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September Issue 2024

Business Plus+ Newsletter

Understanding Business Funding – Predictive Financial Accounts

In the previous edition of Business Plus we discussed the commencement of the “Investment Ready Status” that Directors need to ensure that the company has implemented.

The first component of the achievement of the status, requires the development of the vision for the business and the preparation of the Business Plan.

The Predictive Financial Accounts is the next stage of this status process.  The Predictive Financial Accounts relate to:

  • Budgets for each business operation
  • Key Drivers for the entire business including Debtors, Creditors, Work In Progress, Inventory, Capital Expenditure, Research and Development and other key items that full disclosure of is beneficial to an in-depth understanding of the financial processes rather than having the components of these items basically hidden within the Budgets and Cash Flow Forecast.
  • Cash Flow Forecast incorporates financial information from the Budgets and the Key Drivers and is a crucial document relating to cash flow management.
  • Projected Balance Sheets enable the financial state of the business at some future time to be available for scrutiny and evaluation and a determination by the Directors or owner of the business as to whether they would be happy for those financial results to be achieved in 3 or 5 years’ time.
  • Source and Application of Funds is a document that should be prepared each time the Predictive Accounting Process is prepared so that the Directors or owner and the Leadership Team have an overview document which explains the movements in cash that have occurred during each twelve month period.

This documentation enables an in-depth evaluation to be conducted to determine potential cash shortages and whether additional funding is going to be required for the business.

This process is not undertaken solely for the purpose of preparing “token documentation” for a bank or financial institution – the primary purpose should be as the “Financial Interpretation of the Vision Outlined within the Business Plan”.

Any type of business, not-for-profit, charity, sporting organisation will benefit from this coordinated approach of the preparation of a Business Plan and then the financial interpretation of that Plan being illustrated within the Predictive Accounting Reports.

If you would like to have a discussion with us about the implementation of a process similar to this for your business, please do not hesitate to contact Peter Towers.

Export Market Development Grant Applications Open In November

Austrade has announced that applications for Round 4 of the Export Market Development Grant for the two years comprising 2025/26 and 2026/27 opens on Tuesday, 12 November 2024.

Round 4 will close when the funding has been fully allocated, with applications assessed in the order they are received.

In the August 2024 edition of Business Plus a brief overview of the Export Market Development Grant was supplied.  In this article we are supplying updated information relating to the grant.

Applications may be made by any Australian entity with a valid Australian Business Number (ABN) including:

  • an individual whose principal place of residence is in Australia;
  • a company incorporated under the Corporations Act 2001;
  • an association, or cooperative, incorporated under an Australian law;
  • a partnership that is Australian, that is, a partnership that was formed and operates under a law of a state or territory with at least half the partners Australian persons;
  • a Trust that is Australian within the meaning of the Export Market Development Grant Rules, that is the Trustee, or each Trustee, of the Trust is an Australian person.

The maximum income in the 2023/24 financial year for an applicant is $20 million.

Applicants can apply under tiers:

Tier 1:  The applicant is ready to export and has not previously exported.

Tier 2:  The applicant is already exporting and expanding their marketing and promotional activities within existing markets.

Tier 3:  The applicant is already exporting or promoting eligible products and seeking to expand export promotion activity and make a strategic shift in the marketing or promotion of eligible products in a foreign country

The applicant is required to have a minimum annual turnover for the 2023/24 financial year of more than:

Tier 1 – $100,000

Tier 2 – $500,000

Tier 3 – $1 million

Grant applicants are required to be able to self-fund an amount equivalent to the grant funds supplied by Austrade.

The objective of Tier 1 is to support SMEs who:

  • meet all eligibility criteria;
  • have not exported before;
  • have appropriate skills in marketing products in a foreign country demonstrated by either successfully completion of a recognised export training activity (listed on the Go Global Toolkit Website) and/or an approved test by Austrade for assessing export capability and knowledge.

The minimum grant amount is $20,000 per financial year.

The maximum grant amount is up to $30,000 per financial year.

The objective of Tier 2 is to assist eligible exporters who are exporting or promoting eligible products and seeking to expand export promotion activity for eligible products.  The applicant must demonstrate that they:

  • have established export revenue, commensurate with the size of their business and the value of their product or service;
  • are expanding their marketing and promotional activities (i.e. they must be doing more than they have before as the grant is for new expanding activity);
  • are undertaking marketing and promotional activities targeting existing markets that they are currently exporting.

Minimum grant amount $20,000 per financial year.

Maximum grant amount up to $50,000 per financial year.

The objective of Tier 3 is to support SMEs to diversify (defined as a strategic shift) their export activities to new markets that align with the trade diversification agenda

For this grant opportunity (Round 4), the Export Promotional Activity must focus on key markets

  • are exporting eligible products demonstrated by export revenue;
  • are expanding their export marketing and promotional activities for the products;
  • are making a strategic shift in the marketing of eligible products into new markets, which have been identified as key markets.

The applicant must be expanding their exporting marketing and promotional activities, and not applying for a grant to pay for business as usual activity.

Minimum grant amount $20,000 per financial year.

Maximum grant amount up to $80,000 per financial year.

If you are undertaking export marketing activities or supplying services to overseas residents and are interested in submitting an application for an Export Market Development Grant, please note that applications open on 12 November 2024 and will close when the funding has been allocated to applicants.

If you would like our assistance in the preparation of the Grant Application, can you please contact Peter Towers at the earliest opportunity so that we can ensure that your application is able to be lodged on 12 November 2024.

Industry Growth Program Update

The Australian Government’s “Industry Growth Program” which is targeted at companies with turnovers less than $20 million has commenced operations with the government recently announcing that the first grants have been finalised.

“First round funding is underway, supporting businesses from battery making through to blueberry farming, with future rounds to be announced soon”.

The Industry Growth Program is designed to help small and medium-sized businesses overcome barriers associated with scaling up, with the program assisting the growth of manufacturing capabilities and the creation of stronger supply chains.

The grants made included:

  • $4.3 million to support fully automated hyper fermentation technology to make food, animal feed, fibre and fuel.
  • $1.7 million was allocated to support a business for its high tolerance lithium foil battery manufacturing process.
  • $231,000 for a software tool which can remove malicious phishing content from the Internet.
  • $157,943 was allocated to a company for the development of its robotic blueberry picking device.

In the Business Plus Newsletter editions in June and July there is an overview of the Industry Growth Program.

If you are interested in having a discussion with us relative to pursuing a grant application, please do not hesitate to contact Peter Towers.

Research and Development For Start-Ups

It is not unusual for a very small business operating as a sole trader or partnership to have been undertaking Research and Development activities.  If you are going to spend more than $20,000 in the conduct of Research and Development activities in the financial year you might be interested in understanding how the Australian Government’s Research and Development Tax Rebate Scheme operates.

If you believe that the product that you are conducting your research on could be made into an interesting product that you could use in your business or you could develop the prototype into a final product and then either manufacture and sell the final product yourselves or sell the intellectual property to another company you will probably be better off if you started the “Innovation Journey” which would involve:

  • The need to incorporate a company because only companies can claim the Research and Development Tax Incentive.
  • From the time that you have incorporated the company, all of the expenditure relating to research and development activities should be conducted by the company and the expenses paid by the company.
  • You can conduct as many individual projects as you like to make up the minimum expenditure of $20,000.
  • The taxation incentive is 43.5% of the Research and Development Expenditure that the company has incurred in the financial year. The calculated incentive is able to be deducted from the company’s taxation assessment.  However, for companies with turnovers less than $20 million if the company is trading at a loss, in the Company’s Income Tax Return an election can be made for a cash refund of the amount of the incentive so long as the company’s tax losses exceed the amount of the incentive.  If they do not, the cash refund can be an amount up to the companies taxation losses.
  • Like so many other things in life the Research and Development Journey starts with an “idea”.
  • You may have allocated a small team to research the “idea”.
  • It is preferable right from the beginning that records are kept of the people involved in researching the “idea” and what the labour cost is and the labour on costs can be added because this all forms part of the minimum expenditure of $20,000.
  • If you have decided that this “idea” might be worth pursuing this is the time for you to have a conversation with us so that we can ensure that you have a clear understanding of the legal requirements to be able to claim the expenditure for the Research and Development Incentive and the processes that need to be undertaken and the records to be kept.

This phase can be very important and can really be the start of the Innovation Journey which could eventually lead to the creation of a valuable asset for your business.

you would like assistance on any of these activities or anything else relating to Export Market Development Grant please do not hesitate to contact Peter Towers, Managing Director, Towers Business Development at or telephone on 07 4724 1118.

 

September Issue 2024