Debtors’ management is an enormous problem for a significant number of small/medium enterprise operators.
The Small Business and Family Business Ombudsman indicated last year that Australia had the highest debtors’ days' outstanding figure in the world at 56.4 days, thus debtors’ management issues are a significant contributor to cashflow management problems confronting small/medium enterprises.
The Australian Prime Minister announced in late 2017 that he had instructed all Australian government departments to pay bills owing to SMEs within twenty calendar days of the date of the invoice.
This is great news for the small/medium enterprise community – especially for those SMEs that have dealings with Federal government departments.
Hopefully, State and Territory governments and big business will follow the initiative of the Federal government.
However, another significant problem that many small/medium enterprises have is that they have not implemented appropriate debtors’ management systems nor do they regularly calculate their own “debtors’ days outstanding”.
A Debtors’ Management System would include:
This type of system will contribute to a reduction in debtors’ days outstanding in virtually every type of business.
If you would like to have a discussion with us relative to the introduction of systems to reduce debtors’ days outstanding in your business, please do not hesitate to contact us.
The business planning process gives business operators the opportunity to spend some quality time with your accountant analysing every aspect of your business to assist your business to add value by going to the “next level”.
The planning process should be undertaken on an annual basis, with a periodic review during the year so as to ensure that the business is on track to fulfil the targets that have been set in the Business Plan.
Most small/medium enterprises find benefit in a “think tank meeting” which would involve the management team and possibly other team members sitting down to evaluate every component of the businesses operations. This means that a SWOT Analysis (Strengths Weaknesses Opportunities and Threats) would be prepared on the various components of the business.
Some of the key components that would be reviewed in a business planning process include:
These are just some of the questions that would be given in-depth consideration at a “think tank meeting” as part of a business planning process.
If you are interested in having a discussion with us, relative to the preparation of a Business Plan for your business, please do not hesitate to contact us.
Succession planning is something to which every business should give consideration.
Many business operators prepare Succession or Exit Plans regularly so they are in a position to react promptly to any opportunity to change direction in their business.
While succession planning can apply to shareholders, key management personnel and all team members, this article will concentrate on the key owner/CEO within the business.
There can be many succession issues relating to a business.
There are many other issues relative to succession planning in a business.
If you would like to have a discussion with us relative to the development of a Succession Plan and or Exit Strategy for your business, please do not hesitate to contact us.
A recent incident where two men, with substantial experience in their industry, were found dead at the bottom of a tank they had been cleaning has highlighted the necessity for business owners and management to be very vigilant on workplace health and safety issues.
The National Workplace Health and Safety Laws require business owners, directors and managers to assess the potential risks inherent in work practices utilised in workplaces.
The business should only be utilising practices which minimise the possibility of injury occurring.
If a potential risk is identified the business needs to prepare work plans to address that particular risk in the workplace.
Many businesses will find it necessary to engage a Workplace Health and Safety Expert to create appropriate systems for the business, especially if the business does not employ personnel who have adequate experience in the implementation of appropriate systems under the Workplace Health and Safety Regulations.
If you would like us to refer you to a Workplace Health and Safety Consultant, please contact us.
Have you ever woken up in the morning thinking that it was going to be a great day and then you get a letter from the Australian Taxation Office? In particular, the letter is in regards to interest deductions where an individual had purchased land for the development of a unit complex and derivation of rental income.
The Australian Taxation Office’s Taxation Ruling on interest deduction states “Deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities”. Helpfully this ruling is only 18 pages long and quickly sets out the main points and, after setting these out in easy to understand terms, starts to explain the matter in depth for each of the four points below:
The Australian Taxation Office is currently reviewing individual tax returns for the 2016 financial year. In particular, properties which have large losses from interest expenses and no or little income.
Currently investigations seem to be happening where the Australian Taxation Office has identified continued large and long term losses from investments held by individuals. So far, the Australian Taxation Office's focus is on interest incurred prior to assessable income because the units have not been constructed within a three year time period, without consideration of local conditions in the economy and lending positions.
The second situation is a rural parcel of land treated as a rental property, deemed to be non-commercial in purpose after review by the Australian Taxation Office, because the property is used for agistment purposes and drought conditions have resulted in significantly lower income for several years. The Australian Taxation Office has denied deductions for interest and all other expenses limiting the deductions to the amount of income derived.
The Australian Taxation Office has a mandate to ensure that these matters are investigated and that government revenue is not misappropriated by taxpayers incorrectly making claims for deductions to which they are not entitled. The concern is that, where taxpayers make decisions based upon information that they are aware of, how time can affect matters and change the nature of interest from being deductible to being treated as capital due to the length of time between the initial purchase and the final construction of the investment or when the Australian Taxation Office conduct the audit.
The taxation treatment of losses from rental properties and the Australian Taxation Office's focus on these matters, particularly where the land is held for more than three years, can be complex. If you have any concerns from these types of transactions, please do not hesitate to contact us.
Some of the industry potential problem areas are:
These are some of the items that should be examined to determine whether a registration should be made on the Personal Property Securities Register to protect the business' assets. If you would like to have a discussion about the implementation of a strategy, appropriate for your business, please do not hesitate to contact us.
Economists have forecast subdued growth for the Australian economy during 2018. The key figures from a business perspective contained in the economic forecasts published by the Fairfax Group include:
The economists who participated in the survey do not believe that there will be a recession in Australia in 2018 with the probability of a recession being forecast at 15% with the range being from 0% to 20%.
The ASX 200 is forecast to be in the vicinity of 6,200 points by 31 December 2018. This is a reflection of the overall confidence in the market based on forecast profits and capital gains.
The Reserve Bank of Australia's cash rate is expected by most of the economists to increase from the current 1.5% to around 2.25% by December 2018 with the average forecast rate for 2018 being 1.7%.
The exchange rate of the Australian dollar and the USA dollar is expected to be in the vicinity of $0.78 USA per Australian dollar (with a range from $0.65-$0.84).
The scene is set for a continuation of the economic activities that were evident in 2017. If you would like to discuss the effect that these forecasts might have on your business, please do not hesitate to contact us.
Any period of time utilised to measure accounting performance e.g. one year, one month, three months.
The comparison of operating figures, both financial and non-financial from one firm with another, or a group of others, to assist in comparing your business to other similar businesses so as to assist in achieving best practice management by comparing your business to others undertaking the same sort of work.
In valuing businesses, the future maintainable profit is expressed at a capitalisation rate. The capitalisation rate is the rate of return that a prudent arm’s-length interested, but not anxious, investor would require for an investment in this type of business after the allowance for reasonable management salaries.
 Business Essentials