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Bookkeeping – Train, Troubleshoot or we do the books for you! MYOB Reckon Xero & Set Up


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Cashflow Tips – Cash Flow and Budgeting – What are they and how are they different?

Cashflow Tips - Cash Flow and Budgeting – What are they and how are they different?

Cash Flow and Budgeting – What are they and how are they different?

They may sound too hard or scary, but cash flow and a budgeting can show related information – so what are they and how are they different? There is a difference and each have different uses, but mainly they help the business owner in the financial management of the business or organisation.

Cash flow forecastis an estimate of the amount of money (actual cash) you expect to flow in and out of your business and includes all your future income and expenses. A forecast usually covers the next 12 months, or it can also cover a short-term period such as a week or month.

  • It predicts when the actual income and expenditure occurs in the actual bank account(s).
  • Does not consider accruals and adjustments such as depreciation, only ACTUAL cash in and out.
  • Large capital purchases such as assets (usually not recorded in a profit and loss and budget) are included in a cash flow forecast, as to HOW they will be paid – eg show loan money in and payments out – fully paid or the instalments on loans/finance.
  • The full year cash flow forecast is usually shown on a month by month basis. But in it can be broken down into fortnightly or even weekly depending on the requirements.
  • More info and a handy FREE template http://www.business.vic.gov.au/money-profit-and-accounting/getting-paid-on-time/cash-flow-statement-projection-with-template.

Budgetdetails overall what you plan to do with your finances based on expected sales and expected costs, and is similar to Profit and Loss (and a Balance Sheet). It is used to measure how you go against the budget – are you on track for what you want to achieve?

This is usually over 12 months, and focuses on profit. In addition:

  • Accruals and other non-cash adjustments such as depreciation are included;
  • Large capital purchases will be included;
  • A budget also provides a benchmark to then monitor performance – after each month accounts are finished we compare what actually occurred against what was budgeted or planned to occur;
  • Usually the full year budget is prepared in months like the Profit & Loss;
  • A budget is NOT used to monitor the amount of cash in the bank accounts. That is where the cash flow forecast comes in;
  • Some further information is here – http://www.infoentrepreneurs.org/en/guides/budgeting-and-business-planning/.

Both Cash Flow and Budget detail the planned financial goals the organisation is trying to achieve and are linked to the strategic and business plans of the organisation. The main difference is based on:

1.     The type of the transaction and;

2.     The timing when receipts and payments will occur.

As a simple example: A budget will record the income when you have sent out the invoice whereas your cash flow will record it when you actually receive the amount in your bank account. Always remember not to assume that debtors will pay the following month. Often it may be later which is why it is important to know your Average Debtor Days which may show that payment occurs typically 64 days after sending out the invoice. This would be reflected in the cash flow, but not the budget.

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 – Handle your business growth plan carefully to avoid disaster!

Cashflow Tips - Handle your business growth plan carefully to avoid disaster!

Cashflow Tips – Handle your business growth plan carefully to avoid disaster!

For many, your business growth plan will solve most business problems.

But growth can also be a disaster for a business if not handled well – and here are some common miss-beliefs.

  1. Build it and it will sell itself – Many new ideas come to entrepreneurs all the time – but not everything succeeds for outside and internal reasons – no real demand, lack or poorly-prepared marketing plan (often a weak spot for small business owners), lack of financial budget plan.
  2. I can/will do it all – Common error to fall into the “if it’s to be done no-one does as it well as I do it” trap. Yes in the early days you have to do most yourself – but document the method that you find works best, then teach someone else to do it so you can move on to other things. A good explanation is found in “The E Myth” by Michael Gerber. Paint a clear picture of what the future business will look like/become, write out the Organisation chart of the key roles of the organisation and job descriptions, find/create the systems required to make the business efficient, and get employment/HR help as it is a whole new mine-field of managing people and financial responsibility!
  3. Bigger is better When owners work on business growth, they often focus on sales, but a look at industry benchmarks often reveals that businesses in higher sales brackets aren’t always the most profitable.  Often, businesses with modest turnover can achieve better profits, where-as too often, as a business grows, overheads can get out of hand and the extra sales get eaten up then profit falls.  So sales and marketing plans are very important – and testing and measuring as you go is paramount – set budgets and create reports at least monthly to track how you are going.
  4. Growth solves Cashflow problems Nothing just happens without careful measuring and managing carefully!!! Ensure the budget is created as already mentioned, know your margins (Gross Profit, Net Profit as minimum). See if there are supplier discounts with larger purchasing volumes, and importantly, if you sell on account instead of retail, keep monitoring debtor days and don’t get slack on customers taking their time to pay!

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

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


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Cashflow Tips – 5 tips to get more from your accounts/bookkeeper – or how to be a better bookkeeper

Cashflow Tips - 5 tips to get more from your accounts/bookkeeper – or how to be a better bookkeeper

Cashflow Tips – 5 tips to get more from your accounts/bookkeeper – or how to be a better bookkeeper

Do I have the most suitable software for the business needs? Should I upgrade to the next level or another brand? We can help you for FREE – call for a chat!

  1. Expenses we can reduce? What areas of expenses have increased, and are there better deals to reduce costs?
  2. What areas/products of sales are growing? Can we see a trend in products or categories that are underperforming? What about the best performers – should we focus on building them more?
  3. Checklist of the bookkeeping tasks so we don’t forget? Do you have a checklist – there can be at least 10 and more tasks each week/month – invoicing, paying suppliers, payroll, super, Workcover, collating customer payments, reconcile bank statements, reconcile credit cards, petty cash – if you want a template to track the main bookkeeping tasks, call or email info@accountkeepingplus.com.au 
  4. Better Reports for more insight? What other reports does the software offer? I find that exploring other reports and seeing what customization is possible can reveal new reports and insights that help make better decisions!

DOWNLOAD a FREE “Bookkeeping Quarter Checklist” to get organised! CLICK HERE

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

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


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Cashflow Tips – A cool tool to see what affect changes make on Cashflow

Many run by gut or the bank balance early in running a business – but understanding your cash flow is critical to your business success, and a handy tool that bank NAB have created is an online cash flow improvement tool. Whether using MYOB, Reckon/Quickbooks or Xero for bookkeeping, Try it and see what you think! (Click icon to go to the page)

Cash Flow Imp CalcLet us know how you went…

For other NAB cool tools see Calculators and tools

Also see Cashflow Tips – 5 Ways to Keep Cash Flowing

Or Cashflow Tips – To Discount or ADD VALUE?

DOWNLOAD a Free “Bookkeeping Quarter Checklist” to get organised! CLICK HERE

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

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


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Cashflow Tips – Improving cashflow in small business – Tip – Invoice Promptly!

Cashflow Tips - Improving cashflow in small business – Tip – Invoice Promptly!

Cashflow Tips – Improving cashflow in small business – Tip – Invoice Promptly!

Small business owners are often uncomfortable about asking to be paid, yet the top way to improving your cashflow is by invoicing PROMPTLY!. When you run a business, (especially for service businesses) if you don’t invoice promptly as well as collect payment promptly (which causes a cash crisis in the first place), then consider the following consequences –

Consequences for your cashflow:

  1. Clients can quickly forget what they owe you;
  2. They are less likely to remember how much they loved your work and pay you promptly;
  3. They may conclude that you do not expect quick payment and will take their time in sending in their money.

Some ACTION steps:

  1. Where possible, issue invoices at the time services are delivered;
  2. Send your invoice by email to speed the process;
  3. If you can’t issue immediately, be sure to issue your invoices weekly, or at least twice per month on designated days, such as on the 15th and the last day of each month;
  4. Do it like clockwork – it will help to even out your cashflow.

Take-away message and case studyCreate the habit – invoice quickly and often!

Part of our service is assistance with cashflow budgets, debtor collection and reviewing supplier costs and terms. One of our clients said the business finance is now in the BEST shape it has ever been – for our 4-5 hrs work weekly involves managing the invoices, payment follow up unique method and now supplier payments! The owner now can catch up on quoting jobs and finalizing the sale to grow the business.

Could this assist you in your business and let you focus on your best skills and on running the business?

If you would like to speak with these clients, email me and I’ll supply contact details!

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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Bookkeeping – New Year Resolution – Organising bookkeeping tips for small business – Part 2

Bookkeeping – New Year Resolution – Organising bookkeeping tips for small business – Part 2

Bookkeeping – New Year Resolution – Organising bookkeeping tips for small business – Part 2

Part 1 last month, we looked at how to organise your books, your bank and credit cards as separate from your personal banking and tips from the ATO website on record keeping.

Part 2 here, we show 6 steps that look at how to keep track of account-keeping tasks, things that need answers (queries and who to ask) and storage of records.

6 steps to get your accounts in order

Here are 6 steps to get your accounts in order – off to the right start (or improve current systems)

  1. Bookkeeping Task ChecklistA summary snapshot checklist of the full accounting year – tells you what to do and where you are at – down the left side, number the items that apply to you – you may do invoices manually in another book or Word, but then only record the actual sales deposited/cashed in your excel sheet or accounting software (cash basis), or generate invoices from accounting software and then record when customers pay you (accrual basis). Or if you have lots of small sales in a retail shop, you record the end of day sales total only, eg deposit to the bank.
  2. Cash Expense Organiser Sheet – Photocopy one sheet per month, then each week, sort your cash receipts into categories – fuel, stationery, postage and then paper-clip them to the sheet. Enter each receipt, or the total fuel, etc. At end of month staple the bundles, total the expense categories – total fuel, stationery, stamps, etc. Enter in the accounting records, reconciling the petty cash. Then start a new sheet and slip on the clips ready to go for the next month.
  3. Small Expense Organiser  – A Sheet for small receipts paid by EFT, credit card, clip then staple as at end of month after recording. Or put the sheet and all slips for a month in a plastic pocket. File all the other supplier invoices in A4 size, in alphabetical order.
  4. Contact Register  – For important conversations and negotiations such as price bargaining or discussions on what will be supplied and agreed. Also best to record disputes time and dates, very carefully.
  5. Year End – Comprehensive Checklist – Year end can be a busy time, especially with payroll so this checklist can be adapted to the items that apply to your business
  6. Year End – Report Folder Cover SheetIf using manual accounts or Excel, list and check Debtors (accounts receivable, that you are still owed) and Creditors (accounts payable that you still need to pay). Copy the last bank and credit card statements and any reconciliation reports. If using accounting software, print Profit and Loss, Trial Balance, and check Debtors (accounts receivable) and Creditors (accounts payable) PAYG and Super reconcile to the Balance Sheet. Gather all BAS statements and reports. Gather all asset Invoices together.

Fill in the cover sheet and year, collect reports together (separate by labelled tabs for easy reference) and give to your accountant to prepare the tax returns.

DOWNLOAD a Free “Bookkeeping Quarter Checklist” to get organised!

CLICK HERE

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

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


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Cashflow Tips – Managing cash flow in a small business – How a cashflow can help

Cashflow Tips - Managing cash flow in a small business – How a cashflow can help

Cashflow Tips – Managing cash flow in a small business – How a cashflow can help

Here are some great tips from a great resource for managing cash flow in a small business, at the Queensland Govt site at:

http://www.business.qld.gov.au/business and under the Running a Business then – Finances cash Flow.

Managing Cashflow –

Your cash flow is the money you have coming in from revenue and going out for expenses. Good cash flow management will ensure you always have money available for paying your expenses when they are due.

Even profitable businesses can fail if cash flow is not managed properly. If you don’t have enough money available to pay your lenders or suppliers, banks may foreclose and suppliers could cut supplies.

There are many areas in your business that can impact on your cash flow. It is important to understand how customer payment terms, supplier payment terms, loan payments, future spending decisions and other items can affect your cash flow.

This guide will help you to manage your cash flow and understand how to use cash flow analysis to inform business decisions.

Plan and Monitor Cashflow

Planning and monitoring your cash flow is one of the most important things you can do when running your business. This should also include how you will address cash shortfalls or surpluses if they occur.

Forecast cash inflows against cash outflows

A cash flow statement will help you forecast your money coming in and going out. Forecasting your cash flow is usually done annually and broken down into monthly amounts. Always record the amount in the month it is expected to be spent or received. For example, electricity is usually paid quarterly so should be recorded in the month it is due.

You can use a cash flow template to forecast your annual cash flow. You will need to estimate and record the following amounts for each month:

  • total monthly cash inflow – includes sales, sales of assets, capital injections from borrowings or owners funds, interest revenue and any other sources
  • total monthly cash outflow – includes items such as purchases, loan payments, supplies, telephone, electricity, wages and any other bills
  • net cash flow – take the total outflows from the total inflows to see if there is more money in or out
  • opening balance – record your cash available at the beginning of the month
  • closing balance – calculate your funds available at the end of the month by adding the net cash flow to the opening balance. This will become your opening balance for the next month. Note: If your net cash flow is negative, this amount will be reduced.

Include GST when inserting amounts for some cash inflows (particularly sales) and many cash outflows (particularly purchases). Calculate the difference between total GST inflows and total GST outflows and insert this as GST payments.

Different businesses are subject to differing GST requirements, so you should seek specific advice from your tax adviser. Learn more about working with business advisers.

Monitor actual inflows against outflows

As each month passes it is important to record your actual cash flow. This can be compared against your forecast to see if you are tracking as planned. You may find you need to review and adjust your forecast as amounts change over the year. Always make sure your payments received match invoices issued, and receipts and payments match.

Invest surplus cash or arrange loans

If you forecast excess cash for some months, it can be worth putting it in short-term investments to maximise your income. If you anticipate any shortfalls in cash, you may want to plan to use this invested excess, or seek for an appropriate loan to temporarily cover your costs. Don’t forget to include these extra payments or receipts in your cash flow forecast.

What are your thoughts? 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