ATO Line of credit ending

As new reporting powers come into play, businesses are being warned against using the ATO as an alternative line of credit.

Debt Reporting Powers

In 2019, the ATO was afforded new debt reporting powers. While this took a backseat to the Covid-19 pandemic, the ATO is now cracking down on outstanding tax debt. 

Businesses without a payment plan, that are more than 90 days in arrears, and who owe more than $100,000 in tax are more likely to be reported to credit agencies by the ATO.

Impact on credit rating

In the past, business owners have sometimes used the ATO like a ‘line of credit’ by not paying their ATO commitments on time.

Taking this road is much more likely to have an adverse impact on your credit ratings and credit insurance limits. This, in turn, makes it more difficult to maintain or extend credit terms with suppliers.

Therefore, it's important to maintain a high level of communication with your creditors. 

Staying on the front foot

As business owners, if you owe tax, it's vital that you stay on the front foot with this ATO crackdown. We suggest you seek the advice of your BAS agent.

First Class Accounts Ovens and Murray, as your BAS Agent, are able to advocate on your behalf to deal with the ATO.

As Busy01 Consulting, we can also to assist with:

• preparing a business plan
• management advice
• cash-flow planning and projection
• systems development
• business expansion
• budget development
• trading-structure planning.

Get in touch to discuss which options are best for your business. 

Direct Debits and Online Payments

Do You Have Direct Debits and Online Payments Set Up for Your Business?

Making it easy for your customers to pay you is vital to business success. Getting direct debits and alternative payment methods linked to your business is so easy these days there's no excuse not to give your customers multiple ways of making payment.

Many service-based businesses choose direct debit arrangements with their clients to avoid late payment. If you’re often chasing overdue payments, consider implementing direct debit arrangements to reduce your administration time.

If you’re already using online accounting software, check the add-on solutions and choose one that integrates with your accounts. This means that the payment platform information feeds directly into your accounting software to be easily matched to customer transactions.

Make it Easy

You probably already have bank transfer information set up, but adding several other methods such as PayPal, debit cards, and credit cards allows customers to choose the method most convenient for them at the time. Many customers appreciate the automation and simplicity of direct debits.

Make sure your payment terms and conditions are clear on your website and invoices and don't forget to include all your chosen payment methods for customers!

Worried About Costly Fees?

You have the option to choose whether you will absorb the cost of the payment gateway processing fees or whether you will add the cost to your invoice and charge the clients extra. Your accounting software will then allocate the funds accordingly to invoice payment and fees received.

Better Transaction Recording

When you integrate direct debits and online payment methods with your accounting system, you dramatically reduce errors in recording customer payments – which means less time spent on your accounts!

Not Sure Where to Start?

If you’d like to make it easier for customers to pay you, talk to us about which solutions are best for your business. We can discuss which platforms have the best and most secure integrations with the accounting software you use.

We’ll help streamline your payment systems.

Single Touch Payroll Phase 2 Expansion is Nearly Here!

The expanded Single Touch Payroll (STP) Phase 2 is due to start on 1 January 2022.

However, the ATO has recently announced that there will be some flexibility with the reporting start date being allowed up to 1 March 2022 if the business is not ready by 1 January.

Businesses must now report all employees via STP. Plus, concessional reporting options are no longer available unless the employer has extraordinary circumstances.

It's important to note that employers should be reporting STP to the ATO on the day they pay employees.

What’s New with the Expanded Phase 2?

The STP Phase 2 report includes extra fields to allow for more detailed payroll information. The additional details enable the data to be reported to multiple government agencies using standard payroll categories.

This means the government agencies receive accurate data directly from the employer without extra forms or time-consuming administration.

STP Phase 2 Improvements

• More income types and related special tax treatment.
• Reporting gross pay in separate elements such as bonus, commission or overtime.
• New employee tax file number declarations lodged directly with the ATO.
• Employee termination information.
• Clearer superannuation and lump sum payment reporting.
• Easier for employees at tax time and when dealing with government agencies.
• Better matching employer payroll data, employee tax return information, government agency payments and business activity statements.

The main payroll software providers are now bringing in phase 2 reporting categories, and in some cases, the changes have already happened in the background.

If you’re not already using an STP enabled payroll product, or you want to upgrade your software, talk to us about implementing a solution to make STP reporting quick and easy.

We can set you up with the right software or submit all the reports on your behalf.

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

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.

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.

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.

Creating a watertight accounts receivable process

In business, it doesn’t get much more important than making sure your customers pay you.

And accounts receivable is all about getting paid for the work you do – in business.

It’s not exciting, but it’s important.

The accounts receivable process covers every part of your payment lifecycle. From finding customers to communicating expectations to billing correctly to following up on late invoices.

Building an accounts receivable process

So, how do you to build an effective accounts receivable process in your business?

The right customers

First, you need to work with the right customers and clients.

Before taking on customers, make sure you run credit checks. It’s also important to have them sign written terms, including billing timeframes and late payment penalties.

If you are comfortable doing so, you can also ask clients to sign a personal guarantee. This gives you the option of suing for an unpaid debt.

Effective invoicing

It’s vital that you always send invoices straight after the work is completed. This gets the payment ball rolling.

Make it as easy as possible for your customers and clients to pay you. You can do this by offering options like debit, credit or direct debit to.

Dependent on the apps you and your customers use, you may be able to set up to send e-invoices directly to your customer’s accounting or finance software.

Following up

Make sure you keep a close eye on your invoices. Make frequent and regular checks that payment has been made.

Have a process to follow up if an unpaid invoice is past its due date. This can be an automated process using cloud accounting software to send email reminders and statements. If that is unsuccessful included phone calls and consider debt collectors in your process.

Reviewing

For any customers that regularly pay their invoices late, consider changing their terms. Perhaps split your invoices and ask them to pay half upfront. Or suggest another payment method.

If there is not change to their late payments after changing their terms, you might consider letting them go.

Consistency is key

At the end of the day, having a watertight accounts receivable process is all about consistency.

Follow your process every time.

• Select the right customers
• Have clear policies and prompt billing
• Ensure thorough follow-ups and reviews

Automating your process as much as possible ensures consistency. And being consistent in your process reduces the risk of unpaid bills and rogue customers.

If you’re ready to create an effective payment process talk to us about how we can help.