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Cash flow Tips – How we achieved steady cash flow for our client

Cash flow Tips – How we achieved steady cash flow for our client

Cash flow Tips – How we achieved steady cash flow for our client

One client was struggling – feast and famine with money coming in then drying up and bills to pay!! He couldn’t achieve steady cashflow because he was pulled with all the many tasks a growing business owner must juggle! WE have found a system that improves getting paid and is more consistent than the old traditional monthly statement and phone call method of traditional business practice.

How he was going under

One week he could get on top of who owed him what, and what he owed, then he was out of touch again within a week with calls, quotes, staff issues, client issues and so on. He’d stay up after the children and wife were in bed and it was quiet, to concentrate and get back on track – but it was making him more tired and he was being drained.

How he bit the bullet and solved the problem

  • He decided to call us back in for regular help – that would free him up to work on what he did well, and win more clients to grow his business!
  • We got all his bills to pay, nagged him to check all his emails and that all bills were emailed to our account email, and entered them in the software – about 10-15 min work – now there is a list of what is due, and when! Up to date!
  • We reconciled the bank for the last month, checked where it was at because the accountant’s office was reconciling it monthly. And checked that the last quarter was correct, as some invoices were of the same $ but remittances from clients said they paid different ones and not always the oldest! Re-did some payments, aligned the correct ones paid. Up to date!
  • We synchronized the project software with his accounts software, and checked the 2 systems had the same invoices due, by number and $ – the invoices exported into the accounts software, but unfortunately the accounts can’t update paid invoices back into the project software – hopefully this will be rectified in time! Up to date!
  • Filed all paid invoices, checking back on the bank when paid and marking clearly as paid, then put in folder alphabetically.
  • Reported on clients due – debtors – accounts receivable, in an aged report to be able to easily see what was overdue – the business had 7 day terms – of course many larger businesses ignore and still pay on 30 day cycles! There were 12 well over due, 5 just a day over due, and 10 not due as yet
  • Reminders – emailed all over due outstanding receivables with a friendly tone, and “REMINDER” at the start of the subject message so it stood out
  • System – send reminders FORTNIGHLY – not monthly! It’s too long and people forget! And for those well over due – WEEKLY email reminders

RESULT

  • Over 3 weeks the old 12 outstanding accounts were up to date except 1!
  • Only 1 client needed to be called after several reminders, excuses, requests for invoices again by accounts – the usual delay tactics that indicate possible cashflow issues!
  • Regular clients realised we were on to them straight after the 7 days due!
  • 70-80% now pay before, on time, or a day or two after the time due!
  • Client has regular income to cover expenses
  • Client is sleeping better and serving prospective and new clients with more enthusiasm and energy!
  • Low costs – all this weekly for under a few hundred dollars!!!
  • Peace of mind with professionals handling what they can do very well!

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

0407 361 596 Aust

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 Bookkeeping – MYOB running slow all of a sudden when doing the books? – Tips to speed up the PC

MYOB Bookkeeping – PC running slow all of a sudden when doing the books? – Tips to speed up the PC

Bookkeeping – MYOB running slow all of a sudden when doing the books? – Tips to speed up the PC

Have you found your MYOB is running slow all of a sudden while you are doing the books, or when you came back after a break? Here are some tips that may help –

Win10 –

In the Cortana window, type “Run”

Click the App “Run” in the list

Type “%localappdata%” > OK

Go to the MYOB folder

Go to the AR folder > 2017.1 > Cache folder

Delete all files there “Company File Cache”

Close the window

Then

In the Cortana window, type “Run”

Click the App “Run” in the list

Type “CMD” > OK

At the cursor type “ipconfig /flushdns” (note there is a space after config) > Enter key

Should get a message.. successfully…

Close the window

Then

Restart your PC

Win7

Click the Windows button, lower left corner

In the search box, type “Run”, and continue as above

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

Call and you also get for 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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Cashflow Tips – What is the meaning of, & what does a Cashflow Statement show?

Cashflow Tips – What is the meaning of, & what does a Cashflow Statement show?

Cashflow Tips – What is the meaning of, & what does a Cashflow Statement show?

The Cashflow Statement is also called the Statement of Cashflows, and here we explain the meaning of, and look at what the statement shows us. It is one of the 3 main financial statements that businesses report on – the other 2 are Profit & Loss, and the Balance Sheet.

The cash flow statement reports the actual cash generated and used during the time interval stated in its heading. The period of time that the statement covers is chosen by the company, for example, “For the Three Months Ended 31 December, 2015” or “The Fiscal Year Ended September 30, 2016”. Most common is annual.

The cash flow statement actually uses data and the CHANGES between periods from the Profit & Loss and Balance Sheet, and organises and reports the cash generated and used in the following categories:

Operating, Investing and Financial activities

Business Cash Flow

What the Cashflow Statement shows

The profit & loss or Income Statement is prepared under the accrual basis of accounting, meaning the sales/revenues reported may not have been collected yet. Similarly, the expenses reported on the income statement might not have been paid. You could review the balance sheet changes to determine the facts, but the cash flow statement already has integrated all that information. As a result, savvy business people and investors utilize this important financial statement.

Here are a few ways the statement of cash flows is used.

  1. The cash from operating activities is compared to the company’s net income (profit/loss). If the cash from operating activities is consistently greater than the net income, the company’s net income or earnings are said to be of a “high quality“. If the cash from operating activities is less than net income, a red flag is raised as to why the reported net income is not turning into cash.
  2. Some investors believe that “cash is king”. The cash flow statement identifies the cash that is flowing in and out of the company. If a company is consistently generating more cash than it is using, the company will be able to increase its dividend, buy back some of its stock, reduce debt, or acquire another company. All of these are seen to be good for shareholder value.
  3. There are also some financial models that use the cash flow.

The statement of cash flows has four distinct sections:

  1. Cash generated from operating activities
  2. Cash generated from investing activities
  3.  Cash generated from financing activities
  4. Supplemental information.

The differences in a company’s balance sheet accounts from one period to the next, will provide much of the needed information. The changes—or differences—in the account balances will likely be entered in one of the sections of the statement of cash flows.

Of the four sections of the statement of cash flows, those balance sheet accounts which affect each section include –

1. Operating Activities

This section reports the net income and then converts it from the accrual basis to the cash basis by using the changes in the balances of current asset and current liability accounts, such as:

  • Accounts Receivable
  • Inventory
  • Prepaid Insurance
  • Other Current Assets
  • Notes Payable
  • Accounts Payable
  • Wages Payable
  • Payroll Liabilities
  • Interest Payable
  • Income Taxes Payable
  • Unearned Revenues
  • Other Current Liabilities

Note – as well as using the changes in current assets and current liabilities, the operating activities section may list adjustments for depreciation expense and for the gains and losses on the sale of long-term assets/investments.

2. Investing Activities

This section reports changes in the balances of long-term asset accounts, such as:

  • Long-term Investments
  • Land
  • Buildings
  • Equipment
  • Furniture & Fixtures
  • Vehicles

Investing activities involve the purchase and/or sale of long-term investments and property, plant, and equipment.

3. Financing Activities

This section reports changes in balances of the long-term liability and stockholders’ equity accounts, such as:

  • Notes Payable (generally due after one year)
  • Bonds Payable
  • Deferred Income Taxes
  • Preferred Stock
  • Paid-in Capital in Excess of Par-Preferred Stock
  • Common Stock
  • Paid-in Capital in Excess of Par-Common Stock
  • Paid-in Capital from Treasury Stock
  • Retained Earnings
  • Treasury Stock

Financing activities involve the issuance and/or the repurchase of a company’s own bonds or shares as well as short-term and long-term borrowings and repayments.

4. Supplemental Information

This section of the cash flow statement reports the amount of interest and income taxes paid as well as significant exchanges not involving cash. For example, the exchange of company shares for company bonds would be reported here.

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

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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Cashflow Tips – I’m making a profit but no cash – why does this happen?

Cashflow Tips – I’m making a profit but no cash – why does this happen?

Cashflow Tips – I’m making a profit but no cash – why does this happen?

Is your business making a profit but no cash and you wonder why?

This may be because company reports like Profit & Loss may show you are making a profit but have no cash because profit is an accounting record using revenues and expenses, (accrual accounting) which are different from the company’s cash receipts and cash disbursements (cash accounting).

Put another way, there is a difference between revenues (invoiced sales) and receipts (actual cash receipt of payment of invoices (banked)). There is also a difference between expenses (purchase orders still to pay) and expenditures (actual payment of purchases, and overhead expenses).

Examples

  1. As an example a new company that sells $10,000 to its clients in a month and the clients are given 30 days to pay. The company will have $10,000 of revenues in its first month, but the cash will not be received until the second month. If the company’s expenses are $7,000 in the first month, the company will report a profit of $3,000 but will not have received any cash from its clients. It may not have been paid, and it may not have paid its expenses either.
  2. Another company might report a profit of $60,000 in its first year, but during its first year it uses $65,000 of cash to acquire equipment that will be put into service at the beginning of the second year. This company will have a profit, but will not have the cash.
  3. Other times cash is paid out, but the profits are not reduced at the time of the payment, because they don’t pay for expenses but pay loans, payroll PAYG or super or for stock – they go to the Balance Sheet and include prepayments of insurance, payments to increase the inventory of merchandise on hand, and payments to reduce liabilities.

Keep in mind that Profit does not equal cash: It is as simple as that!

Profit is the accounting record of what is left after you have made sales and raised all expenses. Of course, remember there is tax on the profit as well. The remaining amount is then reinvested back into the business or distributed to the owners.

Cash is what the business needs to operate every day and can come from 5 different main sources — profit, selling assets, contributing your own personal funds, bank loans or new investor money.

Cash and Timing

The key to remember is that you don’t spend profit in our business — you spend cash, and it is all in the timing.

There are 2 timing situations to be aware of –

Firstly as the old saying goes, you have to spend money to make money. To make a profit, you first need to purchase goods or services to sell, so you will need cash before the sale is made. By selling your product or service at a higher price than what it cost, you make a profit.  The point is you need the cash before you get the profit, or get credit and pay the supplier later!

Secondly (that catches most businesses) is providing credit to customers. The longer the customer takes to pay, the longer you have to wait for the cash, and in the meantime you have wages, rent, stock and other expenses to pay. This is where the trouble begins and often ends.

Focus on what matters – cashflow

You need to focus on not only profit but also what drives your cashflow. If you have regular loan repayments, rent and other expenses that have to be made on time, then you will need enough cash to cover these while you wait for your customers to pay. Keeping track of your accounts receivable and following up on late payments will definitely help your cashflow. The other thing to remember is if you can get credit from your suppliers, this may mean that you don’t have to pay for stock until you have sold it — again making a big difference to your cash flow.

The business needs to be profitable to stay in business. Be careful of sacrificing profits to generate cash. Offering discounts to pay early will definitely help your cash position but will reduce your profit.

The best management is to make sure you have enough cash buffer to cover ongoing expenses. Having a finance facility (overdraft, credit card) can help that will tide you over during a cash flow shortage, but this will cost in the form of fees and interest, which again, will reduce your profit.

Remember profit does not equal cash!

See more help at Cashflow Tips

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


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Bookkeeping – Holiday/Annual Leave Payout deducts from the Accrual, but Holiday Cash Out doesn’t – Why? (Updated Article)

Bookkeeping – Holiday/annual leave payout deducts from the accrual, but holiday cash out doesn’t – Why?

Bookkeeping – Holiday/annual leave payout deducts from the accrual, but holiday cash out doesn’t – Why?

( 31 Aug 2017 – Information corrected, due to Sue’s advice in comments below – I learn new tricks every day, even when right before you !!! Thanks Sue!)

Client Skype’d Hi Paul, I’ve had a look and our special Pay Category, Holiday Cash Out doesn’t seem to be deducting from the balance of Holiday Leave Accrual. It’s not listed under entitlements under the Payroll Category List window.

Answer – Yes it is NOT linked to the accrual entitlement because it may only have one wage category (can be) linked (at a time to a) to the pay wage category – the Holiday/Annual Leave wage pay category that is regularly used, is linked to the Holiday Accrual and deducts from the accrual – if you go to Entitlements, and then open the Holiday Leave Accrual, you will see down at the bottom it says it is linked to Holiday Leave.

Your Holiday Cash Out is not an a usual entitlement (only with some awards) – it will be under the Wages Payroll Category to be used when paid :), but it has no effect on the accrual if not linked – until linked.

Client Skype’d – Thanks. So how do we reduce the accrued holiday leave by the hours that have been paid as a holiday cash out which is allowed in the award, up to 2 weeks per year? Can we put it as an entitlement that gets deducted or can we manually deduct from accrued holiday pay?

Answer – You tick it to link to the Holiday Leave Entitlement Accrual at the bottom for linked cateories! It needs be manually deducted – the more automatic way is to set up the Hol Cash Out as a separate entitlement, and choose to link it to the Holiday Cash Out wage category.

BUT – If the 2 weeks are optional and it is linked to the Accrual, it will adjust the hours WHEN Holiday is cashed out – automatically adjusted for you! it will be difficult to balance with the regular Holiday accrual if not taken every year – it becomes messy – if not used regularly but occasional years.

(with this correction of the info, past Cashed Out Holiday still needs to be adjusted to the Holiday Accrual as follows –

I would adjust the Accrual in this way – do a paycheque with ZERO hours, and in the lower lines at Holiday Accrual, adjust the holiday accrual with NEGATIVE the hours cashed out, and write a note in the memo for the reason and date the cash out occurred, there should be no super generated, ensure any other allowances etc are ALL ZERO also – then record, and this pay updates the accrual and there is a clear record with note and date for the reason for the adjustment.

Client Skype’dOK I will try that. There’s only a few done so far. So will need to do that for those ones. May make an adjustment today so these are all done now and up to date. Thanks.

Answer – Yes, do as a pay, then it updates and provides a note and proper record on the staff pays record.

Client Skype’d –  Thanks. Is the other option to use the “Unused Holiday Pay” for Cashed Out pay as well?

Answer – NO Unused is for a different reason – when they leave and still have Unused Leave owing due to them on leaving. The Unused Holiday can ALSO be linked to the Holiday Accrual will ALSO NOT decrease the Holiday Accrual, but it is used to be clear what the pay is for – and when you enter the Termination Date in the card it closes OFF the entitlements.

Client Skype’d –  OK thanks. Thought I’d check. Will org. Cheers.

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

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Bookkeeping – End of Financial year final pay falls in new financial year

Bookkeeping – End of Financial year final pay falls in new financial year

Bookkeeping – End of Financial year final pay falls in new financial year

Client questionJust a quick question. 

We have an employee being paid fortnightly.

Next payment to be made 07/07/2017.  This includes the week 26/6 to 30/6/2017. Does any of this have to be put through in EOFY for 2016/2017?  Or will it be first payment for New year on new tax table?

Solution Payroll is taken as  a cash payment in the accounts – ie WHEN it is paid.

Regardless of what period it covers – it is WHEN it is paid.

So not included in previous tax year.

You can finish your payroll YE17 year, prepare the Payment Summaries – check you include in Gross Payments, any NEW payroll types/categories if you created any during the year.

Then roll forward to new payroll year, and you can process the 7/7/17 payroll that covers end of June days and some of July days.

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

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 / Quickbooks – Tax Tables for 2017 – 2018?

MYOB / Quickbooks – Tax Tables for 2017 - 2018?

MYOB / Quickbooks – Tax Tables for 2017 – 2018?

 

The new tax tables for 2017-2018, have been released. The new tax tables include the removal of the temporary budget repair levy, the increase in Medicare levy low-income threshold, as well as the annual indexation of HELP/SSL/TSL and SFSS.
So employees earning between $394 and $520 per week will be affected, all employees with student loans, as well as those on higher incomes.

tax rates 2016-2017

Last tax year, 16-17 they mainly changed in the level $37,001 – $$87,000 (was up to $80,000) range. The past tax year levels are –

 

tax rates 2016-2017

Does your MYOB software have out of date tax tables, or you know you need them by experience every year. (To find what you have, click Set Up then General Payroll Information. In about the middle is the table date at the start of that tax year it applies to).

Tax tables become out of date nearly each year as tax rates and/or Medicare and HECS thresholds can be changed by the Tax Office (ATO). MYOB only supply new tax tables via full software annual subscription. You can no-longer buy the  latest tax tables separately as many years ago. Users must upgrade to a new version or take out Cover under their support program to receive the latest tables or ‘pay2myob.bin’ file for earlier versions (MYOB) to keep payroll compliant. (If you want assistance to upgrade to the latest MYOB call Paul – 0407 361 596 or email us – info@accountkeepingplus.com.au).

The special MYOB tax file (eg ‘pay2myob.bin’) has been specially formatted so that it disallows any manual edit. Additionally, each version is formatted specially, so you can’t use a tax file formatted for MYOB Version 19 with say Version 16. For the Mac version (AccountEdge®) the tax table file is called “MYOB Tax Tables” or in v9 to 9.6 has a “.tax” extension. Everything else though is the same and all the comments here apply equally to the Mac version.

Note third-party tax tables cannot be used in MYOB 2011 onwards – you MUST have subscription or upgrade. Contact us to discuss your needs, or assistance with upgrades and get our extra BONUSES no obligation. 0407 361 596.

There is a Solution up to MYOB v19.13 and Account Edge 15.5 Third party updated tax tables available for $80 provide a substitute, have been tested by ourselves and work with many prior versions. They are for those who want to continue to use their current versions of MYOB® without the need to upgrade. Note that there is nothing in your license agreement that prevents you using 3rd party tax tables.

Installation is simple. The tables are supplied with easy to follow video and instructions and instantly downloaded after secure credit card  payment in most instances, or will be emailed to you. You also receive a PDF copy of the applicable Aust Tax Office Weekly Tax Table for you to check the accuracy of the calculations. After-sales email support is available for any installation or setup issues you may encounter. If you would like Account Keeping Plus to install for you, we can do by remote desktop – Teamviewer (free software). For $50+GST. Call or email for instructions.

Note NO changes are made to the software. The only changes made are to the tax rates in your company data file that the software calls upon to calculate PAYG Withholding in a pay, when processing payroll. The changes made are not permanent and can be reversed by reloading the tax tables from your current tax table file, simply moving a file in the software folder

These third-party tables are available, which Account Keeping Plus have tested in the software and tested against the ATO tables and work perfectly for us and our clients. To get more details and purchase for your MYOB – click the grey box to the right – “Tax Tables” or CLICK HERE

ATO Tax Tables – PDF’s

For the latest tax tables to download the PDF and keep a copy, or use the Tax Withheld Calculator online all from here.

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