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Cashflow Tips – A few KPIs can have a big impact on business growth management

Cashflow Tips – A few KPIs can have a big impact on business growth management

Cashflow Tips – A few KPIs can have a big impact on business growth management

There are many things that take up the business owner’s time and no “one silver bullet” in order to have a big impact on business growth as we would all like – every business is unique – I see it as I visit businesses in the same industry. More often than not it is a few key things that together can have a big impact. The drivers of financial performance or personnel or production or operations are certain Key Performance Indicators (or KPI’s). If you don’t have KPIs you should consider a hand-full that you can track and measure to see what effect key decisions are having on your goal to improve and grow the business. It will depend on the industry generally:

Sales Company –  Volume of sales weekly/monthly, gross margin percent;

Manufacturer –  Machine hours weekly/monthly, labour $/machine hours, material margin percent;

Contractors –  Billable hours, rate per hour etc.

So key drivers can vary between industries, but if you were away from your business, what 5-6 things would you want to know about how your business is performing? That is, those that impact the bottom line.

To see what KPIs matter, scenario analysis can help sort out how much a KPI will affect the profit, and how much you need to improve the KPI to achieve a significant/desired rise in profit. It’s a sensitivity analysis.

An example – a business that generates $80,000 profit

Profit Sensitivity

This shows the biggest impact will come from number of hours sold – so that should receive the most attention first.

Many businesses know their sales and monitor their rise and fall, but you need to be more sophisticated than that. And set realistic targets – do SMART goals – specific, measurable, achievable, realistic, timely.

Next determine how you will achieve the new targets and get to it NOW!

Need help? Not sure? Call for FREE 30min advice / Strategy session today! Call 0407 361 596 Aust

 

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Reckon/Quickbooks – Adding a % Fee Discount Before the Total on an Invoice

 

Reckon/Quickbooks – Adding a % Fee Before the Total on an Invoice

Reckon/Quickbooks – Adding a % Fee Before the Total on an Invoice

Client called asking: How can they add a 5% service charge to an invoice before the final total?

Answer: Because Reckon Accounts calculates percentages only on the line above, you must subtotal the items before entering a discount item that calculates on a percentage basis. A subtotal item is created – it totals the amounts of the items above it, up to the last subtotal. You must create a subtotal item if you ever want to apply a percentage discount to several items.

To create the Subtotal item:

Go to the Lists menu and click Item List.

Click Item at the bottom of the list and click New.

Click the Type drop-down arrow and then click Subtotal.

Enter an item name, such as Subtotal.

Enter the description that you want Reckon Accounts to put on your sales forms when you apply the subtotal.

Record the item.

On the sales form, insert the subtotal item immediately after the items that you want to subtotal.

To automate the calculation of the discount on the subtotal:

Go to the Lists menu and click Item List.

Click Item at the bottom of the list and then click New.

In the New Item window, click the Type drop-down arrow and then click Discount.

Enter an item name, such as Discount.

Enter the Description that you want Reckon Accounts to put on your sales forms when you apply the discount.

In the Amount or % field, enter the discount amount or percentage:

If the discount is a percentage, enter the number of the discount followed by the % symbol. For example, 5% tells Reckon Accounts to multiply the previous line by .05.

(If your discount amounts vary, you can leave the Amount or % field blank and enter the amount directly on your sales forms.)

Click the Account drop-down arrow and then click the income account you want to use to track discounts you give to customers.

When an income account tracks discounts on sales, the account is often called a “contra-income” account.

Click the Tax Code drop-down arrow and choose a tax code for this item.

If you select a taxable code, the discount you specify on taxable sales is applied before the tax is calculated. If you select a non-taxable code, the discount is applied after the tax is calculated.

Click OK or click Next to create another item.

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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MYOB – Why did Sales Income go to the Accounts Receivable Account?

MYOB – Why did Sales Income go to the Accounts Receivable Account?

MYOB – Why did Sales Income go to the Accounts Receivable Account?

ClientI created some invoices and when I went to look at the Profit & Loss the amounts are all in the Accounts Receivable (A/R) – Why? Doesn’t income go to the Sales/Income account?

HowThe handling of the invoice amounts is correct – a sale sits in the A/R until it is paid – every transaction has a Debit and Credit side. If you open an invoice and hold Ctrl key then hit “R” and  let go, you will see Dr goes to A/R and Credit goes to Sales/Income. When you receive the customer payment, a credit is made for the amount from the A/R account and a DR to your bank account to show the deposit of the payment (or Undeposited Transactions if you use that when banking several cheques together).

If you want to see the Profit and Loss WHEN you are actually paid, then create the P & L Cash Basis report which is under Accounts> Small Business Entity.

If you want to put certain sales to certain Sale/Income accounts, allocate directly to a new “4” account in a Service/Professional Invoice or allocate to the “I Sell” account in the item, if using Item Invoicing.

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

***BEFORE you BUY Ask us for a competitive software price BELOW retail – no obligation!

You also get FREE 30 min to assist in setting up your company in the software, 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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Business Finance 101 – Motor Vehicle Asset changes

Business Finance 101 – Motor Vehicle Asset changes

Business Finance 101 – Motor Vehicle Asset changes

Client emailedOur Company bought 2 cars  –

  • Holden Cruze for $16,700.00 includes GST/stamp duty/transfer fee
  • Barina for $12,888.00

We traded in the company car – Holden Commodore for $3000 and the wife’s car for $1500. Daniel has not claimed the $1500 but gave it to the business.

Now both ’new’ cars belong to the company.

Invoice for Holden Cruze is $16,700.00

The $4,500 trade in was netted out of the purchase of the Barina so the invoice is ($12,888- $4,500) $8,388.00 net.

We have in our accounts:-

MV @ cost                             18539.37

MV Accum Depn                  15412.00

Please advise. Thank you.

How to Enter To keep things simple, we need to set up some new accounts (NA) for each motor vehicle, and new accounts for the loans on each car – it is then easiest to leave the final reconciliation and adjustments to your accountant year end.

I assume the 2 MV accounts are only for the Commodore and no other cars. It is good practice to create new accounts for EACH vehicle so the accountant can reconcile at year end with ease!

Separate the Rego (and Insur if included in the deal) from the $16,700 (or you can leave for accountant year end to pick up)

NA          Asset      MV Accum Dep Cruze        (to be used at year end) – create in the Accounts List

Start a new General Journal with Purchase ticked at the top, and tick Includes GST.

Then enter as follows – (create new accounts as you go)

NA          Asset      MVehicle @ Cost Cruze          Dr 16,700 less rego, insur      CAP (tax code)

NA          Liability  Mveh Loan Fin Co Name*       Cr 16,700 less                               N-t

Expen    Rego                                                            Dr $rego                                      split for GST, 2 lines

Expen    Insur (if included)                                   Dr $insur                                    split for GST, 2 lines

Liab        Mveh Loan Fin Co Name                             Dr 4,5000                                        N-t

Liab        Daniel Loan Account                             Cr 1,500                                             N-t

Asset      MVehicle @ Cost Commodore             Cr 3,000                                             N-t

*Is the Loan a Chattel Mortgage? – Can mention type of loan in account name as well

Monthly payments – for simplicity, allocate from bank to NA Liability Mveh Loan Fin Co Name (the new finance account).

The old car accounts – Asset MVehicle @ Cost Commodore, and the MV Accum Dep can be left for the accountant to calculate and adjust at year end, incase there are other adjustments he needs to do.

For other examples of entering MV assets in the accounts, see –

Quickbooks – How to go about setting Chattel Mortgage up and accounting for the monthly payments in Quickbooks.

Another Asset Example – How to enter assets in the books

How do I show liabilities for the total borrowed including interest, not just the principle/asset amount?

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