5 Ways to Improve your Cash Flow

In our last blog, we discussed ways of managing your cash flow. We know that cash is the lifeblood of any business, so here are 5 more tips to help you improve your cash flow.

 If the cash dries up, problems quickly begin to multiply. By keeping the cash running freely and you can continue to grow your business.

Here are five tips for improving your cash flow:

1. Have a system to manage your debtors. 

Come up with a clear, step-by-step way to handle outstanding accounts. This might include:

• automated reminders on unpaid emails
• a phone call or email when the amount has been outstanding for a certain period of time
• a stop credit on the client when they exceed an acceptable payment time.

2. Be prepared for tax time 

One of the fastest ways to run out of cash is to find yourself short at tax time. Talk to your accountant about tax planning measures you can implement to ensure you can make your compliance and tax obligations. 

3. Try not to dip into business funds for personal spending

It’s always tempting to tap your business account for personal spending. Instead, try to keep them separate. If you’ve over-saved at the end of the tax year, you may be able to draw down a nice bonus. That’s much better than being caught short.

4. Sell old stock

Too much stock? Consider old stock, old furniture, machinery or even stationery: they can all be sold to free up space and provide a small cash injection.

5. Forecast your cash flow

Create a cash flow forecast (we can do this with you) and that will help you monitor and measure the flow of cash in and out of the business.

Need help with forecasting or cash flow management? We’re here for you. Feel free to get in touch.

Accessing Business Funding

Cash is the fuel that powers your business. But, does your business have enough capital in your company to actually fund your short, medium and longer-term goals?

Whatever your business aims are, you’re likely to need some additional finance at some point along the business journey. But, how does this extra cash then benefit the growth, scaling up and (eventually) the sale value of your business?

The value of extra capital in the business

Third-party business finance comes in many forms.

It might mean talking to your bank about agreeing an overdraft extension, or taking out a business loan from a business funding provider. It may even mean looking at specialist finance products, such as:

• asset finance (for buying new equipment)
• invoice financing (for quickly raising cash from your outstanding invoices)
• government-backed grants and tax incentives for enterprising businesses.

Whatever finance route you take, it’s important to understand the impact that this extra capital will have for your business. And for your longer-term success.

Accessing business funding

Accessing business funding provides a number of opportunities for your business.

Boosts your working capital

Funding gives you the liquid cash needed to stabilise and expand your operations.

With enhanced working capital, you can overcome your post-pandemic cash worries and get your balance sheet looking healthy once again.

You can also take on new work, projects and customers, safe in the knowledge that you can cover the initial expenditure while waiting for new revenue streams to bear fruit.

Provides investment in your growth strategy

If you’re looking to expand your operations or scale up the business, extra funding gives you the capital to invest in this growth.

You have the capital to take on more people, to invest in equipment, plant and new technology, and to scale up the overall capacity of your business.

Strengthens your company's balance sheet

The health of your balance sheet is determined by the balance between your assets (the things you own, including cash, within the business) and your liabilities (the debts that you owe other people).

Additional funding in your business helps to:

• increase your assets, which, in turn, helps to boost your working capital and liquid cash
• enhance your asset performance
• improve your capitalisation structure as a viable business.

Makes your company more valuable

With more cash in the bank and more capital to draw on, your company becomes a more valuable, and a more attractive proposition in the marketplace.

This healthy financial position is invaluable when approaching lenders for more funding, when buying out a competitor or even when selling the business and bringing your exit strategy into play as the owner.

However, if you’ve taken on private investors to provide part of your funding, you do have to consider that these investors will likely now own shares in the business – limiting your overall ownership and control of the company.

Whatever the next stage is for your business, the journey will be easier with a robust, tailored funding strategy behind your business plan.

Talk to us about creating a tailored funding strategy

10 ways to improve your margin

Improvements can always be made at the margin. Small tweaks to your processes or systems can make a massive difference to the end result. It’s the same with your business margin; a 1% increase in your gross margin on $500,000 of sales is an extra $5,000 on your bottom line.

The best part about improving your margin is that you increase your profit without needing to lift your sales.

Here are 10 ways to improve your margin

1. Negotiate better prices with your suppliers.

As they say, ‘the squeaky wheel gets the oil’, so if you don’t ask, you won’t get.

2. Update your pricing model.

Make sure you’re using the most recent supplier prices and that all costs are included in your price.

3. Back cost jobs regularly.

Review exactly what you spent on 2-3 jobs each month and compare the actual cost to what you anticipated the cost would be when you quoted the job.

4. Get rid of slow-moving items or work that has a poor return.

Selling old stock at cost will drop your margin, but if you replace those items or jobs with higher-margin items, you’ll achieve a higher return in the long run.

5. Set budgets and targets with your team.

Give your team something to aim for. Celebrate success when the targets are achieved.

6. Report your results on a cloud-based, real-time system.

You can’t manage what you don’t measure! Regularly monitor your most important Key Performance Indicators on your dashboard.

7. Reduce wastage and re-work.

What processes need to be updated to help reduce wastage and re-work? Or, if the processes are correctly documented, what training do you need to provide to your team to ensure the processes are being followed to reduce wastage and re-work?

8. Review your sales process.

Does your sales team know which products or services have the highest margin? Do they know how to upsell to those higher-margin products or services? Identify the sales skills gaps in your team and implement training.

9. Make a plan.

There are plenty of areas for improvement in your business. Unless you write them down, you’re unlikely to bring the correct focus to them. Make a plan to improve one area at a time.

10. Involve your business advisors.

Not only to help you with idea generation and building a plan, but also to hold you accountable to do the things you need to do.

We can help you lift your margin. Contact us today!

"To improve is to change; to be perfect is to change often." - Winston Churchill

The benefits of offering online payments

Did you know the easier it is for people to pay you, the faster you will get paid?

So, how easy do you make it for your customers to pay you?

One of the best things about the digital world is the ability to pay online. And businesses that offer online payments get paid faster.

If your customers can make an instant online payment, they’re likely to pay you more quickly – and they’ll appreciate the simplicity too.

What are online payments

In simple terms, online payments are the methods you offer so your customers can pay you on-line.

Different online payment methods include services like Stripe or Paypal (known as an Automated Clearing House or ACH), credit and debit cards, online wallets like Apple Pay and Google Pay, and recurring payments through direct debit (either from a credit/debit card or bank account).

The right set of payment methods not only offers your customers payment flexibility and convenience, they also reduce the chance of fraud.

It’s important, however, that you choose a provider that can integrate with your accounting software.

Talk to us about integrating the appropriate online payment method, for example, Stripe or Go Cardless, into your business.

What are the costs of online payments

Most online payment service providers won’t charge any set-up fees. However, they will charge transaction fees.

Transaction fees usually range from 2-4% of the payment amount for credit cards. Direct debit transactions are usually a fixed amount - often under $2 per transaction.

On large-ticket items or services, some businesses don’t like to offer online payments. This is because the fees can add up. However, if you include these fees in your profit calculations and offer online payments for these large-ticket items, that point of difference may be the difference between making the sale or not.

What are the benefits of online payments

At the end of the day, businesses that set up online payments get paid faster.

Offering online payments can be a point of difference for your business (especially if you have big-ticket items or services).

Online payments allows you to reach more customers globally.

Offering the right mix of payment options can increase the chances of a purchase.

If you want to add online payments to your business offering, talk to us about integrating the appropriate online payment method into your business.

Vaccinations and the Workplace

The Fair Work Ombudsman (FWO) has released guidance for employers on vaccinations and the workplace.

Currently, there are no laws in place that allow employers to order existing employees to be vaccinated against the coronavirus. The Australian Government policy is that vaccinations are voluntary. Each state and territory government is responsible for implementing vaccination plans.

There are some circumstances in which an employer may require existing or potential employees to be vaccinated, but most employers cannot enforce vaccinations. If there are state or territory laws that provide specific orders requiring vaccination of certain workers, then employers and employees must comply. However, the FWO states that no such orders exist right now.

Employers need to check Fair Work Act workplace protections and discrimination protections before making changes to any employment agreements to require vaccinations. Employers should also discuss any proposed changes to agreements with employees, including options for implementation and safe work practices.

The Fair Work Ombudsman COVID-19 Vaccinations & the workplace webpage has detailed information explaining rules about many aspects of vaccinations in the workplace. Visit the webpage to get details on when an employee can refuse, asking for evidence of vaccination, disciplinary action and lawful directions.

The Department of Health has a great tool to check eligibility for priority vaccinations for high-risk workers such as emergency services, border services, frontline healthcare or aged care and disability workers.

Safe Work Australia provides industry-specific information, including risk assessment and worker consultations. An employer has a duty to eliminate or minimise the risk of exposure in the workplace by cleaning, distancing and hygiene information.

Many employment situations may require legal advice before the employer can make any changes to vaccination policies.

Don’t get caught out by making unlawful changes to your workplace! Review your employment agreements and look at your options for keeping your workplace safe.

Is Your Business Eligible for JobMaker Payments?

The JobMaker Hiring Credit scheme is designed to encourage businesses to employ additional young jobseekers aged 16-35 years. The hiring credit subsidises an increase in employee headcount.

Eligible employers can receive the hiring credit for up to 12 months for each eligible employee engaged between 7 October 2020 and 6 October 2021.

Registration for the scheme has been open since December 2020. Employers can still register for the scheme now, even if you have already put on eligible workers since 7 October last year.

Is Your Business an Eligible Employer?

Various factors must be satisfied for an employer to receive the hiring credit payment, including:

• You must register for the scheme with the ATO by the due date of the first JobMaker period you are claiming.
• You must be registered for PAYG withholding.
• You must be up to date with income tax and activity statement lodgments for the previous two years.
• You must not be claiming JobKeeper in the same period.
• You must be reporting Single Touch Payroll.

The business must also satisfy payroll and headcount increase conditions by proving new employment positions have been created.

Payment Rates

• 16 to 29 years old - $200 per week
• 30 to 35 years old - $100 per week

JobMaker Claim Periods

There are eight JobMaker claim periods available for the scheme from 7 October 2020 to 6 October 2022. Single Touch Payroll reports must be submitted three days before the end of each claim period. Employers must also complete claims electronically through ATO online services.

The ATO JobMaker Hiring Credit scheme webpage has more detail about the scheme, including a calculator spreadsheet to estimate payments you could receive.

Want to Check if You can Receive the Credits?

The headcount rules are important to understand before registering for the scheme.

Contact us to discuss whether your business can access the hiring credits, and we’ll make sure your business can verify the payroll increase.

We can also take care of the ATO reporting and claiming process for each JobMaker period on your behalf.