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How to make sense of the words your Accountant likes to use.

With the Australia Federal Budget having been delivered, we thought we’d help out with some of the terminology they used in the news cycles, and we thought how appropriate it might be that we define some common accounting terms that may be useful for you in your everyday business life, as well as when we post specific details about the Budget, so feel free to print this little glossary out and have it handy to refer to.

Everyone knows we love working with small businesses and new entrepreneurs. One thing that we come across often when working with clients, however, is that we spend a lot of time going over basic accounting terms and concepts before getting into the essential work of tax planning, forecasting, bookkeeping coding and so on, so let’s get stuck in with defining some terms for you:


  • Accounts payable – a record of all unpaid short-term (less than 12 months) invoices, bills and other liabilities. Examples of accounts payable include invoices for goods or services, bills for utilities and tax payments due.
  • Accounts receivable – a record of all short-term accounts (less than 12 months) from customers you sell to but are yet to pay. These customers are called debtors and are generally invoiced by a business.
  • Accrual accounting – an accounting system that records transactions at the time they occur, whether the payment occurs now or in the future.
  • Amortisation/Depreciation – the process of offsetting assets such as goodwill and intellectual property over a period of time. 
  • Assets – things you own. These can be cash or something you can convert into cash such as property, vehicles, equipment and inventory.
  • Audit – a check by an auditor or tax official on your financial records to check that you account for everything correctly.


  • Bad debts – money that is unlikely to be paid in the near future.
  • Balance Sheet – a snapshot of a business on a particular date. It lists all of your assets and liabilities and works out the net assets.
  • Balloon payment – a final lump sum payment due on a loan agreement. Loans with a larger final ‘balloon payment’ have lower regular repayments over the term of the loan.
  • Bank reconciliation – a cross-check that ensures the amounts in your cashbook match the relevant bank statements.
  • Benchmark – a set of conditions against which you can measure a product or business.
  • Benchmarking – the process of comparing your business to similar businesses in your industry.
  • Bill of sale – a legal document for the purchase of property or other assets that details the purchase, where it took place, and for how much.
  • Bootstrapping – where a business funds its growth purely through personal finances and revenue from the business.
  • Bottom line – also called Net profit.
  • Break-even point – the exact point when a business’s income equals its expenses.
  • Budget – a listing of planned revenue and expenditure for a given period.


  • Capital – wealth in the form of money or property owned by a business.
  • Capital cost – a one-off substantial purchase of physical items such as plant, equipment, building or land.
  • Capital gain – the amount gained when an asset sells above its original purchase price.
  • Capital growth – an increase in the value of an asset.
  • Cash – includes all money available on demand, including bank notes and coins, petty cash, certain cheques, and money in savings or debit accounts.
  • Cash accounting – an accounting system that records transactions at the time you actually receive money payment.
  • Cash book – a daily record of all cash, credit or cheque transactions received or paid out by a business.
  • Cash flow – the measure of actual cash flowing in and out of a business.
  • Cash incoming – money that is flowing into the business.
  • Cash outgoing – money that is flowing out of the business.
  • Chart of accounts – an index of the accounts a business will use to classify transactions. Each account represents a type of transaction such as asset, liability, owner’s equity, income, and expense.
  • Chattel mortgage – similar to a hire-purchase agreement although the business owns the asset from the start. Chattel mortgages require regular ongoing payments and typically provide the option of reducing the payments through the use of a final ‘balloon’ payment.
  • Contingent liability – a liability where payment is made only if a particular event or circumstance occurs.
  • Cost of goods sold – the total direct costs of producing a good or delivering a service.
  • Credit – a lending term for when a customer purchases a good or service with an agreement to pay at a later date. This could be an account with a supplier, a store credit card or a bank credit card.
  • Creditor – a person or business that allows you to purchase a good or service with an agreement to pay at a later date. A creditor is also anyone who you owe money to, such as a lender or supplier.
  • Current asset – an asset in cash or something you can convert into cash within 12 months.
  • Current liability – a liability that is due for payment within 12 months.


  • Debit – in double-entry bookkeeping, a debit is an entry made on the left-hand side of a journal or ledger representing an asset or expense.
  • Debt – any amount that you owe including bills, loan repayments and income tax.
  • Debt consolidation – the process of combining several loans or other debts into one for the purposes of obtaining a lower interest rate or reducing fees.
  • Debt finance – money provided by an external lender, such as a bank or building society.
  • Debtor – a person or business that owes you money.
  • Default – a failure to pay a loan or other debt obligation.
  • Depreciation – the process of offsetting an asset over a period of time. You can depreciate an asset to spread the cost of the asset over its useful life.
  • Disbursements – money that a business spends.
  • Discount – a reduction applied to a full priced good or service.  
  • Double-entry bookkeeping – is a bookkeeping method that records each transaction in 2 accounts, both as a debit and a credit.
  • Drawings – personal expenses paid for from a business account.


  • Employee share schemes-  where you give your employees the opportunity to buy shares in your company. Other terms include an ’employee share purchase plan’ or an ’employee equity scheme’.
  • Encumbered – an encumbered asset is one that is currently put forward as security or collateral for a loan.
  • Equity / Owner’s Equity – the value of ownership interest in the business, calculated by deducting liabilities from assets. 
  • Equity finance – money provided to a business in exchange for part ownership of the business. This can be money invested by the business owners, friends, family, or investors like business angels and venture capitalists.
  • Excise duty – an indirect tax levied on certain types of goods produced or manufactured in Australia including petrol, alcohol, tobacco and coal.


  • Facility – an arrangement such as an account offered by a financial institution to a business (such as a bank account, a short-term loan or overdraft).
  • Finance – money used to fund a business or high value purchase.
  • Financial year – a 12-month period typically from 1 July to 30 June.
  • Financial statement – a summary of a business’s financial position for a given period. Financial statements can include a profit and loss, balance sheet and cash flow statement.
  • Fixed asset – a physical asset used in the running of a business.
  • Fixed cost – a cost that is not part of producing a good or service.
  • Fixed interest rate – when the interest rate of a loan remains the same for the term of the loan or an agreed timeframe.
  • Forecast – a list of future financial transactions. Forecasts help to plan a more accurate budget.
  • Fringe benefits – non-monetary benefits, such as company cars and mobile phones, included as part of a salary package.
  • Fully drawn advance – is a long term loan with the option to fix the interest rate for a period. These loans are usually secured and can help fund a new business or equipment.


  • Goodwill – an intangible asset that represents the value of a business’s reputation.
  • Gross income – the total money earned by a business before you deduct expenses.
  • Gross profit (also known as net sales) – the difference between sales and the direct cost of making the sales.
  • Guarantor – a person who promises to pay a loan in the event the borrower cannot meet the repayments. The guarantor is legally responsible for the debt.


  • Hire-purchase – a type of contract where you purchase a good through an initial deposit. You then rent it and pay the balance off in instalments plus interest charges. When you make the final payment, ownership of the good transfers to the purchaser. 


  • Insolvent – a business or company is insolvent when they cannot pay their debts as and when they are due.
  • Intangible assets – non-physical assets with no fixed value, such as goodwill and intellectual property rights.
  • Interest – the cost of borrowing money on a loan or earned on an interest-bearing account.
  • Interest rate – a percentage used to calculate the cost of borrowing money or the amount you will earn. Rates vary from product to product and generally the higher the risk of the loan, the higher the interest rate. Rates may be fixed or variable.
  • Inventory – a list of goods or materials a business is holding for sale.
  • Investment – the purchase of an asset for the purpose of earning money such as shares or property. 
  • Invoice – a document to a customer to request payment for a good or service received.


  • Liability – any financial expense or amount owed.
  • Line of credit – an agreement allowing a borrower to withdraw money from an account up to an approved limit.
  • Liquidate – to quickly sell all the assets of a company and convert them into cash.
  • Liquidation – the process of winding up an insolvent company. An appointed administrator will do this by ceasing business operations, selling assets, and paying creditors and shareholders.
  • Liquidity – how quickly you can convert assets into cash.
  • Loan – a finance agreement where a business borrows money and pays it back in instalments (plus interest) within a specified period of time.


  • Margin / Profit Margin – the difference between the selling price of a good or service and the profit. Margin is generally shown as a gross margin percentage which shows the proportion of profit for each sales dollar.
  • Mark down – a discount applied to a product during a promotion or sale for the purposes of attracting sales or for shifting surplus or discontinued products. 
  • Mark up – the amount added to the cost price of goods, to help determine a selling price. Essentially it is the difference between the cost of the good/service and the selling price. It does not take into account what proportion of the amount is profit.
  • Maturity date – when a loan’s term ends and all outstanding principal and interest payments are due.


  • Net assets (also known as net worth, owner’s equity or shareholder’s equity) – the total assets minus total liabilities.
  • Net income – the total money earned by a business after tax and other deductions.
  • Net profit (also known as your bottom line) – the total gross profit minus all business expenses.
  • Net worth – see Net assets.


  • Overdraft facility – a finance arrangement where a lender allows a business to withdraw more than the balance of an account.
  • Overdrawn account – a credit account that has exceeded its credit limit or a bank account that has had more than the remaining balance withdrawn.
  • Overheads / Fixed Costs – the fixed costs associated with operating a business such as rent, marketing, utilities and administrative costs. 


  • Personal property – covers any property someone can own, except for land, buildings and fixtures. Examples include goods, plant and equipment, cars, boats, planes, livestock and more.
  • Personal Property Security Register (PPSR) – registers of security interests. It provides a single national noticeboard of security interests in personal property.
  • Petty cash – cash for small miscellaneous purchases such as postage.
  • Plant and equipment – a group of fixed assets used in the operation of a business such as furniture, machinery, fit-out, vehicles, computers and tools.
  • Principal – the original loan amount borrowed or the remainder of the original borrowed amount that is still owing (excluding the interest portion).
  • Profit – the total revenue a business earns minus the total expenses. 
  • Profit and loss statement (also known as an income statement) – a financial statement listing sales and expenses. Use it to work out the gross and net profit of a business.


  • R&D – stands for ‘research and development’. Businesses conduct research and development to innovate, create new products and find better ways of doing things.
  • Receipts – a document given to a customer to confirm payment and to confirm the sale of a good or service.
  • Record keeping – the process of keeping or recording information that explains certain business transactions. Record keeping is a requirement under tax law.
  • Refinance – when a new loan helps to pay off an existing one. Reasons to refinance include: extending the original loan over a longer period of time, reduce fees or interest rates, switch banks, or move from a fixed to variable loan.
  • Rent to buy / Hire Purchase – a finance arrangement where you purchase something through an initial deposit and then ‘lease’ it while pay it off. After the final payment, the purchaser has the option (but no obligation) to buy the good or continue leasing. S
  • Retention of title – a clause in contracts where a buyer may receive property, but doesn’t take legal ownership until the full price is paid.
  • Return on investment (ROI) – a calculation that works out how efficient a business is at generating profit from the original equity from the owners/shareholders. It’s a way of thinking about the benefit (return) of the money you invest into the business. To calculate ROI, divide the gain (net profit) of the investment by the cost of the investment. The ROI then becomes a percentage or a ratio.
  • Return on investment (ROI) formula example – Annie buys $1000 worth of stocks and sells the stocks a year later for $1500. The net profit is $500. ROI = (500/1000) = 0.5 x 100 = 50%. Annie’s ROI on the stocks is 50%.
  • Revenue (also known as Turnover) – the amount earned before expenses, tax and other deductions.


  • Security (also known as collateral) – property or assets that a lender can take ownership of when repayment of a loan does not occur.
  • SMSF self-managed superannuation fund . An SMSF is a way of saving for your retirement. Unlike other super funds, an SMSF is self-managed, which means you’re responsible for making sure the super fund complies with super and tax laws. 
  • Stock – the actual goods or materials a business currently has on hand.
  • Stocktaking – a regular process involving a physical count of merchandise and supplies actually held by a business, to verify stock records and accounts.
  • Superannuation – money set aside for retirement that must go into a complying superannuation fund for employees, some contractors and business owners. 


  • Tax invoice – an invoice required for the supply of goods or services over a certain price. You need a valid tax invoice when claiming GST credits. 


  • Variable interest rate – when the interest rate of a loan changes with market conditions for the duration of the loan.
  • Variable cost – a cost that changes depending on the number of goods produced or the demand for the products or service.


  • Working capital – the cash available to a business for day-to-day expenses.

Tax Planning and Forecasting

In those good old days of accounting, keying in manual bank statements, reconciling cashbooks, printed workpapers all filed in a manilla folder; nice and neat, real old school.

This generally meant that no matter how hard the Larkin Partner team worked, we were behind and struggled to get our client files done. It was a scramble to get the end of year work done by the ATO deadlines and we were telling our clients how well they did months ago…and then telling them the news about how much tax they had to pay.

Client catch ups were frustrating for both us, as your accountants, and clients. Simply because if we had got you to take certain actions earlier, opportunities to deliver clients solid tax savings would have occurred and those actions needed to happen, happen.

With the introduction of GST in the 2000’s, came the requirement for most businesses to update their accounting activities and report to the ATO every quarter, sometimes monthly. For many businesses this also created a new and, of course, beneficial opportunity for their Larkin Partner Accountant to review, forecast and tax plan for their business.

Tax Planning and Income & Expense Forecasting should be done by every business, every year, if not more frequently. Having the information to hand to just know where your business is at, and where your business is going, helps you, as the owners, to plan and make more informed decisions.

Larkin Partners also made a bold business decision to start putting all clients onto cloud- based accounting software, such as MYOB’s suite of products and Xero. This move to cloud-based software combined with our greater focus on tax planning as one of our key services, has enabled our team of Larkin Partners Accountants to get on the front foot with clients and forecast both business performance and potential tax implications around the outcomes.

Planning or Forecasting offers you, and your business, so many benefits. The key is that it is proactive rather than reactive, forward thinking rather than playing catch up in the understanding of your business finances. As a minimum it provides your business with an estimate of profit for the year and therefore how much tax is going to need to be paid. At its absolute best, planning can provide you with various options to help minimise tax by making changes in the business before the end of the financial year – before its actually too late.

What’s the difference?

Planning and Forecasting are essentially the same thing, however there are some notable differences – Tax forecasting involves us working with you to predict how much tax is going to be paid at the end of the financial year. Generally, this is once all the options to help minimise tax have already been exhausted.

Tax Planning involves firstly forecasting and then reviewing the various options available including, but not limited to deferring income, prepaying expenses, ensuring lower tax thresholds are utilised, acquiring deductible assets, restructuring and maximising your deductible super contributions.

Not all scenarios result in tax savings. In some case, it simply allows for greater flexibility and improved decision making. For our clients where we have been doing tax planning and forecasting for many years, this process is all about just knowing where they are at and that everything that can be done is getting done at the right time. It rally is just simply good, strategic business practice that you should consider doing, if you are not already.

It’s time to talk about cashflow and your debtors.

Many small business owners are finding it increasingly difficult to manage their debtors. With payment times in Australia being some of the longest in the world, it’s more important than ever for small business owners to take proactive steps to protect their cashflow. But, let’s be honest, no one likes making those phone calls.

So, before you need to make that uncomfortable call, let’s look at some simple steps you can take to avoid debtor issues:

  • Perform credit checks on prospective customers to identify any red flags
  • Know who you are dealing with – a quick ASIC search can help
  • Get your contracts water tight and in order with clear payment terms and consequences for late payment
  • Go electronic and get your invoices out quickly, and automate payment reminders in your accounting system
  • Make paying easy – introduce credit card payment abilities – you can always pass on the fee – or register for a direct debit facility.

But, from time to time, you may have no choice but to make a call to get your invoice paid. Here are three simple steps to ensure your phone call results in a debt paid.

Step 1 – Preparing yourself to make the call

Before calling make sure you have all the relevant information – invoice details – number, what was done, amounts owing, your payment terms, previous attempts to collect and so on, as well as the contact name and phone number.

Step 2 – Actually making the call

It’s so important to be confident and identify yourself clearly and confirm that you are speaking to the right person who will authorise payment. If no one answers, leave a message or send a follow up text but don’t necessarily indicate  that the call is about an unpaid debt.

Stay as calm and professional as you possibly can, try and not get too emotional. Be prepared to listen, try not to argue or judge, stay focussed in your endeavour to recover your debt.

Never underestimate the power of silence at your end. Use it to put the burden of conversation back onto the debtor. For instance “I need your payment no later than the end of the month, as you are past our agreed trading terms.” Then pause. Don’t say another word. You are applying pressure in the most potent way possible to get what you want at the end of the call – which is an agreement to pay the invoice.

Step 3 – Getting the debt paid

Once you have established payment is overdue, ask for payment in full. If you have an EFTPos machine, offer to take a credit card payment over the phone then and there. If that is not possible, ensure you get a confirmation of when payment will be made. Make sure you follow-up this agreement in a letter or email, as if payment is not received you have a trail of your communication if you have to take further action.

What should you do if they can’t pay in full? Offer up a payment plan. Start with offering to break the invoice up into two or three payments with firm dates. Suggest weekly or bimonthly payments, as opposed to monthly payments, as this will help your cash flow and also get the debt paid off and, possibly more quickly, but also show you are empathetic and supportive to their predicament.

SMS Reminders

No one likes picking up the phone and calling debtors, its uncomfortable and awkward. So you can try a number of things first. Sending statements and reminders via email before calling, can be the prompt a forgetful customer just needs. Phone calls are more unpleasant than snail mail or email, but usually get a more immediate response, so don’t avoid them. Some businesses are now using SMS reminders with overdue debtors, which do tend to have a higher success rate in prompting payment than email reminders – inboxes are getting busier and busier, your reminder email can get lost in traffic.

The fastest way to resolve a cash flow crisis is to call the people who owe you money.  … but the reverse also applies. Do you owe money? To free up some cashflow, perhaps reach out to your suppliers and arrange suitable plans.

Why Should You Lodge an FBT Return?

Why should you, as an employer, lodge an FBT return where no FBT is payable? For the simple reason that it turns on the three-year deadline for the ATO to commence audit activities on your business.

Examples of fringe benefits include:

  • allowing an employee to use a work car for private purposes
  • giving an employee a discounted loan
  • paying an employee’s gym membership
  • providing entertainment by way of free tickets to concerts
  • reimbursing an expense incurred by an employee, such as school fees
  • giving benefits under a salary sacrifice arrangement with an employee.

Without an FBT return being lodged, the ATO has the discretion to launch an audit into activities as far back as a business has had employees – past, current and future. Without the evidence (e.g. signed declarations, logbooks, meal entertainment records, etc.) that FBT was NOT payable in each year the ATO is likely to raise FBT liabilities even where the employee who enjoyed the benefit no longer works for the business. Thereby making it impossible for the business to recoup anything from the past employee.

A Common Error

Where you believe you have done everything in accordance with legislation, people can make mistakes. A common error made is where an employee is provided with a car and the private use is worked out using the operating cost (logbook) method. A part of using the logbook method is working out deemed depreciation each year. Many accountants overlook this or work it out incorrectly by relying on the depreciation claimed on the business’ financial statements. This mistake can give rise to an FBT liability where the calculated employee contribution is insufficient to remove the car’s taxable value.

If a mistake like this is identified the ATO is likely to review the entire period that the car was owned by the business. Lodging an FBT return would limit the length of time the ATO can audit the business to three years.

Another common mistake is not maintaining a register of which employees are the recipient of meal entertainment benefits. Not all meal entertainment benefits are treated the same which is why you maintaining a register is vital.

Employers can generally claim an income tax deduction for the cost of providing fringe benefits and for the FBT they pay. Employers can also generally claim GST credits for items provided as fringe benefits.

5 Tips on Project Management

We’ve been supporting SMEs for over 25 years now and knowing the importance of having one eye on profitability at all times, we want to give our clients some strategies around where they’re making money – and where they may not be – with the following insights around project management.

1. Use your past data as a guide to accurate direct cost estimates

For a job to be profitable when it ends, it should start with an accurate estimate that includes the cost of the various individual job components, plus the amount for your markup. However, even the best of us can fall into that old trap of underestimating our costs especially if we don’t have good visibility across the project.

Underestimating your costs across a project and committing to delivering projects at prices that are too slim, will eat away at your profit margin. Less profit could result in less overall money on projects, which means less wiggle room if something blows out and has a negative effect on your cash flow. Worst case scenario in the long term, it could send your business into insolvency.

While it is appealing to rely on your personal past experiences and assessments to come up with your cost estimates, a project management system can speed up this lengthy process. It takes away any speculation, and gives you invaluable financial and non-financial information so that you future estimates can be as accurate as possible, giving your business the appropriate margins you need to be profitable and have that ‘wiggle room’ if something goes wrong.

Comparing your estimates and finished project reports can help you find the ‘why’. Do you have the best processes in place so your team knows exactly what’s expected of them? Was a new employee or contractor working on the job and maybe they needed more training prior to starting? Are you pricing your services far too low? Did you have to go to the client more than once to get all the information you needed to start? Do we need a better brief tool.

Having historical information available and using it for future estimates can lead to better profit margins for you, and fewer issues in the longer term with your clients.

2. Try to value your team’s hourly rates to recover at a minimum your costs plus your margin per hour

By reviewing these numbers in a project management system, you can check employee and contractor performance and their ability to complete work according to the projections made at the beginning of the project. It actually does help your team for them to have clear expectations and information on how long a piece of work should take them, and you can also keep them up to date on their progress and encourage them to notify you if they think they’re going to go over the allotted time and dollar budget. This insight helps you get ahead of issues before they eat into your profit margins.

3. Keep the team updated as to what has been signed off on by the client for the project and ensure that they know they need to itemise out-of-scope works

As you’ve probably experienced, clients can sometimes request additional tasks or services that are not included in the original job scope. These could be the agreed deliverables and associated costs or rejigging the allocated resources and timelines that you have agreed upon. Even if these requests appear minor, they can add up, using a lot of your allotted time and create an inclination for similar requests from the client as the project progresses. These out-of-scope works could end up costing your business time and money and have a major impact on the profitability of the project and potentially put your relationship with the client in a difficult position.

Your team need to be kept informed and be permitted to voice their thoughts and opinions to protect you, your business and the project against these out-of-scope requests so you can address them with the client immediately. Having a core business value where every staff member and contractor feels empowered to speak up is so key to keeping the project and the client relationship on track. That means having your staff

tracking their time accurately against the project proposal, the client understanding their own responsibilities, and the business checking the project progress regularly to ensure all tasks are delivered on time, within the proposal price and within scope.

So, the tip here is to get your team together before finalising the proposal and discuss the work to be delivered and the estimated costs. Seek ideas and feedback from the team on how long they think their tasks will take and if they see any potential concerns and ensure there is a clear pathway for them to identify out-of-scope works to the project leader.

4. Manage your team time tracking

For many businesses, your workforce is the biggest cost to your projects. To maximise your profit, it’s essential that you accurately track, monitor and report on your team’s time.

When you’ve set-up, filled-in and got this timesheet data, you can look at where you might be missing out on any profit. Is someone spending time on the initial project assessment that you didn’t include in your estimate? Do any of the team need more support to complete their work more efficiently so you can keep your costs down and your profits up?

Project management tools also let you track your projects while they’re in progress to make sure that the workforce component of your billable work is staying on budget. We’re talking about the time and expenses that have been recorded against the project, but not yet billed to your client.

If you’re looking like you’re spending more than your proposal value, you can adjust for the next proposal. These changes can include increasing your proposal price; revising your workforce management strategy and streamlining your processes; and removing any barriers to increase efficiencies and get the work completed more cost-effectively.

5. Ensure you are accounting for all related projects costs

It’s always good to ensure that you are checking that your proposals and outgoing invoices include everything you do for a client within the scope of the project. Those out-of-scope costs can add up and if you don’t manage them properly, you can under quote and eradicate your profit margin before you know it and can stop the outflow.

Make sure you are costing your items in your project management system, you can choose from your pre-existing list and easily add new items that will be visible for all projects in the future. Include every relevant cost when you initially quote and then when you are sending out your progress invoices out to ensure your revenue stays on track.

Lay the groundwork early for more profitable projects for your business.

By considering your desired profit before you begin any project and setting up your proposals, your client expectations and your teams’ responsibilities with this profit in mind, you have the pathway to achieving the margins you want at projects end.

Changes to the Self-Managed Super Fund Laws

Over the past little while, there have been numerous developments in the Self-Managed Super Fund (SMSF) space. The passing of legislation in the Parliament includes increasing the limit of SMSF members from 4 to 6 and extending the bring-forward age. There are other changes, as the legislation is broad, so we have placed a link here.

The ATO has also communicated updates surrounding the importance of using a seperate bank account for your SMSF, meaning that you must have a bank account in your SMSF name that manages the fund’s everyday operations and accept contributions, rollovers of super and income from investments.

And from October 1st, you will see the mandatory roll-out of SuperStream for eligible SMSFs. In this article, we look into why your SMSF needs its own bank account, and help you understand what SuperStream is.

For those that don’t know what Superstream is, it is the way in which businesses are required to pay their employee superannuation contributions. SuperStream is an electronic process that sends and receives employer contributions for their employees and any associated employee data on the business’ behalf, and is expected to standardise the superannuation process as we know it.

SuperStream must be used by Employers, SMSFs and APRA-regulated superannuation funds

In order for an SMSF to utilise the SuperStream service, it will need an ABN and an Electronic Service Address (ESA). An ESA is the tool that aids the SuperStream rollover service. If you don’t have an ESA by 1 October 2021, you will be unable to rollover funds to or from your SMSF. Speak to us if you do not have, or know, your ESA.

You will also need to ensure that your SMSF details are always kept up to date and accurate. This includes reporting the everyday bank account of the SMSF to the ATO (where appropriate), and updating your ABN and ESA details.

You are only required to use SuperStream if your SMSF receives contributions from your employers or the contributions you receive are from a related-party employer.

It is important to note that, if you are an employee of your family business and your super guarantee contributions go to your SMSF, these contributions are exempt from the SuperStream standard. Also, SuperStream is not applicable to members who make their own personal contributions.

The SuperStream process will provide more timely payments, and you can expect reductions in data errors, there should be more efficient flow of information regarding your contributions, rollovers themselves are not only processed faster, but also more accurately and with fewer errors. The removal of snail mail delays means that your

super money can be released faster. But one of the best things is that the SuperStream process also keeps an electronic record of all of your contributions in order to support any of your tax obligations (such as your annual SMSF return)

You must be SuperStream ready by 1 October 2021. If you are not SuperStream ready, then APRA-regulated super funds won’t be able to process your rollover request. Similarly, if you fail to update your SMSF to a separate bank account, you will be placed at risk of being unable to roll money both in and out of your SMSF. You also face the possibility of losing any associated retirement benefits. Reach out to us if you do not know if your SMSF is ready or not.

Crisis Management

Ignorance is rarely bliss, and in the case of business, it can be catastrophic.

When you’re running an SME, it can be comforting to think that a business crisis won’t happen to you.

After all, you’re too small to make too many headlines, right?….. And you’ve got insurance for everything else, right? However, crisis management planning isn’t just about avoiding negative PR. It’s about making sure you’ve got the financial sandbags and expert support in place to weather whatever storm comes your way.

Business crises can come in many forms. From simple things like an important member of staff stepping down, to major global events, here are the sorts of scenarios that every business should be planning for:

  • Natural crisis – flood, fire, cyclones
  • Technological crisis
  • Personnel crisis
  • Financial crisis

So, how do you financially prepare for a crisis in your business?

Given the range of crisis above, it’s essential that your business crisis strategy is strong and adaptable enough to cope with a variety of scenarios.

  • Step one: identify and measure the risks.
  • Step two: examine and implement solutions.

Of course, not all risks will be this immediately apparent, or have a clear-cut solutions. So it is important to dedicate in-depth thought and planning to your risk management and mitigation in your business.

Finally, remember that your job isn’t done once your crisis management plans are in place. Initially, you must communicate your plans with all the stakeholders across your business, in a sound and confident way. And secondly, you must never assume your plans are set in stone. To be truly effective, an SME crisis plan should be a living document: always adapting, improving, and responding to the latest changes in and around your business environment.

Latest Victorian Government Business Support

Just to give you all an updated outline of the weekend’s press conference:

In view of the extension of the lockdown, the Victorian and Commonwealth governments have continued with their support of small and medium businesses (SMEs).

Business Costs Assistance Program

Recipients of the Business Costs Assistance Program Round Two or July Extension will continue to receive automatic payments which will now be determined by the business’s payroll. Grants will range from $2800 a week for businesses with an annual payroll below $650,000, and $5600 a week for up to $3 million in payroll costs and $8400 for payroll of up to $10 million.

Licensed Hospitality Venue Fund 2021

Licensed hospitality businesses that have previously received grants under the Licensed Hospitality Venue Fund 2021 or July Extension programs will receive automatic payments based on premises capacity. Businesses will receive $5000 for a capacity of up to 99 patrons, $10,000 for under 500 patrons and $20,000 for more than 500.

Live Performance Support Program (Suppliers) Round Two

The Live Performance Support Program (Suppliers) Round Two provides up to $4000 in total support per applicant for those suppliers affected by the cancellation or postponement of events. Suppliers may be eligible for either $200 or $500 per event. They can apply for support for up to 20 events. Applications are now open and close on 8 September 2021.

Live Performance Support Program (Presenters) Round Two

The Live Performance Support Program (Suppliers) Round Two provides grants of up to $12,000 in total support for live performance event presenters affected by the cancellation or postponement of events as a result of lockdowns. Applicants can apply for either $5000 or $7000 for one event and a further $5000 for a second event. Applications are now open and close on 8 September 2021.

Small Business COVID Hardship Fund

For those SMEs that are not eligible for other government assistance and whose turnover dropped considerably due to the COVID-19 restrictinos, grants are now available up to $20,000. Those businesses who have already received this grant will receive an automatic top-up payment of $6000. Applications are now open and close on 10 September 2021.

For Further details and to register, head to https://business.vic.gov.au/

SME Recovery Loan Scheme

The Commonwealth Government’s SME Recovery Loan Scheme is designed to provide continued assistance to SMEs, including self-employed individuals and non-profit businesses, that are dealing with the economic impacts of the COVID-19 crisis. It provides access to eligible SMEs for loans of up to $5 million over a term of up to 10 years. Eligibility criteria has now been updated and it is no longer a requirement to have received JobKeeper during March 2021 or to have been a flood affected businesses to be eligible for this Scheme. Application are now open and close on 31 December 2021.

For further details and to register, head to https://business.vic.gov.au/grants-and-programs/sme-recovery-loan-scheme

Strategies to Improve Small Business Profitability

Profitability is one of the essential number all small business owners need to track to generate cash buffers. Increase your profitability, cash flows in. Reduce your profitability and times are tougher for your business. Here are 7 strategies to improve your business’ profitability.

  1. Monthly Sales Targets
    So many business owners run their businesses blind. They just go with the flow and hope for the best. If you are serious about generating profits and creating a cash buffer, you need track your business’ results. The first place to start? Tracking your sales targets. Figure out how many new customers/clients and/or products you need to sell per month to generate your desired profits. Then map out a plan that will get your business there. Depending on your industry, you might want to consider tracking daily sales targets or weekly sales targets. At a minimum, you should be tracking sales targets monthly. This provides you with actionable data to help you tweak your sales process until you figure out how to exceed those sales targets.
  2. Improve Your Internal Processes to Create Greater Efficiency
    Efficiency in a business is a great way to improve a business’ profits. Streamline your systems and reduce or remove any processes and systems that do not add value to your customers and clients. The “well, cause I’ve always done it this way…” mentality kills any business’ progress. Business owners and managers need to constantly review and revise. You should always be looking for better & more efficient ways to offer your services, make your products, and cut out the BS. Efficiency grows profits!
  3. Pricing Strategy
    Have you got a pricing strategy in your business and how’s it working out for your business? Lots of business owners think they need to offer discounts or compete based purely on price to make sales. This can be a disastrous strategy – both can kill your profits if not implemented properly… constantly think about the product/service margin in these strategies and is there enough room in the sale price to cover the costs.
  4. Profit Margin per Sale
    The most profitable business owners we know track their profit margin every day, week and month. They know the monthly profit margin of their business each and every month. More importantly, they take it a step further and track the profit made on every sale. Why is this important? This helps to discover the most profitable products and services in the business. Allowing you to focus your employee’s efforts on promoting, offering and selling these more profitable products and services. Stop chasing sales that actually cost you money.
  5. Decrease the Break-Even Point
    The break even point is the amount of sales you need to cover your business’ expenses. When you bring in more money than your expenses (break-even point), your business starts to generate a profit. To do this effectively, it’s important that know your expenses, track them, recognise what you spend your money on, and don’t let them get out of control. By keeping expenses low, you can keep your break-even point low…..this makes it easier to run yourself a profitable business.
  6. Add Value to Your Target Market
    What is your Unique Selling Point or Value Proposition and how does this fit with your Target Market? This can be a hard thing to figure out. A lot of business owners think their customers care about what they care about. …BUT, in reality, their customers value something different. Talking to your customers might shed a different light on what they value and want from your business.
  7. Measure and Improve Your Sales Lead Conversions
    Lead conversion metrics actually quantify the effectiveness of your sales process. Start by tracking the number of leads you have actually closes, out of the total number of leads for the month. Let’s say your business was successful in closing 10 out 100 leads this past month. This means you close every 1 out of 10 leads. So, if you can improve your sales to close 2 leads out of every 10, your number of sales has just doubled. This will have a significant impact on improving your business’ profitability.

Profitability is an important part of running any successful business. As you can see, there are numerous ways to improve your business’ profitability. Choose one of the above suggestions & give it a try. When you master that, start working on another strategy to improve your profitability. Feeling overwhelmed? Give us a call, our team can help you put these profitability strategies into place.