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Category Archives for "Cash Flow"

Financially stress free piggy on christmas holiday on beach

Have you got a strategy for a financially stress-free holiday period?

Have you got a strategy for a financially stress-free holiday period?

Christmas holiday breaks are a time to spend with family, friends & have a chance to recharge for the year ahead. We look forward to warmer weather and finally setting up an out-of-office email for the break. However, for business owners, this time can be stressful without careful cash-flow planning.

Even if you do continue to operate through the holiday shutdown season, your customers' financial behaviour may not remain the same.

It can be pretty disappointing to work hard all year only to find that once you have paid staff, overheads and creditors, you have little or nothing left in the bank to cover your own time off.

The strategies and tips shared below are generalised, however, we are here if you need to budget and prepare a cash-flow forecast. We can also help if you need assistance in applying for short term finance to get you through the break.

Why is cash-flow planning particularly important at this time of year?

Staff leave needs to be covered in addition to your normal fixed overheads like rent, creditors and tax compliance. The budget and forecasting process ensures you know your numbers and are prepared. If you are shutting down, you won't be driving revenue during this period and sales may take time to get started again in the new year.

Here are some simple strategies that can help:
Decide your Christmas and holiday break dates

Confirm these with staff, customers and suppliers.

Budget and plan for annual leave 

Remember the pay rates may be higher than standard hourly rates, also factor in statutory public holidays.

Decide

If you are going to pay out leave in full at the beginning of the Christmas break or continue to pay as usual throughout the break.

Review your work in progress (WIP)

Plan to complete jobs or services that can be invoiced and paid before Christmas (remember if you don’t invoice and get paid before Christmas, you may not see the money until mid to late January).

Capacity planning

There is often a rush to get everything done before Christmas, whether it's the kitchen benchtop installed or the beauty treatment before the break, so make sure you have the capacity to maximise on this.

Stock-take

Do you need to order in goods now to be able to complete work in progress? Check that there is stock on hand available.

Making an arrangement with the Tax Office

if you find you can not make payments, it is possible to apply for an instalment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. Talk to us, we can help.


Talk to us about enhancing your financial support

If you can’t make ends meet, now is the time to organise short term financial relief like an arranged overdraft of loan, rather than hoping it will come right. Please let us know if you need any help with cash-flow forecasting, budgeting or finance applications.

Get in touch to improve your cash flow.

Business man with umbrella what is the forecast

What’s in the forecast?

What’s in the forecast?

When we set out on a fishing trip or hike, we always check the weather forecast.

It’s no different in business. The forecast tells us if there’s bad weather (poor cashflow) in store based on the direction we’re heading.

Your forecast will tell you:

  • 1
    Whether you have enough sales in the pipeline to give you the desired level of profit you want for the year.
  • 2
    Whether your margins are appropriate.
  • 3
    If you need to review your pricing or production processes.
  • 4
    If your business is running as efficiently as it could be.
  • 5
    Where savings can be made.
  • 6
    Whether you should invest more to get a better return.
  • 7
    How much money you need to set aside for tax.
  • 8
    How much money you can draw out of the business each month without running short.
  • 9
    How much debt you’ll be able to pay off.
  • 10
    Whether or not you will be able to meet all of the bank’s requirements.

The difference between a business forecast and a weather forecast is that, when the business forecast is showing bad weather, you can do something about it to make the sun come out. The forecast will tell you what’s going well and what’s not, so you can make adjustments to reduce the impact of bad weather.

Just as you wouldn’t go fishing without checking the forecast, you shouldn’t run your business without an annual forecast. So, don’t live in your raincoat, waiting to get soaked - take control and talk to us about getting your forecast done so you know what to expect.

“Planning is bringing the future into the present so that you can do something about it now.” - Alan Lakein

We’re here to help you, every step along the way. Get in touch!

Collect your debtors faster

Collect your debtors faster

Did you know that you still have to pay tax on your debtors, even if you haven’t yet collected them?

This is because you pay tax on your sales figures, whether you’ve collected the cash or not.

So, how do you collect your debtors faster?

  • 1
    Agree your payment terms at the time of sale
  • 2
    Ensure your customer signs your Terms of Trade before you start the job
  • 3
    Include a guarantee in your payment terms
  • 4
    Invoice as quickly as you can
  • 5
    Ask for a deposit prior to starting the job
  • 6
    Change your payment terms to within 7 days of invoice or on delivery
  • 7
    Send statements religiously at the start of the month
  • 8
    Have someone other than the owner be responsible for collection of debtors
  • 9
    Document any changes to your standard payment terms in writing
  • 10
    Use an integrated payment gateway app
  • 11
    Don’t provide credit to customers who’ve been late payers in the past, and don’t offer more credit to customers with outstanding payments

Don’t procrastinate on your debtors. Establish clear payment terms and ensure you stick to them.

Need help finding an integrated payment gateway app to suit your business? We can help. Get in touch!

“It’s the squeaky wheel that gets the oil.” – Anon

Need help finding an integrated payment gateway app to suit your business? We can help.

How much should you charge

How much should you charge?

Getting your pricing right is one of the best ways to plan for business success. Don’t make a rushed decision, take the time to properly understand the market, your total costs, and how to position your products or services.

Figuring out how much to charge is a big learning curve for any business owner. The answer to how to approach it will fluctuate as circumstances and markets change. It is important to revisit the question throughout the lifecycle of your business.

There is no magic formula

All businesses are unique, with an individual offering of products and services. Before you set your pricing, It’s important to look at the whole picture. This will help to ensure you are being strategic and not just following trends.

Gather the data

To get started, you need to gather as much information as possible. Block out some time to sit down with your business data and strategies. Pricing is essentially figuring out where your products and services are positioned in the market. So keep your business strategies top of mind. It doesn’t have to be a confusing exercise. Just grab a coffee get started.

Here are the first steps to consider:

  • 1
    Record all the costs involved in production. Make sure you include indirect costs, such as assets, insurances, licenses and legal costs.
  • 2
    Now that you have your outlay, consider your current profit margin or what margin you require. Remember there is a difference between net and gross profit margins. Net margins take all operating costs into account
  • 3
    Do your competitor research. Be thorough in understanding the market and what others are charging for the same service or product or variations of this. What unique selling points (USPs) does your business have that allow you to vary your prices?
  • 4
    Think about your offerings. What extra benefits or offerings do you have that can affect your pricing? Think about cheap and no-frills on one end of the spectrum, versus high-end premium products. Can you create different products at different prices to cater to different segments of the market?

Don’t forget to check in on your pricing regularly to make sure you’re keeping up with your customers and staying ahead of the game.

Contact us if you need assistance

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