Numbers should tell a story

Money is a tricky topic for a lot of business owners

There's the matter of how to account for it, how to present it and, of course, how to raise it. 

numbers tell a storyIn this day and age where accounting has been made a lot easier and financial information more transparent, how should business owners approach their numbers? 

Here are some things we figured out:

Numbers should tell a story 
Proper accounting is more than just compliance. It's an opportunity to paint a picture of your business - where its strength and opportunities lie, as well as its risks and challenges which, in turn, can help business owners make better decisions. 

But accounting is a technical skill and not all business owners are necessarily savvy in this field. This is where a good accountant can come in. 

More small and medium sized businesses are leveraging accounting solutions like Xero to get yesterday's data. Back in the day, this was an accountant's job. It would take us days to collect information from a client and the bank before we could present the numbers. But because cloud accounting solutions do all this already, we accountants get to take a more strategic role as advisors, reading and interpreting the numbers into actionable advice. 

This is important because business owners don't always think about this. They see positive numbers and think they're doing well, so no need to bother checking what's under the hood, right? 

We knew one business in particular that didn't realise 82-83% of their revenue was coming from one customer. They knew it in their heads, but didn't have a concrete number for it. When their relationship with that customer soured, they had to scramble to get back on their feet. 

Had an accountant stepped in to provide advice beforehand, whether that was to take care of that customer or to focus their efforts into acquiring other big customers, the business wouldn't have had to rely on a single major source of revenue. 

Back then, many accountants saw themselves solely as the people who could help business owners pay less tax and comply with the law. But now, thanks to new solutions and emerging technologies, we get to be so much more than that.

Having worked with plenty of startups over the years, we've noticed how the approach to their numbers varies. Some don't prioritise accounting and financial transparency, while others inflate the importance of fundraising to a disproportionate degree. 

As business owners ourselves, we have enough experience to know what business owners need to grow and scale. And we know firsthand about the stresses that business owners go through. Call the team at Collins Hume in Ballina or Byron Bay on 02 6686 3000 or go here to read how we help and support business owners with more than just their accounting.

Source Xero

Work-related clothing and laundry expenses

Laundry expenses hung out to dry

The ATO is airing the 'dirty laundry' on work-related clothing and laundry expenses warning that it is closely reviewing claims. 

uniform"Last year around 6 million people claimed work-related clothing and laundry expenses, with total claims adding up to nearly $1.8 billion. While many of these claims will be legitimate, we don't think that half of all taxpayers would have been required to wear uniforms, protective clothing, or occupation-specific clothing," Assistant Commissioner Kath Anderson said.

Clothing claims are up nearly 20% over the last five years and the ATO believes taxpayers are making common mistakes and errors like claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated. In some cases, the ATO will ask employers if they require their employees to wear a uniform to check the validity of claims made.

In one case, a car detailer claimed work related laundry expenses of over $20,000 per year over two years. It seems that the taxpayer worked out how many hours he spent doing his laundry then multiplied that by what he thought was a reasonable hourly rate ($227 per hour because his personal time was valuable). Needless to say, the taxpayer's claim was reduced to $0.

It's not just large claims that the ATO is reviewing but claims up to the $150 substantiation threshold. Claims over $150 have to be substantiated with receipts for expenses. Below this level taxpayers are not required to keep normal records. The ATO believes that a lot of taxpayers are simply ticking the box thinking that the claim is a 'standard deduction' but it's not an automatic entitlement.

"Just to be clear, the $150 limit is there to reduce the record-keeping burden, but it is not an automatic entitlement for everyone. While you don't need written evidence for claims under $150, you must have spent the money, it must have been for uniform, protective or occupation-specific clothing that you were required to wear to earn your income, and you must be able to show us how you calculated your claim," Ms Anderson said.

Let Collins Hume partner with you to achieve greater business and lifestyle success as your trusted advisers. Call us in Ballina or Byron Bay on 02 6686 3000.

Reviewing your loans

Why now is a great time to review your loans

With the drop in interest rates, it's a great time to review your loan arrangements with Collins Hume's local lending specialist, David Seymour.

contractGiven the ever-changing landscape and regulatory changes for Owner Occupied, Interest Only and Investment lending, David can assist you to navigate through the jargon and provide you with several options that suit your personal needs.

Review and save
David will provide a complimentary service by reviewing your existing loan facilities and looking for ways to save you potentially thousands of dollars over the term of your loan. We work closely with David to ensure your long-term goals are met.

Feedback from David's clients

  • I would like to thank David Seymour for all of his advice, guidance and patience through our very lengthy business and personal transactions. David was always on hand for a quick answer when we needed help and made sure all our "i's" were dotted. I would highly recommend David if professional, efficient service is what you need. (KW)
  • Thanks David for your advice and expertise with our Business Loan. Pure Fitness Alstonville has become a reality thanks to your professional service and attitude. I would not hesitate to recommend David Seymour for anyone either starting out in business or looking for advice on a loan. He was available anytime, came to our house to chat and he went out of his way to make our loan both practical and fast tracked. (MB)
  • Everything was better than we could have hoped for. Our situation was dire and felt hopeless before we met David and everything he has done has changed our lives. We will continue to come through you and David personally in the future.

Contact David
To take advantage of a complimentary loan review, please email David or phone him on 0418 785 747 and he will arrange an appointment at a time and place to suit you.

David Seymour is an Authorised Credit Representative No 477331 of Regional Finance Solutions Pty Ltd ABN 71163893945 Australian Credit License 484980

Human cost of late payments

Late payments affect business from financial and operational perspective

It's an issue that's close to our hearts and a conversation that matters.

late paymentsBut another conversation, one that's often lost amid all the talk about lost revenues, invoice-chasing and the rest is the human cost of late payments. Because when businesses aren't paid on time, it doesn't just affect the bottom line – it affects people.

Xero teamed up with PayPal to find out more about how late payments affect, not just businesses but their owners too. 500 small and medium business (SMB) owners shared how they dealt with this ongoing issue. Here are the key findings:

Impact on personal finances 
Businesses are comprised of people – and people need to be paid on time if they're going to avoid stress and enjoy their work. It goes for entrepreneurs just as much as employees.

Overall, 35% of SMB owners claimed late payments meant an increased risk of debt – and 52% said they'd used their own money, or that of their friends and family, just to keep going.

Late payments can stop entrepreneurs from tending to relationships and their wellbeing. If you're not getting paid on time, you might not be at your best.

So, it's no surprise that 73% feel much more optimistic about their business when they have positive cash flow. The more reliable and regular your income, the better!

Impact on personal wellbeing 
Running a business is an act of love, but it can also place a strain on entrepreneurs – particularly if they don't know when the money they're owed is coming in. Late payments can affect:

  • Mental health. More than two-fifths of SMB owners claim that late payments have affected their mental health.
  • Sleep. 43% say they've been kept up worrying about their business' cash flow.
  • Self-esteem. Some 45% of business owners feel they've failed their companies when they're cash flow negative.
  • Outlook and optimism. Overall, 37% of entrepreneurs have considered giving up the ghost because of cash flow issues.

We don't want business owners to give up. We're essential to the economy – we make up 99.9% of registered businesses, after all.

Making late payments history
What if late payments were no longer an issue? What if every entrepreneur was paid on time and in full? The survey found it would make a real difference to finances, wellbeing, and overall attitude. When asked, business owners said:

  • It would make running the business feel 'worth it'. Over three-quarters of entrepreneurs (76%) think being paid on time would make the work more rewarding.
  • They'd feel more optimistic about their businesses. 73% claim it would make them more hopeful about their prospects.
  • They'd enjoy better health. 26% say they'd have better physical fitness, and 21% say they'd spend more time on interests and hobbies. 

Happier, healthier business owners
Small business owners have enough on their plates. Running a business is hard enough as it is, without losing sleep over a late invoice.

There are things entrepreneurs can do to minimise these issues and bring more positivity into the workplace. Automated accounting tools make managing invoices simple and straightforward.

But, beyond that, we'd encourage everyone across all links of a supply chain to pay their invoices promptly and without fuss. It's not just the business that's affected: it's the people who work for it. Everyone benefits when everyone is paid on time. Let's make late payments history.

Award winning Collins Hume offers an extensive concierge service for your financial and business life. From bookkeeping, finance, superannuation, succession and estate planning and even insurance, we help you build a better business. Call us in Ballina or Byron Bay on 02 6686 3000.

Source: Xero

More than just accountants

Ever get the feeling your accountant works for the ATO?

Instead of trying to minimise your tax, they worry about upsetting the tax office rather than fighting to get you the best tax result possible.

more than just accountantsUpgrade from an accountant who 'works' for the tax office to one that works with you to improve your financial position and business.

At Collins Hume we take a holistic approach to your financial affairs.

We'll help you minimise tax, improve your business performance, maximise your wealth and ensure you are 'financially sorted'.

Our award-winning accountants are not only highly trained specialists at legally reducing your tax. We also provide a one-stop-shop for all your financial and business tax needs including:

  • tax returns
  • management accounting
  • activity statement preparation
  • payroll advice
  • GST
  • FBT
  • tax minimisation
  • estate planning, and
  • financial planning

Don't pay more tax than you have to!

Call us on 02 6686 3000 and we will tailor the perfect tax solution for you and your business.

Let Collins Hume partner with you to achieve greater business and lifestyle success as your trusted advisers. Call us in Ballina or Byron Bay on 02 6686 3000.

Kelly is new Collins Hume Partner

Kelly Crethar welcomed to Collins Hume partnership

Managing Partner Jamie Doyle is delighted to announce that Kelly Crethar has joined the Collins Hume partnership from 1 August 2019.

shane bartrim and kelly cretharKelly is a business services specialist who works with business owners on business planning, acquisitions, valuations as well as all their ATO regulatory needs.

With her solid grounding in 'doing the books' which started early in her family's business, Kelly now loves being able to interpret financials into information that business owners can easily grasp.

As a busy mum, Kelly also understands the need to balance the professional world with personal life.

"I have learnt that our time spent in business is quality over quantity, and I help my clients achieve that," Kelly says.

Kelly is looking forward to working with and inspiring local business owners to achieve business and lifestyle success.

"Kelly has the professionalism, passion, drive and enthusiasm required for the role and is a wonderful addition to our partnership group," Jamie added.

"As a local business we have been busy growing the team to better service our clients, increase our service offerings and keep up with the influx of amazing businesses that now call the Northern Rivers home. Our business is growing along with our clients which is really pleasing to see."

"Making these strategic appointments is underpinned by the positive support we receive from our clients, business partners and the wider community. We believe there has never been a more exciting time to be in business.

(Photo: Welcome to the Partnership - Shane Bartrim congratulates Kelly Crethar.)

Read more about Kelly Crethar here and please help us congratulate Kelly in her new role!

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