answering these questions:

  • What is your business goals?
  • What is happening in the business now?
  • What has influenced the past?
Is your data relevant?

With all the tools available for data collection it’s important to focus on what’s relevant to your decision making.

Make sure you know what data is necessary rather than what’s nice to have.

  • Are your financials up-to-date?
  • Are the right systems and processes in use for different parts of your business?
  • Are your cloud systems set up correctly (and being used correctly)?

The worst thing you can do is to attempt to analyse irrelevant data and then make business decisions based on it! Make sure you’re collecting and looking at the data that’s relevant for your business.

Your data needs to have a purpose

Don’t forget what you’re collecting your business data for.

Focus on what truly matters and build from there.

  • What data/numbers/information determines success for you?
  • What do you want to understand most about your business?

If you want help with setting up and understanding your data, so you can forecast and make better, informed business decisions, get in touch.

We can accumulate, analyse, report and advise on your data; or show you the tools to use.

Streamline your business administration with digital record keeping

Streamline your business administration with digital record keeping

Streamline your business administration with digital record keeping

Good record keeping is the mainstay of accounts management. It assists you to both meet your compliance obligations and provide verification for all your business transactions.

The Government requires that relevant records exist to support all business transactions – purchases, sales, payroll, and other business matters such as loans or foreign currency dealings. It is a business owner’s responsibility to maintain and store accurate records for all financial transactions.

Did you know that you are allowed to store all business records digitally? This is both more efficient and sustainable than having to keep years’ worth of paper records at your office.

The most important thing to take care of if you are moving to electronic record keeping is the security of your information.

Using cloud accounting platforms, such as Xero, with add-on apps and systematic electronic record keeping makes it so much easier to run your business. 

This is because you will not waste time trying to find documents when you need them; whether that’s for yourself, your bookkeeper or your tax agent.

Most government departments allow business records to be either in paper or digital format. The legal requirements for record keeping are the same, regardless of format.

All records must be:

  • True and correct
  • Unaltered once stored
  • In English and legible
  • Stored in a secure system, whether physical or digital
  • Easily accessible if required
  • Held securely for the statutory five to seven years, depending on the type of record.

For best protection, store records both locally on your business computers and secure external online storage. This makes the records easily accessible from anywhere at any time.

Always take care of who has what level of access to your documents and manage user access accordingly.

If you need help understanding which apps will work with your business systems, we'd love to hear from you.

cost of sales

Cost of sales affecting gross profit

Cost of Sales Affecting Gross Profit

Do you know how much it costs you to produce each product or service in your range?

The better you can understand this cost of sales – or cost of goods sold (COGS), as it’s more commonly known – the more ability you have to control your company’s profitability. When you know your COGS, you can set the right price point, control your profit margins and ensure that you’re maximising your gross profit.

But to do this, you need to understand COGS and how it impacts on your financial management.

Understanding your Cost of Sales

To take one of your company’s products or services from inception to delivery, you will incur a number of costs.

For example, if you’re a manufacturing business, these costs might include buying in raw materials, direct labour costs, the overheads for running the machinery in your factory, the costs of delivering the products and the sales and marketing expenses needed to sell the product to your target customers.

For you to manufacture a finished product and to generate a sale, all these costs are a necessary part of the process. They’re the direct costs of producing your goods for sale.

You calculate your COGS number for the period by looking at the value of your opening stock (or inventory), adding the cost you’ve incurred to produce the goods and then subtracting the value of the closing stock balance.

The COGS formula looks like this:

Opening Stock + Purchases - Closing Stock = COGS

So, if you started with an inventory of $10,000, this is how you’d calculate your COGS:

  • Opening Stock: $10,000
  • Purchases: $25,000
  • Closing Stock: $8,000
  • COGS: $27,000

Reducing your COGS to boost gross profits

The more sales you make at a given price, the higher your revenue (income) will be. Deducting your COGS number from your revenue figure gives you your gross profit – and gross profit is a key metric for tracking the health and profitability of your business.

A high COGS number reduces the size of your profit margin. And, in turn, a small margin will start to have a negative impact on your gross profit. Being able to control and manage your COGS, and its impact on your gross profit, is a vital skill for any product-based business.

Here are some ideas for improving the profit impact of your COGS:

Reduce your supplier costs

If you can reduce the size of the purchases made to produce your goods, that means less expenditure and less impact on your profit margins. Try shopping around for cheaper suppliers, or negotiating better prices with your existing suppliers to bring down costs.

Streamline your production process

The more complex your production process is, the more overheads and production expenses there will be. Taking a lean approach helps you to continually evolve your processes and remove the extraneous elements – cutting costs while still delivering a quality product.

Increase your prices to boost your margins

If your COGS number is eating into your profit margin, one way to resolve this is to increase your price point. This will help to increase income and boost your margin but does require caution. If prices get too high, this can damage existing customer relationships and make you uncompetitive in the market – so think carefully about any price increases before taking action.

Talk to us about improving your gross profit.

If you want to boost your gross profit and get COGS under control, come and have a chat with us. We’ll look over your expenses and overheads, and will look for the opportunities to reduce your goods-related purchases and push for a better profit margin on your products.

PAYGW and PAYGI

What’s the Difference Between PAYGW and PAYGI?

What’s the Difference Between PAYGW and PAYGI?

Many people running a business and employing people are unsure about the difference between PAYGW and PAYGI.

They are not the same thing!

PAYG stands for ‘pay as you go’. This is the means the ATO uses to obtain tax payments from both employees and business owners.

Paying tax ‘as you go’ throughout the year means you don’t have to pay it all in one lump sum at the end of the tax year.

PAYG Withholding for Employees Income Tax

PAYG withholding refers to the income tax an employer withholds from employees’ gross wages to meet their personal income tax liabilities.

Employers are required to remit the employees’ withheld tax to the ATO each month or quarter, with the business activity statement (BAS) or the monthly instalment activity statement (IAS).

PAYG withholding applies to payments employers make to employees, directors, office holders and labour-hire workers.

PAYG can also be withheld from non-employees: contractors with a voluntary withholding agreement, some payments to foreign residents and payments to suppliers where an ABN has not been quoted.

PAYG Instalments for Business Income Tax

If you run your own business, you'll need to plan for income tax payments once you make more than the taxable threshold.

PAYG instalments allow you to pay an amount towards an expected tax bill. Amounts are based on business or investment income from the previous tax year.

Once you complete your tax return, the amounts already paid are offset against the total amount of tax due. You will then receive either a bill for extra tax or if you have paid too much, you will receive a refund.

Usually, when you start in business, you don't pay any tax instalments until you have completed the first year’s tax return.

However, if you’re new to business, you can voluntarily enter into the PAYG instalment system to start contributing towards your next tax bill. This is worth considering if you have done better than expected in your first year!

You can pay PAYG instalments by using the ATO determined amount based on information in the last tax return (instalment amount) or using the ATO defined percentage rate applied to your income (instalment rate).

The first method is the simplest; however, if your income varies a lot from one quarter to another, it may be better to use the instalment rate so you know you have put aside the correct amount based on your actual income.

PAYG Planning for Cash Flow

If you’re in business or considering employing people soon, you’ll need to plan for PAYG instalments and possibly PAYG withholding so you can meet your ATO tax reporting and paying obligations. 

Planning ahead means you’ll never be caught short with cash flow difficulties.

Talk to us to learn more about income tax responsibilities as an employer and business owner

What value can automation bring to your business

What value can automation bring to your business?

What value can automation bring to your business?

Automation has the capacity to revolutionise your efficiency and productivity. But how many of the automation features that are available to you are actually being used?

Could you be getting more value by building automated processes into your operational framework?

Removing the manual workload to streamline your processes

There’s a very simple mantra when it comes to making the most of automation

If there’s a manual task in your business that’s taking up time, automate it now!

The more time you and your team spend on low-level administration, data-entry and form-filling, the less time you have available for actually running your business.

With your software tools maximised, your automated processes can be chugging along in the background, doing the heavy lifting and freeing up your time to focus on client service, sales and strategy etc.

So, which elements of your everyday operations could you be automating? And which apps and software solutions can help you to achieve your automation goals?

Here are some areas where automation and smart systems can really help to add value

Automated bookkeeping and digitisation of paperwork

Apps like Dext (formerly Receipt Bank) offer you the opportunity to automate your bookkeeping and record-keeping. These solutions let you snap a photo of a receipt or invoice, digitise the contents and then automatically create an expense claim or bill in your accounting system. There’s no keying in and the whole process is synced with your choice of cloud accounting platform.

Automated employee expenses

Apps like DiviPay give you automated control over your employee expenses. Using either virtual or physical credit cards, your staff can pay for expenses and payments are then automatically synced with your main accounting platform.

That means no late expenses claims, no need for petty cash and no wasted time keying in the receipts. All employee expenses can be tracked, measured and paid, with the whole expenses process automated from start to finish.

Automated payment collection from your customers

With payment gateways like Stripe and GoCardless you can automate your cash collection. By using a modern payment gateway, you make it easier for clients to pay their bills. 

But you also automate the actual cash collection and bank reconciliation process too. Money can be instantly paid to your main business account and all the transactional data pulled across to your accounting platform. That means less admin, and faster payments too.


Automated marketing and social media posts

Digital marketing is key to finding customers and growing your business. You can automate a large chunk of your marketing work. These solutions let you create automated emails, target specific customer audiences and track your return on investment (ROI) in forensic detail.

Talk to us about understanding the different App options to help you automate your business.

Getting on top of your invoicing

Getting on top of your invoicing

One way to help your small business succeed is to get on top of your invoicing.

This means sending them in a timely manner, making sure they have all the essential information included and chasing them up when you need to!

When you’re running a small business or working for yourself as a contractor, getting paid relies on sending your invoice. And because getting paid, and on time, is essential to staying afloat, it’s important to make sure that you’ve got all the important information included.

Setting up your invoices correctly will ensure you get paid quicker.

One of the important aspects of invoicing is making sure your invoices are sent in a timely manner. Ideally you will be invoicing immediately a services is completed or a product ordered. At a minimum you should provide an invoice within 28 days.

Also, for high ticket items, consider asking for a deposit.  If your service is ongoing or extended over a period of time then look at implementing progress invoices. This will help your cash flow. 

What to include in your invoice

Your invoice needs to contain the following:

  • 1
    The words ‘tax invoice’, ideally as a heading.
  • 2
    Your business or trading name.
  • 3
    Your contact details- these aren’t technically required for invoices for under $1000, but it’s a good idea to include them in case the recipient needs to get in touch.
  • 4
    Your ABN or ACN.
  • 5
    The date you’re issuing the invoice.
  • 6
    An itemised list of what you’re invoicing for, including the price for each item or service. Make sure that you clearly indicate whether GST is included in the total price.

If you are using accounting software simply fill in the templates or you can see some examples of invoices on the ATO website.

A well set out invoice will make it easier for your clients and customers to pay you. Accounting software will make the job easier by providing the format for your business and increasing your efficiency.

Talk to us about your invoicing to ensure you make it easy for people to pay you.

Understanding your revenue drivers

Understanding your revenue drivers

Understanding your revenue drivers

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a business, you face the multiple challenges of a global recession, an increase in online consumer buying and a ‘new normal’ when it comes to trading, markets and buying expectations.

The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Important areas to consider 

Revenue channels

Where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.

Revenue streams

Your total revenue will be made up of a number of different ‘streams’. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions.

If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.

Product/service split

Do you know which products/services are the most profitable in the business?

Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change?

The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.

Value vs volume

Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin?

Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue?

By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring and understanding your revenue drivers

We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

Upsizing or downsizing: forecasting can help

Upsizing or downsizing: forecasting can help

2020 and 2021 have created a number of challenges for the average business. Depending on your business purpose and strategy, you may need to either upsize, or downsize, to secure the long-term future of your company.

But what are the implications of upsizing or downsizing, your operations? And how do you refine your business so it's fit for purpose and ready to take on your new aims and goals?

The answer is to look carefully at your forecasting and your future decision-making.

Looking at the ongoing needs of your business

Our experiences of the pandemic have demonstrated one very clear lesson – you never know exactly what lies around the corner for your business. But the more prepared you are, the better you can respond, as and when new threats and opportunities do appear.

With this in mind, forecasting and scenario-planning can be exceptionally important tools.

Rather than crossing your fingers and hoping for the best, you can plan for two, three or more different outcomes – with different strategies and tactics for each separate scenario. You can’t bullet-proof your business, but you CAN make sure that you at least have a Plan B (or C).

Scaling up, or scaling down?

By making constructive use of forecasting, you’ll be able to see the most viable path for your business. From here, you can make a decision on whether upsizing, or downsizing, is the most appropriate action for the long-term health of your business.

Some key questions to ask during your decision-making may include:

Do you have enough funding to grow, or do you need to downsize?

Knowing how much working capital you have available in the business is a vital piece of information. If you have a healthy balance sheet, a workable funding strategy and access to lenders, you’ll be able to fund your growth. If your cash reserves are depleted and access to finance is limited, now may be the time to shrink the business and consolidate things down – helping you to survive to fight another day, even if it is at a reduced scale.

Do you need more, or fewer, employees?

If your market share has dropped, you may need to downsize your team. And if you've hit a winning streak of sales, you may need to upsize your workforce to meet demand. Look at what resourcing you need and the types of skills, capabilities and long-term knowledge you need from your team in order to meet your new goals and targets.

Do you need to train your existing people?

If your business purpose has evolved, or you're moving more into the online or digital arena, you may need to train up your staff. Upskilling your people helps to bring them more in line with modern digital business practices, software and online customer interactions, all of which helps to increase your operational capabilities and your customer service levels as a business.

Do you need the same number of branches/shops/offices? 

If you've instigated remote working or hybrid working, you may not need so much office space for your people. And if you’ve moved a lot of your business to online selling, fewer bricks-and-mortar outlets will be required. Cutting building lease costs and/or commercial mortgage expenses can be a serious cost-saver for the business. Conversely, if you’re aiming to scale up, it’s likely that larger premises will be needed – resulting in higher property costs, but increased income from your scaled-up operations.

Do you need new equipment, machinery or vehicles?

Knowing what tangible assets you need in the business is an important part of your new business plan. If you’re expanding your operations, new equipment and/or vehicles will be needed to meet the new demand. This is likely to mean taking out third-party finance, or digging deep into your cash reserves. If you’re downsizing, there’s potential to sell-off existing equipment and assets and to free up this equity for other projects in the business.

Talk to us about scenario planning and decision-making

If you’re in the process of evolving or changing your business purpose, please come and chat to us. We can help you review your existing business plan, run scenarios and forecasts, and look at the long-term future path of your business.

Do you have a business plan

Do you have a business plan?

As we continue to face challenging times, to make a success of your business you’re going to need a robust business plan.

With a one-page business plan behind you, your company has a real sense of strategic direction and a set of core goals to refer to and track against.

But what are the key elements to include in your one-pager business plan?

We’ve listed some of the foundational areas to cover, so there’s real purpose behind your business.

What to include in your business plan

Lots of online resources will suggest that a business plan is an easy document to create, but a good plan will take time and plenty of thinking to get right.

As business advisers, we’ll help you put together a plan that gives you a clear strategy for the next six months and beyond, with measurable goals to include in your plan. The resulting document will help give you clarity on your direction, and where to invest time and money.

A business plan will also be an essential document if you are looking for investors or external funding. Any loan providers or private investors will want to assess the risk in your business, your cashflow position and the underlying profitability of the enterprise – so bear this all in mind when outlining the financial details of your plan.

If you haven't written a plan before, a template is useful.

Start with the following headings:

Business description

Your business description should include a mission statement, your key goals and your objectives as an enterprise. A good mission statement explains:

  1. what you do
  2. why you do it
  3. who you do it for.

It should be short and to the point and be used to inspire your marketing and drive the everyday internal running, ethos and tactics of your business operations and team thinking.

Business profile

A profile section tells me how long you’ve been in business, the specialty products or service niches that you focus on, and the key strengths of the company. It will also outline your business strategy and how you aim to achieve your targets, increase your customer base and grow the business over time.

Business environment

This section sets out the environment that you trade in as a business. So you should outline things like the key trends in your industry, your close competitors in the market, and the size of your current customer base. You can also include any research or market research you’ve compiled regarding your intended market, industries and customers, to give your plan some factual foundations.

Business strategy

A SWOT analysis demonstrates the strengths, opportunities, weaknesses and threats in the business, allowing you to refine your business strategy and maximise your success. Identifying your key strengths and opportunities helps you to focus your efforts and resources in the most productive areas. And knowing your weaknesses and threats helps you look for areas of improvement, and where you may need to safeguard the company against specific risks, threats and competitors.

Financials

Your financials section sets out the basic financial drivers of the business idea. For new businesses, this will mean outlining your projected expenses, budgets, sales targets and profitability projections etc. For existing businesses, you can include your profit and loss, balance sheet, sales trends and projected budgets etc. Cashflow and revenue forecasts will also be essential if you’re approaching lenders.

Talk to us about creating your one-page business plan

We’ll help you create a tailored business plan, to guide you through the threats and opportunities that lie ahead, with solid financial management for the next stage in your growth.