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Cashflow Tips – To Discount or ADD VALUE?

Cashflow Tips – To Discount or ADD VALUE?

Cashflow Tips – To Discount or ADD VALUE?

There are many businesses that offer discounts – especially at the “sales” times. Many businesses haven’t stopped to think – to discount or Add Value, and attempt to gain market share by sales and discount prices. The problem is many don’t realise that to maintain the usual gross profit margin (something many small business do not know what theirs is) will mean they have far too much to make-up and risk that the client will expect you to always keep your prices that low. This is how a business can end up going broke!

Generally, consider also that most people believe they get what they pay for.

The following table shows what increase in sales are required to compensate for a price discount. For example, if your gross margin is 20% and you reduce prices by 10% you need sales volume to increase 100% or to DOUBLE to maintain your profit! It is not common that such a strategy has worked in the past and is only best left for big businesses who can afford it!

Discounting Table Examples

Think of the “25% Sale” or “Half-price sale” which can harm your current business and your future reputation with your customers. If you are selling a product or service with a margin of 40% – a “25% Sale” will require you to increase sales volume by a staggering 167% just to maintain the same profitability! Consider – is  a “25% Sale” going to generate a long-term increase of 167%?

Tip 1 – Only consider large discounting for securing long-term contract sales, or to liquidate out-dated stock.

Tip 2 – Can you offer a cheap but high perceived-value item instead of a discount – “I’ll also throw in…”

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – no-one offers as much! Call and you also get Free “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

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Reckon/Quickbooks – Tax Codes on General Journals

 

Reckon/Quickbooks – Tax Codes on General Journals

Tax Codes on General Journals

When constructing  a general journal (GJ), you may have seen that tax codes cannot be directly assigned to the lines. You can only associate the actual tax (GST) amount in the total, directly to the tax account (eg GST Payable account), the taxable amount will not be able to associate with the tax account.

As an example if you were to entering a general journal of:

    Debit Expense 900.00

    Debit GST Payable account 70.00

    Credit Bank 970.00

The Tax Agent (in the Name column) will be automatically associated with the tax account (GST Payable account) as according to your tax (GST) setting. Besides, you can select the relevant Tax (GST) Item at the Tax Item column.

The debit of 70.00 to the tax account (GST Payable account) will be updated in the Tax Agency Report (GST).

But note that GJs like this are best used for ADJUSTMENTS to tax accounts, because the transaction will not usually be included in Tax Code Detail and Summary Reports, as these gather data from anywhere a Tax Code is used, not when an amount is allocated to the account.

To include tax in the Detail and Summary reports for preparing BAS it is best to use the Invoice, Bill or Write Cheque transaction types instead of a General Journal.

Need help? Not sure? Call for FREE 30min advice / Strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right! Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Tips – 7 Steps to Plan this Year Financially

Business Tips – 7 Steps to Plan this Year Financially

7 Steps to Plan this Year Financially

Planning always sounds more involved than it often actually is – but we know that the extra effort is ALWAYS worth it!

A fresh approach & great tips are given here from MYOB  CEO and The New Zealand Herald which related to the holiday season, but  we can apply to the start of the year now –

“…With so much going on it’s easy to focus on surviving rather than on thriving, so it’s critical to make sure you’re prepared,” MYOB chief executive Tim Reed says.

Putting time aside to work on your business strategy can really help drive sales success… There’s more competition for the shopper’s dollar during this time so plan a range of tactics for attracting them.

“This includes selling your products and services online or, for business-to-business operations, locking in contracts for next year. With 80 per cent of consumers researching online prior to making a purchase, it’s no wonder our research shows SMEs with a website and a social media site are almost two and a half times as likely to expect an annual revenue rise.

“The demands of the silly season coupled with the commitment of running a business can be overwhelming. Remember to focus on why you love your work and not lose sight of the reasons you’re in business.”

MYOB’s seven steps to (sales) … success:

1. Examine the last 12 months’ wins & losses
The time is ripe for a spot of soul searching. Step outside your business to reflect upon the initiatives that worked, those that didn’t and those that can be refined. Did your staffing levels match the workload? (Were) you sufficiently staffed for the Christmas rush? If you have downtime over Christmas is leave locked-in? Knowing the strengths, weaknesses, opportunities and threats to your business today can help you improve your business for tomorrow.

2. Consider a customer retention plan
It costs 5-7 times more to acquire a new customer than to retain an existing one, so it pays to identify your most profitable customers. Don’t have a customer retention strategy? Make time to build one. It’s a great way to develop and maintain productive relationships and grow referral sales. It also enables you to explore ways to grow revenue and recurring sales, and add stability to your business. If you have key clients make time to call them before end of year. While the intent would be to say thanks for their patronage this year, the outcome may well be locking in orders for next year. It’s easy to keep customer and sales records current by using up to date accounting software.

3. Activate a customer acquisition strategy
Want to attract new customers to your business but unsure how or where to find them? A customer acquisition strategy is a powerful way to determine who your existing customers are, and equally who your target customers are. It can help you understand the customers you want to attract and retain, what they want, how much they’re willing to pay, the products or services they’ve tried, plus their expectations about your brand, product or service.

4. Evaluate your product and/or service offering
If it’s been a while since you took a close look at your products and/or services, there’s no time like the present to reassess your mix. How well is your market offering helping you reach your goals? Are some elements more profitable than others? What changes can you make? Are there new opportunities to add to the mix? A great idea is to write what you think are the answers to these questions and then do the work to find the real answers. Any gaps can highlight a blind spot in your strategy.

5. Review your pricing strategy
Knowing what to charge for your products and/or services can help you build a sustainable, profitable business. If you’re unsure where to start, the MYOB Business Reality Check can help you calculate your hours as well as your hourly rate and service rates. You can use this comprehensive assessment tool to identify any business issues you’re facing, get tailored expert advice and plenty of practical resources to help solve them.

6. Perform a cash flow forecast
With cash flow ranking as the second highest pressure point for SMEs in the latest MYOB Business Monitor report, there’s never been a better time to add a little cash flow know-how to your business toolbox. Cash flow forecasting is a gift that keeps on giving. It makes business life easier in many ways, enabling you to track your performance against predictions, map how it might fare during challenging economic times (or boom times) and even model the effects of a strategic shift. Perhaps try the cash flow forecasting tool on the MYOB Business Reality Check website.

7. Get your financial house in order
If your receipts, payments and credit card paperwork are in disarray, it’s time to embrace online accounting solutions. By using up to date software …(including online versions) you can get a comprehensive snapshot of your finances at your fingertips, 24/7, minimise stress and maximise peace of mind!

(Now the dust has settled)… post-Christmas and after you eventually take that well-earned break, don’t forget to plan for the year ahead. Arrange a ‘health check’ of your business with a trusted advisor, such as your accountant, bookkeeper or other business advisor to start your new year’s success story.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – no-one offers as much! Call and you also get Free “Avoid these GST mistakes” – there’s 18 that the Tax Office see regularly – get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia