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making it easier to get paid blog

Making it easier to get paid

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.

Business Development

The importance of business development

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.

chasing invoices

5 tips for chasing invoices without annoying your clients

Chasing Invoices

When you’re a small business owner, sole trader or freelancer, chasing invoices and asking for payment on overdue invoices can be a delicate matter.

Without an accounts person or department, sometimes you’re trying to secure new work and chase invoices from the same person. That can be an awkward tightrope to walk.

Here are five tips for chasing payments while maintaining customer loyalty:

Automate reminders

Set friendly payment reminders that go out automatically – they tell clients they’re missed a payment without making it personal. It’s like your invoicing platform is giving them a nudge, rather than you doing it yourself. You can sign it off with just your business name, rather than your own.

Find out who’s behind the payments

Is there another person at the business who’s in charge of accounts or payments? Ideally, you want to be selling your services to your usual contact and chasing someone else to pay your invoices.

Enlist help from a friend

If you have a friend who also has a small business, become each other’s accounts support. Set your friend up with an ‘accounts@yourwebsite.com’ address and they can send out email reminders and follow-ups to your clients, or call them about the invoice. Maybe you can do the same for them.

Set expectations when you negotiate the job

Firm and clear payment terms make it easier to get paid faster and keep that cash flowing.

Set out your terms up front – it’s much easier to talk about your payment expectations when you organise the job, rather than once the invoice has been sent.

For persistently slow payers, consider offering an early payment discount or ask for more money upfront for the next job.

Be nice, but firm

There’s no need to be rude or aggressive to your clients when chasing payment; you want to maintain a positive relationship.

However, at some point you need to cut off their credit. Often saying ‘I’m very happy to do that for you, just waiting on payment of that last invoice’ will give them the impetus they need to pay you.

But if they persistently don’t pay, no matter how much you like the client, you’re not providing a free service! Stop working for the client and chase those outstanding invoices more assertively.

If you need help managing your outstanding invoices, get in touch for expert support and guidance.


basics of business tax

Basics of Business Tax

Basics of business tax

Different business structures pay taxes in different ways, so it's important to have an understanding of the basics.

Although there are many taxes that a business might be affected by, the main ones are:

  • goods and services tax
  • income tax
  • pay as you go withholding tax for employees
  • payroll tax
  • excise tax

Other taxes that a business could encounter are:

  • fringe benefits
  • capital gains
  • property
  • vehicle
  • other duties and levies administered by state or local governments
Taxes Paid on the Business Activity Statement

Once your business is registered for the relevant taxes, several are reported and paid as part of the monthly or quarterly activity statement.

  • GST is collected from customers and paid to suppliers, and you pay the difference between GST on sales and purchases
  • PAYG Withholding for employees or suppliers that don’t provide an Australian Business Number
  • PAYG Instalments contribute towards an expected income tax bill
  • Other taxes paid on the BAS (if applicable) are fringe benefits instalments, fuel tax credits, wine equalisation tax and luxury car tax
Taxes and Other Fees Paid to State Revenue Offices

Some business taxes are paid directly to the state revenue office, such as land tax for property purchases and payroll tax once the state threshold of reportable wages is reached. Other common government duties include stamp duty on property transfers and land tax.

Income Tax for Businesses

Income tax is calculated after the end of the financial year, taking into account any PAYG instalments already paid.

Tax deductions for business expenses reduce your taxable income and, therefore, your tax bill.

If financial gain is made on the disposal of assets, such as property or shares, capital gains tax is paid on the amount of financial gain and is paid as part of income tax.

Income tax for business is calculated differently according to the type of entity.

Small Business Tax Concessions

Your tax agent can make sure you are claiming all the small business tax benefits that you are allowed through concessions that reduce the amount of tax liability.

For example, there are specific concessions for asset write-off, primary producers, fringe benefits or start-up expenses. Concessions also apply in some situations to reduce the amount of capital gains tax payable.

Thinking of starting or changing your business?

Talk to us about adding or cancelling tax registrations, concessions and planning for the various taxes your business will need to manage.

business finances

Making sure your new business finances are in order

Making sure your business finances are in order

Getting your head around the basics of bookkeeping, accounting and good financial practice may not come naturally to all business owners. But the better you understand the numbers, the more control you'll have over your business and your decision-making.

To get you started, here’s a rundown of some of the main financial terms and how they apply to the financial management of your business.

Revenue and money coming into the business

Most of us understand that revenue is the income you generate through your sales.

If you multiply your average sale price by the number of units sold, this is the top level number you get. It’s a gross figure (i.e. before any deductions) and gives you a clear idea of how much money the business is generating through its sales activity.

Revenue can come from various sources, and each income source is known as a ‘revenue stream’.

Revenue streams could include product sales, income from services you provide, income from intellectual property you own (like patents) or income from assets the business owns, like property you rent out at a profit.

Having several revenue streams is a good idea, as it spreads your income generation across multiple areas and reduces the risk of one revenue stream drying up.

Expenditure and money going out of the business

Expenditure refers to any payments you make (either in cash or credit) against the purchase of goods and/or services.

In a nutshell, expenditure is the money that’s going OUT of the business, so it’s important to have a good grip on these costs and to make sure you’re not spending any more money than you need to.

Costs that would fall under expenses include your supplier bills, your payroll expenses, your operational overheads and the costs of any raw materials and goods you buy to keep the business running.

The less you pay out in these expenses and overheads, the more of your revenue will end up as profit – as we’ll see in the next section.

Profit and loss (P&L)

Your profit and loss statement (usually referred to as your P&L) is an incredibly important financial report to get your head around. 

The P&L summarises your revenues and expenditure over the course of a period – usually for the month, quarter or year that’s just ended – and gives you a breakdown of the profits and losses the business made during that period.

If you make more in sales revenues than you spend in outgoing expenses, you make a profit (and that’s vital to your success).

For any business to be financially viable, your financial model MUST be able to generate profit.

Without profits, the business can’t make money, you can’t reinvest back into the company to drive growth, and you (personally) won’t get paid anything.

Cashflow statements and positive cashflow

Your cashflow statement is another vital tool in your accounting toolbox. 

To keep the lights on in the business, you need enough available cash to cover your everyday expenses. Your cashflow statement shows you the cash inflows (money coming into the business from revenues etc.) alongside the cash outflows (payments to suppliers, or operational overheads etc).

For the business to have enough cash in the pot, your cash inflows MUST outweigh your cash outflows. This is called being in a ‘positive cashflow position’ and it’s a level of financial health that every startup should aim for.

By tracking inflows and outflows, and projecting them forwards in time to create forecasts, you can make sure there’s always available cash in the business.

Improving your understanding of the numbers

It takes time to pick up the financial jargon and accounting terms that will help you understand your accounts.

But don’t despair. As your business journey evolves you’ll gradually begin to get your head around the important business finances, numbers, metrics and reports.

Other important finance terms to understand include

  • Turnover = the total sales revenue made in a period. It’s also sometimes called ‘gross revenue’, as it’s the number prior to any deductions being made.
  • Assets = the things you own in the business, like equipment, property or cash etc.
  • Liabilities = the things you owe to other people, like bills, debts and loan repayments.
  • Balance sheet = a snapshot of your assets and liabilities on a given date.
  • Working capital = your current assets minus your liabilities. In common usage, it’s the capital (money) you have in the business to keep the company operational and trading.
  • Funding = bringing additional capital into the business, usually in the form of business finance products like loans, or through private investment from outside sources.
  • Credit score = a rating given to the financial health and risk level of the business. The bigger the score, the lower the risk – and the better your access to funding.

If you’re planning for your business, get in touch. We’ll help you set up the ideal accounting system, so you’re in complete control of your finances.

e-invoicing

E-invoicing

E-invoicing

Is your business using e-invoicing?

It’s a fantastic way to protect yourself and your customers from invoice scams, and it can help you get paid faster. E-invoices replace emailed PDF invoices or links to online invoices. Instead, e-invoices are delivered securely to your clients, even across different accounting systems.

Preventing invoice fraud

Invoice scams are surprisingly common, and can be quite sophisticated.

For example, with intercepted invoices everything looks exactly right, but the bank account number has been altered. When it happens to you, your client thinks they’ve paid you, but the money has actually gone to a scammer. 

Another example is when you receive notifications from suppliers that their bank account number has changed. But it’s not actually your supplier, it’s fake, and your money is going to a scammer.

In the event of an invoice scam, it can be very difficult to get your money back.

E-invoicing prevents these types of scams because the invoices travel directly from one accounting or payment system to another. By directly connecting suppliers with their clients, there’s no opportunity for scammers to intercept the invoices.

Start sending and receiving e-invoices

When you have your accounting software set up for e-invoicing you can send and receive e-invoices immediately.

You can also use e-invoicing if you don’t use an online accounting platform. There are a number of e-invoicing enabled software providers. Talk to us about which one would suit your business.

It only takes a little bit of time to learn how to use e-invoicing.  And once you have implemented e-invoicing you’re more protected from invoice fraud. So, it’s well worth getting it set up!

We can help you set up your accounting software to send and receive e-invoices immediately. Talk to us about how

Keeping your business cash liquid

Keeping your business cash liquid

Keeping your business cash liquid – the difference between cashflow and profit

The foundational goal of any business is to make a profit.

As a business owner, that’s one of your key financial aims – to make enough sales, at a big enough margin, to generate profit from your enterprise.

But how does profit differ from cashflow? And why is cash king?

How do profit and cashflow differ?

To really understand the difference between generating profit and managing cashflow, we need to look at what both these terms mean. You might think that delving into the accounts is a job for your adviser, but being in control of your profit and cashflow is an invaluable business skill.

Let’s take a look at the differences:

What is profit? 

Profit is the surplus that’s left from your income once you’ve paid your expenses, supplier bills and tax etc. It's driven by creating a profit margin and generating value from your products and/or services.

What is cashflow? 

Cashflow is the ongoing process of ensuring that the business has the available cash (or ‘liquid’ cash) needed to operate. This provides the money needed to trade, to pay suppliers, to cover wages or to buy raw materials etc.

Why is positive cashflow so important?

‘Cash is king!’ may be a cliche these days, but it’s a maxim which underpins any successful business model. Yes, it’s great to make a profit at year-end, but if you don’t look after your cashflow then the business may not survive as long as the end of the year.

What’s needed is good cashflow management to enhance your financial health. And without a careful eye on your cash numbers, things can quickly go awry.

A business can generate high revenues and big profits, but still be cashflow poor. In other words, it can have profits at the end of the period, but have very little liquid cash to fund it's day-to-day operations over the course of the period.

Talk to us about improving your cashflow management.

Good cashflow management is all about being in control of your cash inflows (income you’re generating) and your cash outflows (what you’re spending). To achieve ‘positive cashflow’ you need to proactively work to keep your inflows higher than your outflows.

As your bookkeeper and BAS Agent, we’ll help you set up detailed cashflow reporting and forecasting, so you can keep the business in that ideal positive cashflow position. And we’ll also look at key steps for keeping your revenues high, margins profitable and meeting your financial targets.

Get in touch to talk through your cashflow management.

Plan for 2022

Plan for 2022!

What are your business goals for 2022?

The beginning of a new calendar year is an excellent time to review the year just finished and reflect on what worked, what didn’t, what you’d like to change and new things you’d like to implement.

Last year, there were inescapable impacts on businesses, with some thriving, others failing, and others just getting by. So what kind of year was 2021 for your business?

Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business efforts.

Your Yearly Business Review

  • What were the most significant impacts on your business in 2021? How well did you meet the challenges?
  • What worked well last year? What systems, technology, products or services were successful?
  • What accomplishments can you celebrate?
  • What situation, event or experience provided the biggest learning opportunity?
  • What is the biggest challenge or frustration you face as you prepare for 2022?
  • What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it!
  • Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable?

Get Ready for a Great 2022

While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for 2022.

If you’d like to chat about what you can do differently this year to enable your business to thrive, get in touch with us today.

Automating Bank Reconciliation

Automating bank reconciliation

Automating Bank Reconciliation

Good bookkeeping is all about recording and matching your financial transactions.

Over the course of a usual week of trading, you’ll have a range of payments being deposited into your bank account and a host of operational expenses being withdrawn from that same account.

To keep on top of this, you must match each line on your bank statement with the transactions recorded in your accounting software.

This process of matching the incoming (or outgoing) transaction with the relevant receipt, invoice or supplier bill is called bank reconciliation.

Why is bank reconciliation so labour intensive?

Bank reconciliation (or bank recs) is not the most thrilling part of the accounting process. But it’s essential if you’re going to have an accurate overview of your current accounting balance, and the balance that’s in your business bank account.

Traditionally, to complete the bank recs, you would need to:

  • Get a copy of your bank statement for the period
  • Check the deposits (cash coming in) and withdrawals (cash going out) on the statement
  • Look at the related credits and debits in your accounting software
  • Match these transactions to the relevant receipts, invoices or supplier bills
  • Reconcile your balance in the bank with the balance in your accounting software.

It’s a necessary process – and something you have to keep on top of. But it’s also a laborious and time-consuming task that eats into your admin time.

So, is there an alternative?

How can automation help to lighten the workload?

Accounting software has evolved in leaps and bounds over the past decade. And many of the innovations that are now available focus on alleviating the time-intensive tasks, like bank recs.

Modern cloud accounting packages offer a range of ways to not only lighten the financial workload, but also to improve speed, accuracy and efficiency.

For example:

Live bank feeds

These software integrations pull all the data from your online banking into the accounting software, giving you a live feed of your bank transactions.

Automated matching

Artificial intelligence (AI) and machine learning are used to automatically match the right invoices and bills with your bank transactions.

One-click matching

In a platform like Xero, you just need to review the automated matches and then click OK to match the transaction and complete the bank rec process.

Reduced human error

With an algorithm doing the matching, there are fewer errors in the bank rec process, and the whole process is completed in seconds, rather than hours.

Real-time bank and accounting balances

With live bank feeds and real-time data in your accounting software, you have the most current overview of your balances.

Talk to us about automating your bank reconciliation process.

If your current accounting platform doesn’t allow for automated bank recs, now’s the time to upgrade. Cutting out the manual processes gives you more time to focus on higher-value financial tasks, and keeps the reconciliation process ticking away silently in the background.

Get in touch to discuss switching to a new accounting platform.

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