Cashing Out Annual Leave

Are your staff asking to cash out annual leave? 

There are some important rules to remember before paying out annual leave.

Firstly, you must review the employee’s modern award to check that cashing out leave is explicitly allowed.

Most awards do allow for excess annual leave to be paid out, and we give you the general rules here – but you need to check the relevant award for special regulations before agreeing to cash out leave.

Common Rules for Cashing Out Leave

• The leave must be paid at the same rate as if the employee takes the leave. That means you must pay leave loading if it applies, and super is always payable on cashed out annual leave.
• The employee must have at least four weeks of leave left available after paying out any excess amount.
• You can’t pay out more than two weeks of leave per year.
• While leave accrues as usual when an employee takes leave, you don’t need to accrue leave on cashed out leave.
• You need to have a written agreement with the employee, stating the number of hours being paid, the total amount and when you will pay it.
• Remember to check the employee’s award first and keep all records and calculations!

You Can Direct Employees to Take Excess Leave

You can't force an employee to cash out leave, but you can ask an employee to take leave in some circumstances. If you have employees accruing a lot of leave, check the award for guidance. For example, some awards allow an employer to direct an employee to take one week or more of leave if they have more than eight weeks accrued, give at least six weeks’ notice, and leave at least six weeks of leave available.

Need Help?

Remember, annual leave is paid out when an employee leaves your business, so it’s good to keep an eye on how much is owing and not let too much accrue.

Also, employees should be taking leave regularly for their health and wellbeing.

If you need help, talk to us, and we can review your payroll, leave accruals and modern awards to help manage employees’ annual leave.

Managing projects in a remote team

We’re living in a world where remote and hybrid working are now the norm.

Driven by lockdowns and the pandemic, businesses have been forced to adopt a ‘working from home’ approach. And this ability to work remotely has driven productivity and efficiency for some companies but can create its own challenges.

Designing your workflows for remote working

When a whole team, or even a percentage of a team, are no longer sitting in the same office space, there are some very specific considerations to bear in mind. How do they access the systems they need? Where is all the company and customer data stored? How can people collaborate? What’s the best way to communicate?

If you’re going to make it easy to manage a project with a remote or hybrid team, you absolutely need to think through these questions and come up with some practical answers.

For example:

Video-based meetings and project kick-offs

The obvious problem of not being in the same room is that the project team can’t see or hear each other. 

And over the course of the pandemic, we’ve seen video meetings and platforms like Zoom and Microsoft Teams come into their own. Having your kick-off meeting and regular team catch-ups via video calls helps everyone to feel involved, and helps to create more of a ‘team spirit’ between a group of people who may be hundreds, or even thousands, of miles apart.

Capturing actions and briefs

During meetings, you need good ways of taking down notes, capturing actions or summarising what’s been discussed with the client or the team. Using a cloud-based document system, like Microsoft 365, Google Docs or Evernote allows you to capture these ideas as rough notes. Or you could use an AI transcription tool, like Otter.ai, to transcribe the audio from the meeting as it happens and provide you with a full written breakdown of the call.

Job management and tracking tools

Once the project is underway, it’s important to monitor progress, record which tasks have been completed and stay in control of a disparate group of people all working in different places.

There are many project management tools for tracking the progress of a project and keeping everyone on top of things. When these tools are cloud-based, everyone has access 24/7 from any internet-enabled location, so that makes it far easier for everyone to be kept in the loop – and for people managers to see how each person is tracking.

We specialise in this space to support the implementation of these tools, so talk to us about your options. 

Collaborating together as a team

Working together from a distance is another hurdle for a dispersed team to overcome. But with cloud-based collaboration tools, like Monday, Slack or Teams, you can quickly create an online space for the team to share documents, have online chats, upload different document versions and generally boost the collaborative process.

The easier you make it to communicate and share files/info, the fewer challenges you’ll face as the project develops.

Integrating project finances with your accounts

Whatever the project, there are going to be certain costs, expenses and budgetary considerations to cope with. And staying in control of that with a team of remote workers can be a challenge – both for the project manager and the company’s finance team.

The answer is to use a project management tool that integrates with your main cloud accounting software. Many of the top project management and invoicing solutions can connect directly to platforms such as Xero, QuickBooks, MYOB or Sage.

Apps like DiviPay or Pleo also provide ways to manage your remote team expenses when employees are making ad hoc payments, racking up project expenses or have control over their own budgets etc.

Again, we specialise in this space to support the implementation of these tools, so talk to us about your options. 

As the benefits and flexibility of remote working become more widely felt, we’re likely to see even more projects being run remotely – with employees no longer clustered in the same office 5 days per week. So, if you want to keep your competitive advantage, you need to be ready.

The benefits of engaging a BAS Agent for your business

Do you spend too much time on your accounts? It could be time to engage the services of a BAS agent to help you with bookkeeping and ATO reporting.

Working with a BAS agent can benefit your business more than you may realise! We’d love to talk about how we can help save you time and money.

Many business owners starting out try to save on costs by doing their own bookkeeping, but this is one of the first tasks you can outsource to give yourself time and save money. If you can work on your business to generate more sales, why spend that valuable time on administration and accounts management?

A BAS agent is a registered tax professional who can provide a greater variety of services than a bookkeeper. BAS agents are trained in the complexities of GST and other laws – meaning you don't have to become an expert in areas that are not your passion or skillset.

What a BAS Agent can do for your business

Once the agent has become familiar with your business operations, they can not only take care of the transactional recording, financial reporting and compliance requirements, but they can assist you in better understanding your day-to-day business performance. A

BAS agent can become a trusted member of your management team along with your tax agent, providing accurate and timely financial advice and insights to help you make better business decisions and plan for long-term success.

BAS Services

A BAS agent can ascertain and advise the business owner on correct liability amounts and submit statutory reports to the ATO and other agencies on behalf of the owner.

BAS provisions include determining GST liabilities, PAYG withholding obligations, employee superannuation contributions, and submitting taxable payments reports and Single Touch Payroll.

What makes a great BAS Agent?

Professional BAS agents keep up with ongoing education and development, use industry best practices, take the time to ask questions and understand your organisation, and do their best to assist and advise your business.

They will work proactively to support the business by ensuring the integrity of the accounts and providing accurate financial reports. They will be able to discuss your business’s financial health, assess operations and systems, and give you valuable advice.

If you think it’s time to engage a professional BAS agent, get in touch and let’s talk about how this can benefit your business and save you time and money.

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.

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.

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?

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.