Are there times when you don’t have enough money in the bank account to pay the bills, wages or the ATO? Does this cause you to freak out about your cash flow?
There are several times during the business lifecycle when cash flow challenges will arise unless you have a sufficient buffer of funds in the bank to carry you through these times.
One circumstance is during periods of growth when you’re required to pay out costs before the higher revenue is received into your bank account. This could be the need to pay additional wages when the income from their work isn’t received until 30 or 60 days later.
Another circumstance is when your clients or customers delay paying their invoices to you. This frequently happens in the construction industry but can happen to anyone.
Let’s face it, cash flow challenges are part of doing business. It’s a struggle during those time periods but there are 3 steps you can take to minimise the impact of a shortage of money....
I may not be the first person to call the elephant in the room. But I am the first person to call the numbers.
Are you treating numbers like elephants in the room, where they are looking at you while you try your best to ignore them?
What is it about the numbers that freaks you out?
I’ve found the top 7 reasons why people don’t look at the numbers
This usually arises when you’re struggling; cash flow is a challenge, you’re stressed out, losing sleep at night and worrying about how to pay the wages, the rent, the bills and taxes. When times are tough, and you already know that, the last thing you want to do is look at the numbers and make yourself even more depressed when you see just how bad the situation is.
A lack of knowledge is the cause of many a case of numbers being ignored. The reality is that the vast majority...
It’s time to spring clean your business by reviewing your goals for the future. Consider what impact it has on your budget and financial results.
Spring is in the air; the early flowering trees are putting on their beautiful display and the days are getting longer and warmer. In the natural world, spring is a time of new beginnings, deciduous trees come to life with green shoots and many animals give birth to their young.
Growing up in Canada, spring was a special time when the snow melted, the temperature climbed above freezing and it was time to get the bicycle out again. Spring felt like a release. both a release from winter and from school, even though I loved school. It meant freedom was around the corner, long summer days, bike riding on the prairies, and exploring the world around where we lived.
It was a truly magical time.
Whilst as an accountant I tend to work in financial years and quarters, I still do whatever I can to recapture that sense of freedom when spring...
Dealing with inventory is the trickiest part of accounting. It is imperative that you match the sales revenue with the purchase costs that relate to those specific sales for your accounting reports to be accurate.
If you have an accounting system that handles inventory you’re well on the way to accurate reports, but I’ve found that many businesses don’t have this and as a result, their accounting reports are not showing their true gross profit and net profit.
My top 3 tips for dealing with inventory are:
Add doing a stocktake to your end of month checklist and do it without fail. Create a list of your inventory items and manually count how many you have on your premises on the last day of the month. Ideally, create this in a spreadsheet so you can enter the inventory count. This will then automatically calculate the value of your inventory.
The reason for this is that if you’ve purchased stock in a...
I often use the phrase “follow the dots” about accounting processes. Bookkeeping processes were designed many years ago and while the systems we use have changed, the fundamentals haven’t.
Once you have your accounting system set up and running for a few months, it’s mostly just doing the same as the transactions previously; hence “follow the dots”.
When you have procedures documented, your team and new team members can undertake the task by following the procedure.
Yes. There are times when they are necessary for showing information in a different way. However, they shouldn’t be used to replace your accounting system; rather as an addition to it.
I’ve recently been working with a client who has a number of extensive spreadsheets that they maintain. A new team member had been updating them and adding in new information. When reviewing the data and ensuring the numbers...
My work has historically consisted of one deadline after another. Mostly imposed by the government, but some imposed by clients.
I was looking at my “to do” list for today which is mostly made up of items that have to be done by a certain date, and it got me thinking about the origin of the word “deadline”.
So, I did what we all do in today’s’ world. I Googled it and got quite a surprise for my efforts.
It appears that the derivation may have come from the American Civil War. In the prisons, there would be a line or boundary called the deadline. If a prisoner went beyond it, they would be shot dead.
Makes sense, doesn’t it? Deadline.
According to Wikipedia, the word deadline was used in the early 1900s in the printing industry as the line in a printing press that delineated the end of the area that would print.
It was also used at that time in the publishing industry for the time by which material had to be submitted to make it...
A curveball can come in all shapes and sizes. There are the small ones that just throw you off track a little bit, and then there are big ones that come out of nowhere that rock you to your core.
As business owners, we’re on the receiving end of a curveball all the time.
In reality, we should be ready for curveballs. We should have thought about the various possibilities of what could go wrong and...
You may have heard of Minimum Viable Product, but what is Minimum Viable Income?
Firstly, let’s identify what Minimum Viable Product is.
The Wikipedia definition is “a product with just enough features to satisfy early customers, and to provide feedback for future product development”.
What, then, is the definition of Minimum Viable Income?
I define Minimum Viable Income to be the income required to pay all expenses of the business, no more and no less. In accounting-speak it is called Break-Even.
Minimum viable income is essential when starting out in business. It is essential in those early days when you’re spending money getting started before your first sale. And then in those months when sales are starting, and you’re building the business.
Knowing your Minimum Viable Income figure becomes the very first goal in business — the goal to have sufficient income to pay all the expenses....
What you read on social media can be misleading and frustrating information.
Benjamin Franklin is attributed to the quote “… nothing can be said to be certain, except death and taxes”. I’d add to that, changes in tax laws.
It seems like every year; there’s another change in taxes that impact business owners. Big changes took place with the introduction of the GST and Superannuation Guarantee.
The recent implementation of Single Touch Payroll (STP) is one of those changes that has crept up stealthily upon us. Businesses employing 20 or more staff had to comply with this legislation on 1 July 2018.
From 1 July 2019, employers with 5 – 19 employees are required to report under the Single Touch Payroll system. There is a transitional period to 30 September 2019 by which time you have to be reporting.
For employers with 1 – 4 employees, there...
It’s time for new financial goals as you celebrate the old year and plan the new year.
Congratulations, you’ve survived another financial year and today is the first day of a new one. Is this year going to be different from last year, or will it be the same again… It’s time to review the past and reset your financial goals for the new year.
A new year is a great time for a reset of your business. However, I recommend a reset at least every quarter with a major reset at the beginning of a new year.
For me, it encompasses a few parts. Firstly, it’s time to reflect on what I’ve achieved. I review the last month, quarter, year and usually take a few minutes to go back a few years to consider just how far I’ve come. I take a look at what I’ve achieved, what I haven’t achieved, what I’ve done differently, and what new skills I’ve learned. Then I also take a look at what is still on my...