Have you had months where your sales have been solid or even better than usual but regardless of how many leads you convert and new invoices you raise, it's just not reflected in your bank balance? Well you're not alone. There are many factors that contribute to poor cash flow but one of the big ones is customers/clients that don't pay their bills on time (if at all).
This is a challenge faced by every business that offers their clients payment terms other than Cash on Delivery. Businesses offer payment terms in good faith that customers will uphold their end of the deal and for the most part, they will pay on time, however there will be some that take advantage of your goodwill and drag their feet. Collecting delinquent debt costs you time and money whilst having a substantial impact on your cash flow.
A good way to look at debt collection is that a sale isn't a sale until you have been paid. Customers will delay payment because holding off on paying you is cheaper than digging into their bank overdraft. You're offering them cheap credit, but you're not in business to finance someone else's growth. Always remember, you're not a bank, so don't let them treat you as one. Converting sales into cash is key to securing your future.
Being proactive with regards to debtors is much better than being reactive. With this in mind, here are some easy tips to help get control over your debtors:
One in Five businesses provide no structured training to their employees, which means someone has to manually demonstrate every task to a new employee. So is there a way to have a well trained effective team without it costing a fortune? Here’s the secret of how to provide cost effective training in your business.
Some people might find this surprising but one of the most important services we provide as accountants isn’t preparing your tax return or annual financial statements, it’s tax planning. It may seem obvious to some, however to the vast majority of business owners, tax is something they worry about once the financial year is over. As the tax deadline looms, they begrudgingly compile their financial information and track on down to their accountant’s office for their annual visit. By the end of the meeting their taxes have been completed and they’re left to digest the bad news that a substantial tax liability will be due and payable in the coming weeks. Often the size of their tax liability comes as a total shock, possibly presenting owners with some cash flow challenges that could have all been avoided had adequate tax planning been conducted.
Does this story sound familiar to you? We’re always amazed by the number of business owners that have no idea that tax planning is a thing. That there are numbers we can review, actions we can take and long term plans we can make to reduce and/or better manage their yearend tax liability. The aim of the game is to be well informed and avoid surprises, to be ahead of the 8ball and ensure we utilise every provision available to maximise your tax position. However it’s essential to conduct said planning before the financial year is out because once the year is over, so is our opportunity to implement any tax saving actions.
Being proactive and taking ownership of your tax position will not only give you greater control over your cash and profitability, it’ll also empower you with the information to better run all aspects of your business, even those that seem to be out of your control.
Freelancing can look like an ideal job. But it can be hard. You're doing the work, and you also have to be the office manager, IT department and finance team.
Lucky we're going to recommend some apps to help with that.
These are 5 of the top easy to use apps.
What does it do? Don't know how much work you have coming up? Not sure when you will have time to take on a new project? Cushionapp is designed for freelancers to see their future, current and invoiced projects, and see what their forecasted income is and when they have gaps in the workflow.
Cost? $10 per month
Who should use it? If you stay awake at night worrying about money and upcoming projects.
What does it do? Job management through time tracking and invoicing made easy. Syncs across multiple devices and if you have to record your time, this is the app for it.
Cost? Free for micro businesses, $12 per month for solo freelancers
Who should use it? If you're doing time-based billing, yet your income isn't stacking up to how hard you're working.
Who? Inbox from gmail
What does it do? It's very similar to feel to the Mailbox app, which was our old favourite. You can swipe and archive to zero out your inbox every day. If you can't do it today. Pick another day to deal with that email and it will disappear from your inbox until then.
Cost? Inbox is free however if you're using your own domain you need to pay to use gmail for work
Who should use it? If you're already using google apps for work and using email clients or the gmail interface, move over and have some zen over your inbox.
What does it do? It's essentially the best to do list in your life. It syncs across platforms (so you can't lose it), and you can collaborate with it. Create launch schedules, to-do lists and more with wunderlist. I'm a huge fan of using the hashtags feature. If I'm in a writing zone, I pull up all the #write. If I'm waiting at the airport, #5mins to do quick easy tasks. Integrates with your email- so add it to your todo list and archive that email.
Cost? Free for most, $5 per month if you want to attach large files in there
Who should use it? Everyone who writes lists. If you aren't a list maker, that's not going to suddenly change.
What does it do? It's a secure password manager which works across platforms, stores all your passwords and keeps your sanity (and security). It can also suggest super secure passwords.
Cost? Free option is very limited, only $1 per month to sync across devices/platforms
Don't waste your time on administrative tasks when you could be doing what you do best.
The most frequent problem we see with freelancers, is they start their business, quit their job...and then come and see us when their first year of business is done. And it's tax time. It's a mess, and they don't know how much the owe - and then reality hits. They haven't put aside enough money.
Don't fall into this trap. We'll do another detailed post on the why this is a huge trap (here's a hint - the PAYG instalment transition HURTS).
So by popular request we're putting this out. It's not the prettiest little excel calculator, but if you put in your profit each month it will let you know very roughly how much income tax is on that.
The video here goes through a worked example, and if you have any questions please let us know by email email@example.com.
Vend + Xero
Alison and Sharon wanted their systems to be as well designed as their dream store. They use a Vend + Xero integration, with wireless iPad, printer and scanner technology.
For a new store in Eltham, a simple to use POS was their goal.
ABOUT THE CLIENT
The quilt shop is a local business in leafy Eltham. Committed to providing not just a quilt shop, but a whole feel good experience. The Quilt Shop will be a place where you can just pop in and say hi or stay for a cuppa and a slice of cake. They sell fabric, kits, patterns and supplies. The store is beautifully presented. The instore experience is throughly enjoyable for customers.
The Quiltshop wanted the countertop to be uncluttered and stylish.
The biggest challenge was the fact that the inventory needed to be sold in portions. Fabric is measured (and priced) by the metre. Therefore any POS system such as Vend needed to be able to sell items in part.
The integration needed to be seamless and help them manage the complex inventory. With thousands of different product lines, hundreds of ranges, and dozens of Brands. All with ease of use.
Other challenges during our planning meeting identified that they needed inventory management.
Suppliers sent incorrect items or only part shipped purchase orders frequently.
The first thing we did to ensure ease of use was the combination of Xero and Vend. We created a beautiful physical guide, tailored to their business and processes. From how to do sales, refunds, inventory counts, to even how to post COGS into Xero. This printed guide was also provided as an ebook and loaded into their ibooks on the store iPad.
The Hardware visible to the customer is an iPad Air mounted on a studio proper base. All the other items, wireless scanner, wireless printer, and cash drawer are tucked away out of sight. This kept Sharon happy with the finished custom countertop.
The Quiltshop collects customer details as part of a VIP loyalty program. Part of the appeal of Vend was the creation of promotions not relying on discounting.
Part receipting purchase orders and viewing outstanding items has made Alison's role easier. Alison had been doing an amazing job keeping track of inventory shipments with a colour coded highlighter system. Vend now saves Alison time (and highlighters).
Pictured is the 70 page printed guide created by Bramble and Briar. Used for training and as a reference.
Vend and Xero has automated much of the accounting processes. Business admin can be managed all during business hours - no matter how busy it is instore.
Yet if Sharon and Alison need to take time out to be at home, they still have the flexibility to log into the system any time, any place.
Xerocon 2015 features a crazy amount of new apps and integration options - but it did feel like there weren't many innovating new players to watch. With one exception - Sendle.
Sendle is an app that has been developed out of an existing userbase within another app, TuShare. TuShare was a crowdsharing recycling community, where users could give away things they no longer wanted, to someone else - for free. TuShare overcame the location barriers by creating a way to tap into a variety of couriers to create an easy, flat rate shipping service.
With people listing items just to access the shipping component of their service - you can see the huge potential of Sendle.
It's still in early stages, with their only integration being directly to Xero - but from the testing I've done, the service was great.
The prices are amazing, and it's much easier than waiting at the post office, or dealing with 8 different courier websites.
The only tricky aspect of integrating Sendle into your business will be ensuring the client data in your Xero file is correct and complete. If you're using an e-commerce integration, check whether the billing or shipping address is the updated field in Xero. Compared to the normal shipping processes, that's an investment!
To celebrate the launch of our online course launch, we've created a super special promo code for our earlybirds. These are limited, so snap one up while you can.
The course is to launch early next year. Covering the data flow between Xero and Vend, you can learn how to maximise the integration.
I’ve been working in, working with and starting small businesses for 16 years. The businesses that I see succeed always have one thing in common. They know how much money is in the bank. You may have heard the phrase Cash is King a million times, but it’s this is the simple way to make sure your business doesn’t run out of cash.
When you start any new venture, you are going to have to pitch in money. Whether it’s fitting out a new store, or living off your savings while building up your freelancing income. There is a personal financial cost, and an element of risk.
Where most people come unstuck is when they lose track of the spending or the income. They think the business is making money, when actually it’s been subsidised by another business, or their salaries, or worse — the savings. It’s normal to put in savings into a new business, but only when it’s a conscious decision and not throwing good money after bad.
Open a dedicated bank account.
Transfer an opening sum of money, which is how much you are willing to risk. No more. Keep your savings in your own account, and keep the two separate.
- You know if you are running at a profit, and you can’t run at a loss beyond your original contribution.
- At the end of the year, you can claim every business deduction by giving your accountant business bank statements.
- You can’t lose track of SAAS subscriptions (which can chew through freelancer income)
- You can quickly identify if you aren’t charging enough to your clients/customers.
When you start having surpluses of cash in that account, then you can start paying yourself back. Then, the business should be self-sufficient, and not eating into your personal finances.
It’s a simple as that. If you have a business, treat it like a business.
If you've got expenses to be on charged to a client, with a set marked up amount - there is a way to configure Harvest to include those expenses at the grossed up amount.
Let's use the example of an interior designer. The interior designer uses Harvest to bill her time to clients, but all materials sourced for clients are to be marked up by 15%. Many people record the expense at cost in Harvest, and then make the adjustment at invoicing time.
Rather than risk forgetting to having to adjust the expenses (or even bother with having to do it at all), set up your expense category so that it has a unit price equal to the percentage markup. In this example, our client wants to mark their sourced items up by 15%, so we put the cost as $1.15 per unit. Each unit, is each item we have sourced at cost.
Then, when it comes time to put in our expenses, we just record them at cost, include the receipt for our records and voila! The expense is recorded at $160 ready to be billed. Have a closer look at the gallery below to see the configuration, and how it looks in action.