I was asked what was my number one business tip at the recent MYOB Conference for 2011.

It was quite simple! Cash is still king. That is to say, a successful business must have the cash to run the business and to invest in it's future. This means that the business manager must be in touch at all times with it's creditors (accounts payable) and debtors (accounts receivable) and match the timing differences between the two to ensure that the debtors exceed creditors to ensure a sustainable business.

The number one mistake that small business make is to quite simply spend or draw more out of the business than there is available. Cash at the bank is not a reflection of cash flow or available cash funds. For example, if you have $15,000 in the bank, but you have $20,000 in creditors, quite clearly, there is a cash shortfall of $5,000. My rules are:

1. Ensure that you have a handle on how much your customers owe you and when it will be paid;
2. Ensure that you have a handle on how much you owe your suppliers and when it must be paid;
3. Ensure that you are continually invoicing more than you need to cover the people who you need to pay, cover your overhead costs & expenses and make a profit (if you can't do this, your business is in need of a review);
4. Ensure that 2 & 3 are sustainable;
5. Ensure that you can invest in your business' future and detail this in your business plan;
6. If the answer in 2 and 3 is NO, you need to either increase 1 or decrease 2 or both!!

Most importantly - be very, very careful about spending more than you have - in particular in areas where there is little or no return for your investment (discretionary spending and owners drawings/wages).

 

I remember well the Valvoline advertising campaign........oils ain't oils!!

Well I support that Data Entry is not just data entry! I

It is impossible to complete data entry without also being involved in determine tax codes and therefore  the allocation of GST. There are many situations where GST is not a straight 10% of the purchase and needs to be split. eg. shopping from a supermarket, insurance premiums. This of course has BAS implications.

To ensure the accuracy of BAS Lodgements, every transaction entered into MYOB should be cross referenced with the paper trail to check the value of GST. In some instances this is not possible - if a client does not produce receipts and only a bank statement or a bank statement with receipts of which some have been misplaced eg. fuel receipts.

It must be stressed that the ATO requires all transations  over $82.50 to be supported with a relevant tax invoice. In the case of a tax office audit - these receipts will be called upon.

Receipts make a Book Keepers life easier and make the clients records reliable - so keep all your receipts and provide them to your book keeper.

An easy bank reconciliation relies on accurate data entry. Bank reconciliations should be completed on a regular basis. How often is regular? Well that really depends on the volume of data. Regular for some business may be daily, whilst many it will be monthly. Checking your business' bank statement regularly and keeping data entry up to date is a key to making bank reconciliation easy. We recommend only finalising your bank reconciliation at the end of each month so that your reports are for a full month - but that does not mean that you can't ensure that your records are up to date on a daily or weekly basis by simply checking your bank balance and your MYOB balance regularly. If you are reconciling your bank say to the 31st August then your balance in MYOB must match to the cent. If it does not, we recommend the following:

1. Work out the amount it is out by;
2. Check for any obvious typo's that may alleviate this out of balance amount. If still out;
3. Back track to the point in which the bank is in balance;
4. Move forward until you locate the out of balance figure.

In book keepoing - always follow the paper trail and back track to the point where you are in balance. Locate the point where you become out of balance and then fix the relevant areas.