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).

 

What are some of the practical things that I like to think about in June, ready for the end of financial year?

1. Send out statements as early in June as possible to all your customers to try to encourage customers to fully pay their account before year end;
2. Review whether your business needs to purchase any big ticket items, that is assets over $300.00, for your business that can gain a depreciation benefit this year eg. office equipment, computers/laptops, tools of trade;
3. Ensure that you have all your creditor invoices before 30th June for items that may otherwise arrive from 1st July so that you can claim this year rather than next;
4. Ensure that you have all your bank statements reconciled;
5. Ensure that you are up to date with your BAS lodgements;
6. Pay any Memberships or Subscriptions in advance including insurance policies if you haven't already;
7. If you employ staff, ensure that your payroll records are up to date as you will need to prepare 'Payment Summaries' (aka Group Certificates) after 30th June;
8. Check you are up to date with your Superannuation Contributions (SGC) for employees, if you can afford personally, consider making a Personal Contribution to your Superfund before the end of the financial year;
9. Ask your accountant if there is anything you should be doing before 30th June?

If you are not on track with your record keeping - ask The BookSitters, we are here to help!!

A note on the upcoming end of financial year 2009/10. If you are using a computerised system for running your Payroll, like MYOB, make sure that you have the latest version loaded ready for your first payroll run post 1st July 2010 - tax tables are changing and if you are running old software, your PAYG Liabiliies may not be correct. This is an issue for both your business and your employees take home pay calculations.

Remember that the ATO requires Payment Summaries (aka Group Certificates) to be issued to staff by 14th July 2010 and that Annual PAYG Payment Summary Statements are to be lodged to the ATO by 14th August 2010, this is an orange form the ATO provides for your business which totals all wages and PAYG for the year withheld by your business and is a means of the ATO reconciling the Payment Summaries provided to individuals verses what is reported by business.

There is a step by step process that must be completed prior to rolling over a new payroll year to obtain this information. A new payroll year must be rolled to run wages post 1st July, however, Payment Summaries and various payroll reporting MUST be completed first as it cannot be done retrospectively once rolled. If your business needs assistance, we would be happy to help.

Well I can hardly believe that it is just 8 days away from the 1st of June....,meaning 4 weeks away from the end of another financial year. This year seems to me to have gone even quicker than usual. Maybe its because our business has been growing and we have been able to look after more business' book keeping needs??

Now is a great time to have a good look at the state of your financials and in particular, if you are on a Cash System, look at putting a plan into action to pay for as much of your supplies as possible and clear out the Accounts Payable (Trade Creditors) for the start of the new year....and in the same way.....get as many of your customers to pay for your services as possible Accounts Receivable (or your Trade Debtors).

Another thing to think about for the start of the new financial year....is ensuring that your Tax Codes are all correct in your MYOB file ready for your Accountant to lodge the final Quarter BAS with any end of year adjustments and that all your accounts can be reconciled successfully. This is not always the case if your BAS has not been lodged by a registered BAS Agent or Accountant. That is, not just your bank accounts and credit cards, but your Trade Creditors, Trade Debtors and BAS accounts too.

If you are not sure if this is the case in your business, we would be happy to assist. Putting these things in action before the end of the finanical year means that your books can be forwarded to your accountant quicker and cleaner post the end of the financial year.