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May Newsletter

Hi, and welcome to the May newsletter.

 In this edition of the Newsletter we look at a Government grant worth up to $50,000 for Victorian businesses.

We have some ideas on saving your business significant time and money by automating data entry, which isn’t as  hard as you might think.

And finally on July 1 Single Touch Payroll is mandatory for all businesses with more than 20 staff. So if you haven’t got started on that yet its time to get your skates on.

 I hope you find this information useful

 Boost your business with this government grant

 The Department of Economic Development, Jobs, Transport & Resources (DEDJTR) has established Boost Your Business Vouchers. These are generous grants of up to $50,000 and they have been created to support Victorian businesses. The goal is to support businesses as they increase productivity, grow their team or improve access to their chosen markets. Profitability and growth for businesses are the two primary goals of the initiative.

 If you apply and are successful, your business could be $50,000 better off, giving you money to spend on new products, marketing or new export opportunities. Depending on your business, you can apply for different streams.

 These are:

·         Advanced Manufacturing

·         Asia Gateway

·         Food Innovation

·         Social Enterprise Capability

 Businesses who apply must be registered in Victoria and employ between 20 and 200 staff or have an annual turnover greater than $1.5m. There are other requirements that can be found here.

 The goal of the scheme is that Victorian businesses spend their vouchers on services that will increase their skills in:

 ·         Market Engagement – this will help them to identify and establish markets overseas, leading to potential export opportunities.

·         Innovation – the grant can give businesses the financial freedom to develop new products and bring them to market

·         Business Capability – The grant can be used to increase the knowledge and skills of the team to support the business as it grows.

 A cash injection of this size could make a huge difference to a medium sized business. Even if you’ve never applied for a grant, this could be a great opportunity to give it your best shot.

 You can lodge applications from June 4 for about 8 weeks. Check the website for exact information.

 Save time and money by automating data entry – it’s surprisingly simple!

 Walk around your business and take a look at what your staff do. Are they doing lots of data entry? Despite all the recent advances in technology, most businesses still have a lot of these manual, repetitive jobs.

 Ask your staff if there are any mundane jobs they don’t like, or think could be done better, faster or more accurately and make a list of them.

 Now you have your list, It’s time for automation.

 The truth is, there are most likely more effective ways of doing these jobs using technology. This has a huge advantage – your people will end up doing less of what they don’t like. They will be free to do more value-adding jobs such as analysis of results and customer service, leading to more satisfied customers, more sales and a better bottom line.

 Ok so now what? How do you automate them? You might not know how to do this, but you have already done the hardest part by identifying the tasks needing automation.

 Next, you need to get the help of an automation expert, who understands technology and what it can do. They can then help you automate the tasks you have identified. You will probably be surprised – some of these automations are not as costly or as difficult as you might think.

 We see this all the time in the businesses we help. We love automating processes. It’s one of the best ways to achieve efficiencies in a business, and it’s a great booster for staff morale too.

Here are some examples of tasks that can be automated.

 Sales Order entry

Manual sales order entry is time consuming, particularly for high volume sales businesses. This manual entry can be automated in a number of ways. The most straightforward is simple cutting and pasting from orders into software, but you can also have software “scrape” the information off a paper document and enter it in your system. The costs are surprisingly low and the savings large.

Timesheet recording and customer billing

If your staff are still completing paper-based time sheets then your business has a big job every time payroll comes around because someone must collect and enter the information. There are multiple software options capable of automating this process and making timesheet entry a review only process. You’ll benefit from no more data entry and big hours saved.  

Automated debtor follow-up

If you have a lot of debtors to follow up and you’re preparing a separate email for each of them then consider this alternative. Software can automate a standard follow up on dates you choose – just before they come due, on the due date and past the due date. Sure, there is still some calling and follow up, but a large part of the job can be done automatically and importantly, no follow up is overlooked.

Do these processes sound familiar? Are your staff still manually entering data in your office? Maybe you have a different manual process you’d like to talk about automating.

 If so give a us a call on 1300 720 795 and we will talk to you about how we can help. Or you can email peter@infinancialcontrol.com.

  Single touch payroll starts on 1 July 2018

Single Touch Payroll is a reporting change for employers. If you employ 20 or more employees, you will have different reporting obligations from 1 July 2018.

Going forward, you will report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation information from your payroll solution each time you pay your employees. Instead of requiring your payroll staff to compile complex reports and gather information, this new system relies on your payroll system to send the required information directly to the ATO.

Once set up, it will make life easier for your payroll staff as their reporting burden will go down significantly.

The information will now populate the ATOs records and after the first financial year is complete, certain areas of your tax return relating to income and PAYG tax will be prefilled. Your employees can also access this information via their MyGov account.

Your payroll solution provider should let you know when single touch payroll reporting is enabled. If they haven’t by now, you might want to contact them. Once it is ready, you can start using it immediately, there is no need to wait until 1 July.

For most businesses, it’s easy to calculate how many employees they have, but if there is any question of whether or not you have 20 or more employees, you should have performed an official headcount on 1 April this year. If you’re worried about counting your employees, there’s a handy webinar on the ATO website which can be accessed here.

 For more information from the ATO about Single Touch Payroll visit their website.

 If you would prefer to speak to a human who knows all about Single Touch Payroll and what it could mean for your business, please give a us a call on 1300 720 795 or send us an email and we will explain what (if anything) must be done.

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February Newsletter

Hi, and welcome to the February newsletter.

This month we look at the cashflow crunch that can hit businesses after the Christmas period and what to do about it in our piece From Ho Ho Ho to – Oh Oh No!.

We have a case study on how we have been involved in turning a business in bad shape to a business in good shape and our final story is something every business owner should consider. What happens if you have to make an unexpected exit from your business.

I hope you find this information useful

 From Ho Ho Ho to – Oh, Oh No!

The weeks leading into Christmas can be a good time for business owners. There’s a buzz in the air, people are busy, keen to spend money and finalise their to-do lists before the holidays. Many people do a lot of business and rush to complete tasks before Christmas, and of course Christmas shopping keeps retail businesses very busy.

It’s a trend that affects many industries. Project based businesses like construction companies often try to wrap up projects prior to Christmas allowing them to start the new year with a clean slate. And Government departments or larger businesses may have half-yearly budget allocations to use up before the end of December, creating a strong imperative to spend.

If your business enjoys the cash flow rush from this pre-Christmas spending frenzy, you may feel that business is good heading into Christmas and you’ll start the silly season on a high, feeling confident in your cashflow and sales numbers.

You also may neglect to make plans for what happens to your business after Christmas. Instead, you head off on a well-deserved Christmas break.

While you’re on holidays, and your sales funnel is empty, the bills keep coming. Rent, finance repayments, insurances and payroll (often the biggest bill) all fall due as normal. At the same time, your income levels drop significantly from their pre-Christmas heights.  

It can take until early February for the wheels of your business to be turning back at full capacity. By then, you may have two months of expenses paid with no solid income to offset them. Cash levels could be getting low.

Now, it’s early Feb, and your income needs to kick back in fast. All that great business you were experiencing before Christmas just isn’t enough to get you through a two-month period of low or no sales. If you’re not careful you could start facing some serious cash flow issues.

How do you make sure this doesn’t happen to you?

Plan for it. It happens every year. It shouldn’t be a surprise. You can be preparing for January’s cash deficit months in advance with budgeting and cash flow forecasts and a solid plan of action.

Knowing which tools you can access to fund your business until sales rise again will prevent your stress levels rising too. There are several ways you can prepare for short-term cash flow issues.

It’s probably best to use a mix of these options, relying on one solution alone could be risky:  

Short term loans

Increase your sales efforts – try to set up business for January in December so you have sales on your books and some ready cash to start the year.

Offer discounts to clients for paying COD to boost your cash coffers

Negotiate with creditors to extend terms for a month or two

Being prepared and realistic about your potential cash flow shortage at this time of year is a good place to start. Then you can plan for it and never experience that nasty January ‘no/low cashflow’ surprise ever again.

For assistance with any of the above solutions or for some advice on preparing an accurate budget and cash flow forecast, contact Peter at pmclean@infinancialcontrol.com.

A business transformed – from down and in debt to breaking records

I started working with a business about 4 years ago. At the time they had just implemented a new business system, but it was poorly set up. It was 11 months after financial year end and they still hadn’t done their tax return, in fact, they didn’t know if they were making a profit or a loss. To make matters worse they had debt…big debt. They owed hundreds of thousands of dollars to a major supplier and a large debt to the ATO.

This business’ situation was dire, and there was serious doubt about its ability to continue at all. The owner was keeping the business afloat via loans from family members. Something had to change, or it would fail.

Luckily, they came to me and I was able to step in and help. Over the last 4 years, with our assistance, the business has done the following to turn things around:

Instigated cost management and control

Implemented regular cash flow forecasting, including planning to pay down the large debt

Completed a full review and correction of the business system so it now reports accurate numbers within days of month end

Established monthly reporting of profit and loss

Developed sales and marketing plans and budgets

After 4 years the positive results are significant, and the business is flourishing. It has benefited hugely from the structure and processes our team has put in.

All debt is paid down

The new systems have allowed for a leaner accounting department which produces on time, detailed and accurate reports.

The sales department has just enjoyed 6 consecutive months of above budget sales

Reports are produced monthly, analysed and issues acted upon

The business owner is on top of all aspects of his business and is confident of all the numbers presented to him – this is perhaps the most important success

I am now a highly trusted and valued member of his team

Some businesses find themselves in bad place, almost by accident. Your situation may seem hopeless, but with the right people around you and a willingness to put in the time, you can turn a struggling business around. Sometimes tough decisions are necessary, it’s not always a straightforward path and there is no magic bullet. But it’s possible, and the results are worth the hard graft.

Have you planned for an unplanned exit?

Most business owners have thought about exit plans and how they intend to leave their business and have created a rough idea of what they’re going to do when the time comes. For an expected and inevitable succession, a majority expect to sell or hand down to the next generation, in other words, an organised departure.

But what if you need to exit the business in an unplanned manner? What if things don’t work out as you thought?

Recently I have seen and heard a few stories where business owners have experienced circumstances which have caused them to leave their business unexpectedly. An illness or injury is the most common reason. In these cases, the owner has found on very short notice they can no longer work in their business. If they’re lucky it’s just for a short period, but sometimes it’s long-term, or permanent.

What do you do when this happens? Do you have a plan? Or even just a rough idea of what you would do if this happened to you and your business?

Leaving in a rush for an unknown period of time could mean your business may simply have to close its doors. Selling in a hurry may result in a lower price than the business is worth.

To avoid the above, you should plan for an unplanned exit. Here’s how:

Be absolutely certain you have the right insurances in place. These are Keyman, Life Insurance and Income Protection

Think about key people who can keep the business ticking if you are away for a period of time. Train them up so they can do what you do in your absence

Delegate your role in different ways so the business isn’t totally dependent on you

Start to formulate some ideas about a succession plan

This sort of planning does require some thought about  a less than pleasant topics. And an unexpected exit is certainly not an event we would wish upon anyone. But to be unprepared is to risk everything you’ve worked so hard for.

Even though you should always hope your exit will go according to your personal plan, it is imperative to prepare for an unexpected exit. If you do experience a forced exit, the time required to sell your business and whether or not you maximise its value at sale will be directly related to your preparedness. A well-planned exit keeps the control in your hands.

For advice on unexpected exit planning, turning your business around or post-Christmas cash flow planning please contact Peter from In Financial Control. He can help you with any of these topics and many more business-related questions too. Email pmclean@infinancialcontrol.com.

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November Newsletter

Hi, and welcome to the November newsletter. It is hard to believe Christmas is just round the corner as another year seems to have just flown by.

This month we put your business banker under the microscope, and see if they are on the money. We also look at turning a business around, where we list some small achievable steps that can make a big profit impact and finally managing your Foreign Currency risk.  In a global economy more and more businesses have some exposure for Foreign currency exposure and it is important to take steps to minimise the risk so it doesn’t eat into your profit.

I hope you find this information useful

 Your business banker – are they on the money?

Cash and cashflow are key for any and every business. Money keeps your business ticking over and the person who can most influence your access to external cash, is your business banker.

Banks usually assign a business banker to every business turning over more than one million dollars, so if you have some scale about your business there is every likelihood you have been assigned a business banker. It is their job to understand your goals and to make banking easy for you.

With constantly changing business and cash conditions it’s crucial to have a good business banker as your partner.

But do you know your business banker? And if you do, how can you tell yours is up to scratch?

What makes a good business banker

1.       They’re in regular contact – it might be once a quarter, once a month or in the case of some clients, once a week (or more), but it should be regular.

2.       They should take an active and authentic interest in your business.

3.       They understand your business, and its cash cycle. They know roughly how many days normally pass from when you purchase stock to when you receive payment from your customers? And if your business banker understands your cash cycle, then –

They will offer products and terms on loans that match your business’ requirements

They will think beyond the ‘now’ to other products and services that may suit you later. These products may not be their own, but they don’t care. They genuinely want to help you.

They introduce you to other people within their business who may know how to help you.

4.       They are flexible – where there are short term limitations. They have the flexibility to support you with extra cashflow – provided you can show you can pay it back.

When it comes to your business banker, a strong relationship and regular contact is important. Some business bankers only turn up for the annual review. You need more than this.

Don’t wait until your cash flow situation is desperate

If you don’t have an existing relationship with your business banker  and you go to the bank when you urgently need cash it is probably too late. Your bank manager won’t know enough about you and your business to take a risk. If they don’t understand your business they can’t offer you cash quickly when you’re in a tight spot.

If your banker understands your business and you have had regular discussions about your current cash flow and potential requirements, then they will be far better placed to assist you when things get a little tight, providing you meet their lending criteria.

And finally, don’t let the relationship be entirely one sided. As a business owner, you should also take the initiative to maintain the business banking relationship and stay in regular contact with your banker.

Business performance: Small changes can make a significant impact on the performance and results of your business

Many business owners dream that their businesses will suddenly have a huge growth spurt or a big direction change. They might wish for overnight success, or easy passage through a difficult patch.

Unfortunately, the reality of running a business isn’t quite so magical, and improved business performance or results are usually made up of many small improvements (and hard work) which all add up to something bigger.

Here are some ideas for a few small changes you can make, or actions you (or your staff) can take which could potentially have a big impact on your business:

-          Make five extra new sales calls a week

-          Call five existing customers each week and see how they are going. Customer follow up and service often leads to more sales

-          Find ways to save 5% on the cost of production and increase your gross margin

-          Increase prices by 2%

-          Provide a tempting value-add to your product that customers are prepared to pay a premium for

-          Cut your overhead costs by 2-5% by reviewing all your suppliers regularly to make sure you are paying competitive prices

-          Remind debtors of upcoming commitments just before they are due, to increase the chance of being paid by the due date, reducing follow up time and putting funds in your bank account sooner

-          Pay accounts on time to take advantage of discount terms offered by suppliers

-          See if suppliers have steps in purchase quantities. If there is a discount for bulk then work out if this could save some dollars

All these initiatives on their own might seem small but when aggregated can have a big dollar effect on your bottom line.

The best way to do this is with financial modelling. This lets you play with different scenarios and helps you establish which actions have the biggest potential impact on your business. A good finance or accounting expert can help you with financial modelling.

We have recently been involved in a successful business turnaround.

Much of this business’ new success came through measuring and making sure all the small things were done and closely managed. There was no single action that turned things around but efforts across all areas have turned a struggling business into a financially successful one.

 Taking a position on Foreign currency

Whether we like it or not, all businesses who import or export goods to or from overseas are affected by the vagaries of foreign currency.

A change in foreign exchange rates can increase or decrease the price you pay your supplier.

A change in foreign exchange rates can change how much you receive in AUD from your debtors if you invoice in foreign currency.

A change in foreign exchange rates can change your margin if you have a price list in a foreign currency and pay for goods in a local currency.

There are many ways a change in foreign exchange rates can impact on your margin and profitability. Whether you like it or not, we are operating in a global economy and foreign currency exposure comes as part of transacting with overseas suppliers or customers. It’s called Foreign Exchange risk (FX risk).

How do you manage FX risk?

It is difficult to know how currencies will move relative to one another. There are so many different factors involved on a global scale, nobody can predict the direction currency is moving in, not even economists and traders (though they may try to convince you otherwise).

When you look at the forecasts produced by the big banks, they often have opposing views of where the Australian Dollar is headed compared to other currencies.  

Foreign Exchange (FX) rates and management of FX exposure is unlikely to be your area of expertise. So, what can you do to manage and minimise the impact of foreign currency on your business?

Protect yourself and your business against exposure to foreign currencies

Yes, it’s possible to do this.

You can buy forward exchange contracts, for the amount of currency you are expecting to receive, to convert back to Australian Dollars (AUD). This sets the foreign rate at an agreed contract rate you can buy from your bank. It’s also known as hedging.

When you have a forward contract, you have certainty about the price you are going to pay (i.e. the exchange rate at which your foreign currency will be converted to AUD). This means you can set prices and calculate the costs of your product with some certainty.

Forward contracts won’t necessarily give you the best rate (in fact, it’s unlikely), but they will give you a set rate. A set rate provides certainty for planning and cash management. It would be foolish to attempt to make money from foreign exchange trading when it is not your primary business. Bigger businesses than yours have suffered trouble when they have tried this.

Once you have a forward contract, you have certainty of your future income or expenditure, even as exchange rates move around. It’s possible that you may have received more (or paid less) money had you not hedged your FX risk. But you’ll never know for sure. Knowing your potential income allows you to plan, budget and not fear exchange rate movements. If you leave your foreign exchange risk unhedged, there’s always a risk that if the currency moves in the wrong direction you could find yourself losing money – which will have a negative impact on your business.

The best person to talk to is your business banker who understands how to manage foreign exchange risk and can get the ball rolling for you.

If you have any questions regarding the points raised in this week’s newsletter, or you would like to know more about our services, contact Peter McLean at In Financial Control.

[infinancialcontrol]

September Newsletter

Hi, and welcome to the September newsletter

This month we are covering issues that we have come in contact with recently, including corporate fraud – which I was recently an unsuspecting victim of, getting your pricing right, which a couple of businesses I spoke with recently had trouble doing and the importance of having accurate numbers to make good financial decisions.

I hope you find this information useful

 Corporate Fraud – be vigilant, it can easily happen to you (it happened to me)

Corporate fraud has always been a problem, but it seems hackers and thieves are becoming more inventive every day about how to convince people that their fraudulent requests are legitimate. These devious humans use any method they can (including our inclination to trust people we know!) to get hold of our hard-earned cash.

The truth is, even the most financially savvy among us can fall victim to corporate fraud. I know this because it happened to me. It’s frustrating and infuriating (not to mention embarrassing) for any business owner. And once the money has left your bank account, it’s extremely difficult to get it back. It’s best to focus your efforts on avoiding in the first place.

 Corporate fraud is one of the biggest issues both banks and business face and this example is one of the most common ways it is committed at the moment.

From within your business

First your fraudsters hack into your business network and infiltrate the mail system. Then they analyse your emails and track who sends and receives what, until they work out who pays the bills (usually the bookkeeper) and who makes authorisations for payment of invoices.(this is often the owner)

Once they have enough information, these thieves send a pretty authentic looking email with an invoice attached (that looks like it comes from whoever authorises payments) requesting the invoice be paid. The staff member sees no reason to doubt this email is authentic, it comes from their boss after all who is often the business owner. It looks just like lots of other emails they receive. So, they pay the invoice.

And the hackers have your money.

All you can do is hope this is discovered quickly and you can contact your bank and the recipient bank before the money is gone forever.

From within someone else’s business

Or, these devious types hack into your supplier’s system and send you an email advising they have changed bank accounts. They give you their new bank account number (which of course are the hacker’s account details) within a perfectly legitimate looking email from their business.

Next time you pay that supplier, you dutifully use the ‘new’ bank details, sending cash straight into the hands of the hackers. Next thing you know, your supplier is wondering where your payment is and you’re trying to tell them it’s all paid.

Once the money is gone, it’s super hard to get back. This is the scenario that happened to me. I’m still seething.

How to make life difficult for fraudsters

Always have two people involved in the payment process. One person reviews the goods or services purchased, and double checks payment details and authorisations are correct. The other person makes the payment. This means there’s more of a chance that anything unusual will be picked up.

Be alert to when things ‘just don’t feel right’. You know what normal is. So, you’ll also know when something feels off. It could be the language in an email, unusual spelling mistakes or a weird account number.

And anytime anyone sends you a message regarding changed bank details, call them directly (don’t use the number on the message, go back to an old invoice) to check it’s legitimate.

 You can’t stop fraudsters from trying to illegally access your money, but with a little vigilance and a strong payables function, you can at least double-check situations that send up red flags and be alert to unusual requests.

Staff at every level of every business should be made aware of and alerted to the warning signs.

 Don’t let the fraudsters win!

 What Price for Profitability?

Lately I’ve come across a few businesses who are struggling to get their pricing right. This has resulted in them selling for little or no margin and risking the health of their operation.

Without a healthy margin, you won’t be in business long.

When you’re calculating price, there are a range of methodologies you can use. And if you want to stay in business, you need to get your pricing right. Different industries have different challenges in calculating costs and working out the best price to charge customers.

Here’s a plan for you to start with:

1.       Begin by covering all your direct costs

Manufacturing

do your calculations carefully

 In a manufacturing environment, you must cover all your direct costs and also factor in some recovery of indirect costs.

You will need to estimate your production levels to determine the level of recovery

We recommend you have a professional doing these calculations. Back of the envelope estimates might get you into trouble

 Professional services 

staff are your biggest expense so get this part right

For any industry, when factoring in the cost of staff don’t forget to include on costs like super, Workcover and payroll tax which can add about 15% to your labour costs.

When calculating prices in professional services, it’s important to make allowances for utilisation and staff leave. Staff down time has to be covered in your pricing  

 Importers of stock 

Don’t forget your exposure to currency

Make sure you factor in the related price variations that come about as a result of currency movements.

 2.       Once you know your exact costs (and you know they’re right because they have been carefully calculated by a professional) you must decide the gross margin you want.

 In its simplest form: Decide how much money you need to make on each item. That’s your gross margin. Add your gross margin to your cost per item and you have a price per item to charge customers.

 Ok, it’s not quite that simple. You must also make sure you consider price points and competitor pricing. You don’t want to price yourself out of the market.

 Top tip: don’t get mixed up between mark up and gross margin.

 Gross margin is the difference between your selling price and your costs. If you know your cost per product or service and you know what you’d like your gross margin to be, then your selling price should be fairly easy to set. If your cost per item is $8 and you want a gross margin of $2, your selling price should be $10. Leaving you with a gross margin of 20%

 Mark up is the percentage above costs that you sell your product at. A product costing $8 and sold at $10 has a 25% mark up

 3.       Finally, work out how many items or services you must sell to break even.  

We know it’s not always easy and there are many components to think about when price setting. Ultimately you want to be sure you can retain a few dollars of profit for yourself. Pricing yourself too low and operating on tiny margins means this will never happen.

It’s wise to get advice from an expert if you can, especially if price setting is not an area you’re confident in. A business adviser or accountant (or virtual CFO) can help you develop a strong process for pricing your goods and services, that will stand you in good stead going forward.

Good luck

 Good Data leads to good decisions but dirty data can lead to disaster

Having access to accurate financial data is crucial for a business owner.

Having inaccurate or dirty data makes it difficult to make good decisions. You can’t make good decisions about what is selling, how much you are making, and how much does it cost to run your business if you don’t have accurate up to date numbers

You can’t show dodgy figures to a bank when you’re asking for a loan, and you need to present accurate numbers to the tax office at year end.

Inaccurate numbers create a world of pain for business owners.

When we get invited into a business we often find that financial accounts and reports are not right and business owners are making decisions based on inaccurate information. This occurs for a number of reasons:

o   Systems haven’t been set up correctly

o   Transactions are being posted to the wrong place

o   Some accounts haven’t been reconciled

o   The bookkeeper, despite trying their hardest to keep the books up to date and accurate, doesn’t have anyone to turn to with questions, meaning some of their decisions have not been ideal

These are the most common issues we come across, but there are many more. It all leads to “dirty data” or inaccurate data in the accounting system.

Oblivious to the problem, happily believing their numbers are accurate, business owners base decisions on them, often important ones. And making big decisions based on inaccurate financial data leads to bad decisions.

The impact? Wrong decisions invariably lead to lost time and lost money.

Read on and learn how a part time CFO can turn dirty data into good data and good decisions.

Systems are set up correctly from the start. (If necessary, existing systems can be set up to run accurately going forward.)

Systems and processes are set up, documented and taught to staff. This makes sure every transaction is recorded correctly and accounts can be regularly reconciled.

We guide and train your bookkeeper or graduate accountant to do things the right way, to ask questions (the right questions) and to double check anything they’re not sure of.

We don’t assume everything is right just because we’ve set it up. Mistakes can still happen. We check on the accounting system and reports monthly to ensure the data remains accurate. Checks and balances are put in place to make this easy and routine.

Knowing the data is accurate means reports are correct and can be confidently presented.

You can now be certain that any decisions you make are based on accurate information.

We’re not suggesting you retain a CFO for huge amounts of time. But investing some money in a virtual CFO for a good quality set up will save you not just money, but stress and anxiety because it helps you avoid mistakes and poor decisions further down the track. You can’t put a price on the value of reliable, accurate financial information, but you can clearly see the value of a virtual CFO as your company thrives and grows, backed up by solid numbers and informed decisions.

[infinancialcontrol]

May Newsletter

Introduction

Hello again and welcome to our May Newsletter.

In this edition we look at a new type of short term lending that is shaking up the market, we also address one of the biggest issues all businesses with stock face, how not to get stuck with stock that doesn’t sell.

And finally, we look at who small and mid size businesses can use as a sounding board and how an effective Advisory Board can help the success of a business.

We hope you find this information useful

 A new type of lending shaking up the market

If your business needs some ready cash to tide you over a cash flow shortage, there’s recently been a surge in the number of short term (often called payday) lenders. These lenders are quick, easy and responsive, able to cover your cash shortfall with quick approvals and transfer of funds within 24 hours.

But be warned, borrowing money in this fashion is only a short-term solution. With effective rates of about 20% pa you don’t want to be owing money to these lenders for very long. It’s important that you weigh up the convenience of quick cash with the financial interest outlay you’ll be liable for.

How to get started

For business loans, the following websites offer quick approval and fast cash to the right applicants.

-          Moula – Moula.com.au

-          Spotcap – spotcap.com.au

-          Ondeck – Ondeck.com.au

Applying for a cash loan via these websites is easy, usually via an online application. Make sure you have your bank details, statements and company financials in good order and be ready to enter this information online.

The financiers assess your bank accounts and credit worthiness. If approved, you can usually have the money within 24 hours.  

The advantages

The service is fast and simple, you don’t have to provide security and it’s much quicker than a bank loan. These lenders can get you out of a cash flow hole quickly and without fuss.

The disadvantages

The interest rate is super high (approx. 20% pa). Before you apply, be very sure that you have solid expectations of cash coming in, otherwise you’ll be paying outrageous amounts of interest on the amount outstanding.

Quick, easy loans can be too quick and easy. Borrowing money fast, without thought for consequences can be a risky move for your business.

Don’t rush in to a borrowing agreement like this.

Lenders like this have their use, but if you’re wanting to borrow an amount for a long-term investment or expansion, a bank is the best institution to approach. Interest rates are lower, longer terms can be set, in line with your business growth.

Our conclusion: a good solution for a quick cash injection, but not for everyone, and never for long.

  Don’t get stuck with stock

As a business, you purchase stock to sell to customers. You might hold seasonal stock, or annual stock, or even stock that lasts only a day or two, like flowers or bread.

Customers decide what stock to purchase when they enter your premises or visit your website. And no matter what you’re selling, some items will always be more popular than others.

Popular stock marches out the door quickly and your stock becomes cash – great – that part is easy.

But what about stock that, for whatever reason, isn’t as appealing? Customers don’t buy it at the same rate you thought they would. It hangs around. Now you have your business’ cash tied up in slow moving stock.

What if a new season is coming? You need the space, this stock is getting old and you want it gone, preferably turned in to cash – without losing money (or losing as little as possible).

This is the hard part.

How do you sell slow moving, less popular stock? You don’t want to write it off entirely, but how do you make it appealling to your customers?

Here are some strategies you can use to move old, slow moving stock:

Sales

There are always customers looking for a bargain. Drop the price and they will buy.

Pop up Stores

Set up at markets or in your local shopping centre for a dedicated stock moving event.

Discounts

On bulk purchases, two for one, three for two, lots of ways you can make the price right.

Selling to other markets

Sell to other cities, states or even countries, set up an online shop to make it easier.

Use it as freebies for marketing promotions

It’s not a sale, but it could lead to sales.

Donate it to charity

Only quality stock in good condition. Don’t be shy about saying you’ve done this- it’s good PR.

Reuse it in other products or bundle it up with something that does sell

Repurposing is an awesome way to extract value from old stock.

Sell it to someone else who specialises in “old” stock

You may not get an amazing price, but at least there’s room in your warehouse now.

The aim is to realise as much as you can for your stock – but you also must be prepared to get less than you paid for it and walk away. Holding on to it for too long will result a full warehouse of old stock and no cash.

  Who is your sounding board? Create your own Advisory Board

Running a small or mid-size business can have its challenges. And as the owner you have lots of ideas about what to do and what not to do.

But there are times, especially when you’re doing much of the decision making alone, that you have a dilemma you can’t resolve, or you’re concerned you’ve made the wrong decision. You might have worries or issues you need help with but it’s not appropriate to share them with staff.

It’s easy to get bogged down in decision making when you don’t have a sounding board.

Who can you bounce ideas off?

You could talk to your husband or wife, a partner a friend or a mentor. You may already have a ‘go to’ person who helps you with decisions? It’s important to have someone (neutral) you can rely on to help with decisions.

It’s your business, but you can’t be an island when it comes to decision making. You don’t have to carry the whole burden, and you shouldn’t, because every big decision needs different perspectives.

Consider creating an advisory board

An advisory board is a group of trustworthy experts who can help you with advice on tough business issues. Ultimately, you’re still making the decisions but before you do, surround yourself with key people who have experience in a range of relevant areas. They can give you their recommendations when you’re unsure of the next step.

You could include:

someone who knows your industry

someone who knows you and how you operate

specialists in the key parts of your business ��� maybe selling – support centres

accountants who understand your financial situation and funding capabilities

Your board could meet regularly to kick around ideas and help you clarify your direction.

They’re not official directors, and they don’t get a vote, but your advisory board members should be knowledgeable and generous with their advice. Listen to them. Respect them.

They may encourage you to take a leap of faith or hold back on taking a risky step, or validate what you’re already thinking.

Advisory boards can provide you with the sounding board your business needs and the ability to step back from a problem if you’re getting too close and you’ve lost perspective. We highly recommend an advisory board as a decision-making tool.

If any of the issues raised in this month’s newsletter have caused you to have an “aha!” moment and you would like to speak to someone who can help, please contact Peter on 1300 720 795.

[infinancialcontrol]

February Newsletter

Introduction

Hello and welcome to the February Newsletter.

In this edition we look at visiting the bank manager, an experience that most business owners find a challenge. We look at what financial information the bank manager wants to see and how to  give yourself the best chance at getting funding.

We also look at a couple of reporting tools that make it easy to present your business numbers on a graphical dashboards. 

And finally, we look at 5 key numbers that every business should be looking at every month.

We hope you find this information useful

 Visiting the bank manager: What do I take? What do I say? How do I speak Banker language?

When you’re visiting the bank manager it’s usually because you need to borrow money. And in this kind of situation the power rests with the bank, which is not a fabulous feeling and one that many business owners dislike intensely. But there’s no reason why you can’t take some control back, by being prepared and even ready to speak ‘banker’ if required.

Start by bringing the appropriate documents and information, have a good understanding of the numbers on your reports and a solid knowledge of your business and industry, and you’ll feel prepared, calm and ready to respond to any questions or requests for detail.  

What do I take?

Depending on what you’re asking for, the bank will probably have an information pack which sets out their requirements for information. If it’s a loan, overdraft or extension of credit, it’s all about your current financials and future prospects, so make sure you’ve got everything up to date and looking professional (i.e. back of envelope P&L probably not a good idea).

It may vary from bank to bank but usually we find you’ll need the following documents/information:

-          Last 3 year’s financial reports

-          Last 3 year’s tax returns

-          Most recent Profit and Loss with a comparison to budget

-          Sales projections

-          3-way forecast for the next 12 months– this is a forecast profit and loss, balance sheet and cash flow statement and it’s something your accountant normally does for you, so make sure you’re organised and have requested this in time for your meeting

-          An understanding of your market, including market analysis statistics so you can prove to the bank that you understand the current status of the sector you’re operating in, and can also prove it is healthy and growing.

Apart from bringing your financial documents, forecasts and doing some research, you’ll need to be prepared for the most important four questions the bank will ask you.

How much money do you want?  Why you want it ? How long do you want it for? And when will you pay it back?

Be honest and forthright. Share your story. Tell them who you are, what you do, show your industry knowledge and your experience. Be able to explain any seasonality in your business and your cash to cash cycle. Also show you have considered any business or industry risks.  Prove that you are a determined, dedicated operator.

You’ll also have to explain what circumstances have led to your need to borrow money.  Explain your financial forecast to the banker. Show how the business will use the money, when it is required and how using the funding will generate profit to pay it back. You may need to be prepared to negotiate on amount, duration and terms. Make sure you’ve thought this out already so you’re prepared to make concessions or stand your ground if necessary.

And despite your hard work and preparation, if you’re still not comfortable with the financial talk and jargon, why not take your accountant along and let them do the talking? Peter can help with this, call him on 8618 6820.

 A graphical dashboard – a quick way to see what’s happening in your business

Most businesses have key numbers or ratios that must be reported regularly. These may be after every month end, or every quarter. Certainly at half year and year end. Finding engaging and straightforward ways to present these numbers (without making them so simple they lose their meaning) is a delicate balancing act.

Having your accountant present the same old black and white table of results may be the traditional method of reporting numbers, but it’s no longer the best way. Faced with a dry presentation, people won’t retain information, and they may not be engaged or interested enough to ask questions. Yet these numbers are crucial. They reflect your business’ current health and potential future prosperity. How do you make people listen to and understand the results?

Most people take things in visually – so a better way of presenting the numbers is in graphical format – with colour indicators and different sizes and shapes to reflect different elements. A graphic format for your key numbers is quicker and easier to take in and interpret.

For example, you could create a dashboard of five to ten key numbers, a one-page summary of where the business sits at the last period end, or important forecast figures. This is a simple way to make sure key staff members remember and absorb financial results.

As a start, use a graphical format to display:

•        sales forecasts

•        debtors balance and aging

•        sales trends versus previous years

•        performance against budget

Because each business is different, you need to customise the key numbers for yourself and decide which results or ratios are the best reflection of the financial health of your business. Which numbers can you show your management team to give them the best snapshot of the business’ financial status? And then, how can you make these numbers visual so they’re easy to take in.

Which tools are available to create these graphical presentations?

You can use a spreadsheeting program like Excel to create graphs. This is reasonably easy but it does take time to learn and can be a bit fiddly. There are many new reporting tools becoming available with some very clever features. These make the creation of graphics more fun and less of a chore – have a look at Calxa and Crunchboards.

These clever applications have features which allow for several different type of graphs you can customise for your needs. You can also create pie charts or heat maps that show where customers live, or how they found you, providing lots of information you can use to improve or target your offering.

Even if you start with one or two simple graphics, you can work your way into more complex creations depending on the tool you’re using. If you would like to see some examples of graphical dashboards or need help in setting them up. Please give us a call 03 8618 6820

 The Big Five: business numbers and reports EVERY business owner should see monthly

Looking back at results is an important part of reporting, it certainly helps you discover how well your business has fared in previous financial periods. It’s important too, for tax and for planning. But for most businesses, forward looking numbers are far more useful to management than historic numbers.

Historic numbers can only tell us where we were and what happened. We can’t take any action to change them. They are done.

But forward looking numbers give us guidance on where we are going and what we need to do. They are numbers we can use to drive our next step, or to make plans around.

Most importantly, if we don’t like the forward looking numbers, we can take steps to change them.

Here are five forward looking numbers we think you should keep a close eye on:

1.Cash flow forecast

Cash is king, and you want certainty that you have enough to run your business going forward. A week to week cash flow forecast shows you what’s coming. This way you know if you’re a little short, and you can plan to work through it.

 2.Sales forecast  and Sales Pipeline

It’s important to know you can confidently forecast sales figures that will cover costs and make a profit. If the forecast is looking short, you might need to cut back on future expenses. These numbers also help determine inventory levels and stock purchases to meet projected orders so it is very important to have your finger on the pulse . 

3.Order Book/ Backlog  

How many existing orders still have to be filled? When will they be filled? Is your business on track to do so? Will orders be delivered on time or should your team prepare the customer for a delay?  It’s nice to get the order but actual revenue and profit lies in shipment, preferably on time.  

4.Profit margin and pricing

If you know your costs, are you selling with enough margin? Is the margin moving? Are your costs of production increasing or decreasing? Strong sales are great, but without enough margin they won’t cover costs. If you understand your costs of production and your margin you can work out if you need to increase prices or reduce production costs to be more profitable.

5.Budgeted operating costs

What’s the total cost of running the business next month? How much must be sold to cover all costs each month? At what level of sales and costs does your business start making a profit? How can you achieve this level (and maintain it)? Have you got room to increase the sales team or do you need to trim some costs to remain profitable

Remember: you have the power to change your forward looking numbers. If you don’t like your forecast sales, or cash flow, or margin, you can make changes to your business to push them closer to what you want. Focus on the numbers you have the power to change. Your business will benefit.

For help with any of the issues or ideas presented in our latest newsletter please contact us at In Financial Control on 8618 6820. Our virtual CFO services and skills can help you prepare for an upcoming bank meeting, assist you with graphical reporting and help you hone in on your future financial numbers.

      H�_�Ds

[infinancialcontrol]

September Newsletter

Introduction

Hello and Welcome to the September Newsletter.

In this edition we look at  the skills gap between the bookkeeper and tax accountant that most small businesses have, and how to address it

From a software perspective Xero is  growing at a fast pace and so is the market for software that gives you the extra functionality you need to run your business.  I look at 5 Xero add-ons my clients are using and how they perform.

And finally, we have all heard the horror stories of how the trusted bookkeeper wasn’t doing the right thing. After  a really bad one I have heard recently, I have written about it and how to put in place simple steps to avoid it

We hope you find this information useful

Mind the Skills Gap! Do you need a part time CFO?

Is there a gaping hole between your bookkeeper and your tax accountant? Read on to find out.

It’s common for small businesses owners to employ a bookkeeper to process sales, payments, payroll and bank reconciliations. They may have a bookkeeping qualification, on the job experience, or both. As long they’re accurate and keep the accounting function ticking along by recording transactions and reconciling your bank account, it doesn’t matter.

 What your bookkeeper is unlikely to have, is a business or accounting qualification. They can input the data to create your profit and loss, prepare it and print it out. But they’re unlikely to have the ability to check it for reasonableness or analyse and interpret your results.

 Most small businesses also have a tax accountant. They usually visit the business once a year, perhaps quarterly if they’re proactive and involved. They’re excellent at tax but have little practical knowledge of running a small business. Business systems, cash flow forecasting, monthly management reports, are all out of their usual sphere. And at $300 per hour, they’re not the ideal choice to help you with anything other than your tax return obligations.

 It’s extremely common for small businesses to have a bookkeeper for their data processing and up to date tax returns prepared by a tax expert. And a big skills gap in between.  

 Big companies have the resources to employ accounting staff, a CFO and a tax accountant. Small businesses, all too often, miss the CFO level. This means their reports and results aren’t being analysed, checked or acted upon.

 The solution?

A part time CFO. One you pay for only when you need their skills. Someone who can interpret results, help solve a business questions, or help plan next year’s budget.

 Here’s how a part time CFO allows you to fill your skills gap, without the cost of a full time CFO:

  They’ll have formal qualifications, including a CA or CPA designation.

 They can interpret both financial (P&L, cash flow) and management accounting reports (actual-to-budget, cost analysis) and give you solutions and strategies to improve or maintain results

They can calculate and analyse ratios and trends and come up with ideas to capitalise on positive indicators and reduce the impact of negative ones.

 They can work with you on site, or be available via phone or email to bounce ideas off

They will learn your business and understand your systems and processes. So they can come up with ideas to improve or change your methods to save costs, or improve margins.

 A part time CFO can assess the accuracy and performance of your bookkeeper if needed

 They will have commercial knowledge and experience, and a ‘feel’ for what’s going well and what might need further investigation or improvement.

They can do all this, for your small business, for a fraction of the cost of a full time CFO.

 A part time CFO can make a real difference to a small business owner. If you want to look beyond number crunching to true understanding of results, and development of a strategy for your business, it’s a savvy alternative.

You don’t need a CFO all the time, you just need one to fill the skills gap. In Financial Control has a part time CFO ready to help your business. Give Peter a call on 1300 720 795 to discuss.  

 5 Xero add ons my clients are using – you might find them useful

There are many software add-ons that can be linked to Xero, some are better than others, and picking the good from the not so good isn’t easy. While they all come with a free trial period it’s often not until you get into the detail that you find what is working and what is not.

My advice is to be careful in selection and analysis before turning an add-on “live” in your business. Here are 5 that my clients are using, with some comments on how they perform.

Expensify - Expense claims processing.

How it works: Keying expense claims is never fun. This add on makes it easy and requires no data entry from the accounts team. Expense claimers take a photo of their receipt, add a comment, select a category and send to finance to be checked and paid. It’s easy to use, staff have picked it up without any training at all. The system can be set up with 2 levels of approval.

Verdict: A BIG time saver at a very low cost. Much cheaper and easier than a data entry method.

Crunchboards - Cashflow forecast and Key Performance Indicator (KPI) reporting.

How it works: This tool makes it super easy to set up graphical reporting of key numbers in the business. It has a forecasting function so you can plan for the future and see the outcomes of different “what if?” scenarios. It also has 3-way forecasting you can show your bank if you’re applying for loans.

Verdict: There’s a lot packed into this add-on. I have looked at it briefly and it looks impressive. It certainly rates well among accounting advisors

 Vend - Retail data processing  

How it works: Vend is used by retail stores. It rates highly in some areas, including front of house ease of use and inventory control. But it does have a number of limitations (which I am told the developers are working on). For a simple business like a coffee shops it seems ok, for a business with cost of sales, lay-bys and other areas the accounting side is inadequate. Reports don’t align with Xero postings, making it impossible to be sure that all accounting entries have come across from Vend correctly.

Verdict: A bit of work to do here before I am satisfied with the accounting side of this one.

DEAR Inventory - Inventory management

How it works: This is one of the strongest Xero integrated inventory systems I’ve seen. It allows manufacturing and multi-level bills of materials. Auto set up/ fast set up of SKU’s. Support has been very responsive. It suits my client well. As with a number of these inventory systems that link to Xero the audit trail to Xero is not available. From an accounting point of view this means the postings from DEAR to Xero can’t be proven 100%. We found instances where sales were posting into a different month to cost of sales, causing problems with analysis

Verdict: Not perfect but a number of strong points, including a responsive service team so problems will be taken seriously.

 Minute Dock - Time recording

How it works: This add-on makes it easy to record time for a clients and a job or project you are working on. You can add time as you go or after the event with simple keystroke features. It could do with a little more reporting but the speed of recording excellent. You can invoice from within the add-on or push the times across to Xero for invoicing.

Verdict: Could improve reporting features, but one of the most intuitive and fastest add-ons of this type.

 Business payments going astray? How to avoid it happening to you.

A sad tale of high hopes and broken trust.  

 You employ a bookkeeper. It looks like they’re doing a good job. Data entered on time, reports up to date. You feel good. You start to put more trust in your bookkeeper. They’re so good, it’s amazing. You set them up to make payments too, give them access to your online bank account. It’s incredible! You can leave that side of things ticking over, and get on with running and growing your business.

 It’s all going well. It couldn’t be better.

 Until…

 You start wondering why your bank account balance isn’t what you think it should be. You worry about that small payment to a new supplier you’ve never heard of. It’s only small, but still…

 You puzzle over why your payroll has increased. You don’t remember anyone working overtime. But you’re so busy, much too busy to pay much attention, you’ve got a great bookkeeper, right?

 But what if your great bookkeeper isn’t quite so great? What if that extra unchecked access to your business bank account has gone to their head.

 Only recently I’ve heard of two examples just like this. Both cost two small business owners hundreds of thousands of dollars. The trouble started slowly. The business owner was so happy at having a smoothly run accounts department they didn’t investigate when transactions first started seeming odd. By the time they realised, it was too late, and thousands of dollars had gone missing.

 Most business owners hearing this, are appalled. “My staff would never do that. How insulting to even think it.”

 But it can happen. It does. The real question it, how can you stop it from happening to you?

 Only a tiny minority of people are fraudulent. But it’s good business practice to have checks and balances and levels of authority over bank accounts, to avoid error as well as fraud. You want your business run professionally, and that means no person EVER can prepare a payment and authorise it to be paid.

 Why? Well, left alone, able to prepare and make payments, a dishonest staff member could:

Make up payments to fictitious suppliers

 Make payroll payments to pretend people or pay real people the wrong amount

 Start small so no one notices and become bolder as they get away with it

End up embezzling thousands of dollars of YOUR money

 With your head in the sand, the first you’re aware of a problem is when your business isn’t going as well as you thought. Yet you can’t put your finger on why. You don’t want to accuse your staff of dishonesty, but the truth is, the person managing the wallet is helping themselves.

 Business reality check

No matter how much you trust your accounts staff, or your bookkeeper, you need to put some security systems in place.

 All businesses should have two people involved in business payments. It doesn’t matter if you’re a big business or small business – this is the golden rule. All big businesses do it.

 Set up your systems as follows:

 1.       One person does the data entry and prepares all the payments but has no access to the bank account.

2.       Another person approves and sends the payments.  They check what is being paid, refer to supporting docs and enter a password or code as required.

 If your business isn’t very big (yet), the person sending the payments might be you. You might think you don’t have time to review payments, but it’s not that big a task. It might seem like a hassle, but now you’ll have peace of mind that money isn’t leaking out of your business.

 It is not that you don’t trust the people doing the job, but putting in place processes and controls to avoid fraud or error is, quite simply, good business practice.

 If you’d like some assistance setting up some secure business processes in your small business, we can help. Call us at In Financial Control on 1300 720 795

[infinancialcontrol]

June Newsletter

Introduction

Hello and Welcome to the June Newsletter.

In this edition we look at cashflow and some ways of introducing “extra” cash into your business. The areas we look at are DEBTOR FINANCE and GOVERNMENT GRANTS.

From an operational perspective we look at steps to turn your business around during a slow or difficult period. And with the financial year end just a couple of weeks away we have included a checklist of things to do before and after year end.

We hope you find this information useful

 Debtor Finance: a potential solution when cash is tight

Does this sound like your business?

Sales have been ticking along well, and your debtor’s ledger is full. But cashflow is tight and you’re worrying about funding the next payroll or stock purchase. The invoices from all those sales aren’t due for another 30 or 60 days (and there’s no way to hurry them up).

If this scenario is familiar to you, and you’re tired of the stress, you should consider debtor finance as a way of accessing some funds and easing a tight cash situation.

Here’s how it works

First you must pre arrange a debtor finance facility with your bank, who will have to approve you first.

Once the facility is available, you provide your bank/financier with a copy of the invoice for approved customers at the time the sale is made. It’s often an easy upload process.

The bank then gives you up to 80% of the invoice value within 24 hours. This turns your debtor’s ledger into cash 30 or 60 days sooner that you would otherwise get paid. You use the cash as you would normally, e.g. to buy more stock or pay your staff.

You receive the balance when the customer pays. Cash flow crisis, over.

Other points to know about debtor finance are:

You still have to collect the debtors; the bank doesn’t take over the collection process

There are charges for debtor finance and it may not suit all businesses, particularly if you’re operating on small margins

Not all customers need to be factored and in fact banks generally only factor large customers with strong credit ratings

You don’t need to provide the bank with security, your debtors ledger is the security

Are you looking for different finance options to assist with your cashflow? If you would like to discuss your options with an independent source, please give us a call on 03 8618 6820.

 Government Grants inject cash into your business and you may be eligible, it’s worth checking

The government at both State and Federal level likes to help businesses grow by providing grants to those who meet specific criteria. It doesn’t matter what your political persuasion is, all governments do this because they want to see business and employment growth.

There are many types of grants available, the more common ones are outlined below. At the end of the article there’s a website where you can look at them in more detail.

Research and Development Grant

The R&D tax incentive encourages companies to engage in Research and Development of new products that benefit Australia, by providing a tax offset for eligible R&D activities.

Does your business spend any money on researching new products for your market? Do you have a budget for development, perhaps spending money on prototypes and samples, testing and analysis, refinement of new products? If so, you should apply.

For business with turnover under 20 million dollars

A refundable tax offset is available. The grant is for 15% of R&D spending with a tax clawback of 30% if you’re in a loss making situation.

For larger entities

A non-refundable tax offset is available at the same 15% rate

Export Market Development Grant

The Export Market Development Grant is a key Australian Government financial assistance program for aspiring and current exporters.

The EMDG scheme encourages small and medium sized Australian businesses to develop export markets by reimbursing up to 50% of eligible export promotion expenses above $5,000, provided total expenses are at least $15,000.

Applicants can apply for grants for 8 years provided certain criteria are met.

Business Innovation Grants

Federal and State governments offer grant programs to support the development of new jobs and productivity through capital investment grants. These grants generally match the funding the business puts in and range between 25-50% of total project costs. These grants can vary in size from 50K to $2M and are for the purchase of capital equipment that aids in manufacture or production.

Other grants

Other less well known grants are available, aimed at specific industry types or geographic locations. For example, there are grants aimed at renewable energy, the car industry and even specific geographic areas such as Geelong.

Find a detailed list of government grants at www.business.gov.au/grants-and-assistance/grant-finder/

As with all things government there is paperwork involved.  We know this can be time consuming and even discourage some businesses from applying. If you think your business may be eligible but need help with the application process, please give us a call on 03 8618 6820. We can put you in contact with specialists in this area.

 Turning the tide of tough times

 The business cycle includes peaks of business in the good times and troughs during the slower times. Both provide their own mix of challenges.

 Business confidence in some sectors has been down recently, and sales have been slower. Some business owners are finding it tough to meet their sales targets. This tightens up cash flow, making it difficult for businesses to pay bills and keep the lights on.

 So what do you do when you hit a quieter patch? Here are some ideas:

 1.       Develop plans to live within your means – revise your budgets so revenue covers your cost base. Look at all the cost lines in your profit and loss and reduce or cut costs where you can. Often during good times extra costs are added in a little at a time. During slow times these need to be cut back.

2.       Develop strategies to grow sales. You need all hands on deck to make sales, so have as many people as possible in your business involved in generating revenue.

3.       Review your current sales approach and plans. Look to target new clients, offer a new package, a new range or incentives for closed sales.

4.       Prepare for the bad when times are good. Have a backup plan ready well in advance, like a cash buffer, reserve funding, possibly an overdraft you draw on.

5.       Get specialist help. When times get tough it helps to have the support of someone who has worked through these downturns before. Don’t leave it too late. Engage assistance early to help you navigate your business through any trouble spots.

 Remember it’s a cycle, and business will improve. And when sales are back at old levels (or higher) you’ll have a lean, efficient business making better margins than ever before, plus the knowledge and experience that comes with surviving a rough patch.

 In Financial Control are experts in surviving tough times. If you need guidance for a struggling business contact us on 03 8618 6820.

  Checklist for End of Financial Year

With the end of Financial Year just a few days away we thought we would start with a checklist of things to do for end of financial year both before and after June 30.

 Pre 30- 6

 Review Accounts Receivable for bad debts

 Review stock for obsolete stock

 Prepare final payroll of year

 Complete stocktake

 Pay superannuation to get benefit of tax deduction

 Have Superstream set up to pay super via the clearing house

 Check to see if eligible for 20K capital allowance deduction and make  purchase if appropriate

14/7

Distribute Payment Summaries to staff

21/7

Payroll tax return due (if applicable)

28/7

BAS Due

 4th quarter Super payments due

14/8

Lodge Payment Summaries with ATO

30/10

Workcover due date for declaration of 14-15 wages

[infinancialcontrol]

March Newsletter

Welcome to the March edition of our Newsletter. In this issue we address some questions we are getting regularly from business owners like

We made a profit but where did all the cash go?

Xero and their add on products– are they good for my business?

Is there a better way to make all my superannuation payments?

Below is a short sample of each story. If you want to know more simply click on the link or contact us. We hope you find it interesting

 We have made a profit, but where did all the CASH go?

 You know you are making a profit so you would assume that there will be plenty of cash in your bank account. Yet when you look at your bank balance it isn’t growing and it may even be reducing.

 So where did all the money go and why isn’t it sitting in the bank account?

 Unfortunately, profit on the profit and loss report doesn’t guarantee that it all turns in to cash in your bank account and there are many reasons for this. Some more common ones are:

Sales have been made but you haven’t collected the cash yet

Cash has been used to buy more stock, or purchase more equipment for the business

Cash has been used to pay off some business loans 

So how can you tell where all the cash has been used?

To do this you need a report showing all your Inflows and Outflows of cash – or in accountants’ terminology a Sources and Applications of funds report

 This report compares your assets and liabilities at two different points in times and gives you a picture of where all the cash is or how it has been used, a very useful report that every business owner should use.

 Some software packages provide this report as standard. Some business analysis tools also do this. But if you don’t have either then you should ask your accountant to prepare this report and analyse it for you

 So if you want to know where all your cash has gone – I recommend you find your Sources and Applications of funds report. It will tell you where all the cash has gone

 Xero and their Add Ons – do they really add up?

 I have been doing a lot of work with businesses who are using Xero and a number of their add-on products. While there is no doubt that good add-ons really add the extra functionality needed by some businesses to do key processing, you do need to be careful.  I am seeing a number of issues with some of the add-on products and the accuracy of the data being passed to Xero. This must be managed carefully or you will end up with numbers that are not right and that will affect your business. Here are a few of the things I have seen

 1.       Batches that should be sent are not being sent Xero. I had an instance where batches of transactions stopped being sent to Xero from the add- on. It was only when a reconciliation was done between the two systems that it was found.

2.       Voided transactions that shouldn’t be sent Xero are being sent. I have found instances where transactions that were voided in the add-on still got passed to Xero and posted to the General Ledger. The result is sales are being recorded that aren’t sales. This overstates sales and GST liability.

3.       Transactions being sent to Xero are posting sales in different periods to the cost of sale. One of the add-ons I have used posted sales into one period and cost of sales into a different month. This made some months highly profitable while others had no Gross Margin.

4.       Foreign exchange rates used in add-ons are not being passed to Xero. I have had an instance of an add-on using an exchange rate to convert USD into AUD. The transaction got passed across to Xero and a different exchange rate was used in Xero. This led to a sub ledger that didn’t agree to the control account.

5.       There is no functionality to feed information back from Xero into Add-ons – it is all one way traffic. In some instances Add-ons should take information from Xero and put it back into their system. When it doesn’t do this the Add-on can’t be relied on for accurate information.

6.       Add-ons don’t talk to other add-ons. In some instances an add-on needs to talk to another add-on to ensure all the numbers are in sync and in balance. In almost every case this does not happen and it means extra work trying to keep all the systems aligned.

 So what is my message: While Xero and the Add-on community are very exciting and you can pick and choose the functionality you want, you need to be very careful to make sure your systems are aligned and numbers are reconciled between all systems or you could end up with numbers that are far from accurate. Be careful

 Is your business SuperStream ready?  You have until June 30 to get set up  

Making superannuation payments can be a headache for small business. Having to make separate payments for all the different super funds of all your employees each month or quarter is a very time consuming exercise

 Fortunately things are getting easier with the introduction of SuperStream. The beauty of this system is that employers can now make all their contributions in a single transaction, even if they're going to multiple super funds.

 Who provides SuperStream services?

 Most of the Superfunds, some of the banks, payroll systems and the ATO all offer SuperStream services. It is up to you to decide which you want to use. The simplest choice is to go with your company superfund or bank as they are both electronic services which you are currently using in some form.

 How do I get set up?

To use SuperStream you'll need to collect some new information from your employees, in addition to the information you already use to pay super. Once you have this information, enter it into you’re your selected SuperStream system, along with the other details you use to pay super, and you're ready to use SuperStream.

If you don't have it already you will need to ask your employees for the following information:

employee tax file number

fund ABN

fund unique     superannuation identifier (USI).

If your employees have a self-managed super fund (SMSF), they need to give you slightly different information:

employee tax file number

fund ABN

fund bank account details

fund electronic     service address.

Once you have entered this information in the system with your SuperStream provider you are ready to go. You have until June 30 to get set up and it will be a lot easier to pay your employees super from now on – so get cracking

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In Financial Control - December Newsletter

Welcome to the third of our bi-monthly newsletters. Leading into Christmas we have addressed a couple of seasonal topics and and an important one we find most businesses struggle with.

We look at the importance of having a cashflow forecast covering the Christmas period and for those planning for growth in 2016 we look at key aspects of growing without growing pains.

The other topic we look at is how to make your business system work for you and not against you.

We hope you enjoy the festive season and all the best for the year ahead

A cashflow forecast is important

A cashflow forecast before Christmas is crucial

Do you know your cash position today? Do you know what it will look like next week – how about next month?  Or 6 weeks?  Having cash in the bank today doesn’t mean you will have cash there tomorrow, in a week or in a month.  Using the old political maxim – a week is a long time in a cashflow cycle.

Having a cashflow forecast gives you a view of where you are headed and what if any challenges you may face is important. Over the Christmas – New Year period it is doubly important as the bills still need to be paid but your sales and customer payments slow down with business closures and holidays. Without a preview of your cashflow you could be coming back to a cash shortage that you have to attend to.

In most businesses we work with, no matter how big or small there are always highs and lows in the cycle of receipts. Having a cashflow forecast allows you to plan and manage the highs and lows well in advance. At the simplest level it may just mean chasing some debtors for early payment or pushing back creditor payments a week or two.  If the trough is bigger, the action required may be to go and talk to the bank about some short and medium term funding. There are many alternatives and these were covered in last the last newsletter.

The key takeaway point is that a weekly cashflow forecast puts you in control of the situation well in advance and not in a panic rather than having a cash shortfall arrive seemingly unannounced.

We establish these reports for all of our clients and put them in control. In a lot of cases it turns a stressful time into a manageable time

Planning on Growth in 2016 – here are some tips to grow without the growing pains

Business growth can mean excitement, busy times, more staff, more stock, more customers, more sales – BUT IT DOES NOT NECESSARILY translate to SUCCESS

Growth can also mean stress, challenges, increasing cost structures, increased complexity, more loans and in some cases growth can actually lead to business failure

To avoid growing pains and give yourself the best chance of success there are a few key things that you should put in place. Here are our top 5

1. Good capable people with the right skills in the right jobs

a. Successfully navigating the challenges of growth requires the right people with the right skills in the right roles. While as business owner you may have struck upon a great idea, you need to ensure that you have the right people to manage your business, its staff, sales, customers and manage your finances. b. Recruiting such people needs to be undertaken carefully with an appropriate probation period to ensure they meet the business needs

2. Address Gaps in knowledge or experience.

a. Where you identify areas where you need specific experience but don’t need a full time person subcontract in specialists. It may be in marketing, quality control, finance. People with good experience can help take your business to the next level b. This may be an ideal time to attend a business course to learn the necessary skills or develop a promising member of staff.

3. Good systems and process a. As the business grows you need to have simple standard processes that can be followed by everyone. This makes it simple to grow. Adding more transactions to a simple process is easy. It’s just more of the same. b. Make sure the expected outcomes are being achieved so build some monitoring into the new processes to ensure nothing goes wrong

4. Accurate and regular detailed reporting a. With growth comes the need for accurate reporting. With numbers growing, costs change there are more moving parts in the business. So it is important to make sure you are across the key measures in the business. Am I profitable? Do I have enough stock? Do I need more cash? How many new customers do I have? Which are my key accounts? How do I keep them happy? Are my suppliers up to scratch? b. Reports to tell you exactly what has happened, to help you pick up on any issues you might have missed and to help you monitor performance compared with your plan.

5. Planning a. as best you can – It is good to have a business plan to keep your focus on the business goals and in what direction you want to head.  Business growth rarely goes according to plan. But that is OK – the plan can be revised and gives you the big picture of where you want to be. That big picture can often be lost in the hustle and bustle of rapid business growth b. Plans give you better access to business finance – any lender will want to know that the business is managed wisely, leaving things to chance is not the way to manage a business so evidence of how the business is controlled as far as the future is concerned

Your accounting software  – Working for you or against you?

When most businesses purchase a new  business system there is the expectation that you just , “Turn it on” and it will do what you need it to.

Unfortunately it is not that simple. We should know, we get a lot of our work from businesses that have implemented systems only to find the numbers are all wrong and the software “doesn’t work”

When this happens you feel like the system is working against you.

Regular problems we find are:

Foreign currency not being recorded correctly

 Stock not being managed properly

 Cost of sales not correct  resulting in over stated profit

 System set up to post transactions to the wrong account

 Control accounts don’t reconcile to detailed reports

Do any of these sound familiar?

To avoid these issues and to have a system that gives you the information you need, it is essential you have people with the right skills and experience working on your project.  If you are putting in a new system here is a list of the skills we think you need:

Someone who understands your business and all its complexities

Someone who knows the system you are going to put in and its full capabilities

Someone with strong accounting understanding to make sure accounting postings are accurate

Someone with training expertise to teach your staff how to use the systems properly

With these skills you can then customise the software to your business and get a good result.  A small price to pay to get it right up front rather than fixing it up later

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In Financial Control - August Newsletter

Welcome to the second of our bi-monthly newsletters. Hopefully by now you will have all you year end reporting behind you and be focusing on the financial year ahead.

The further fall in the value of the Australian dollar has meant business conditions are a little tougher for importers, while exporters of Australian products are benefitting and becoming more cost competitive in overseas markets.  

No matter what business you are in you need to have good quality reporting and cashflow management on a regular and timely basis. This newsletter focuses on things you should be doing to achieve this.

Measuring the health of your business beyond the Profit and Loss

Reporting on your profit and loss is important, so that you know if your business has been profitable in the previous month or year or not. Is it enough to give you a full understanding of what is going on and overall health of your business . I would suggest not.

Beyond the profit and loss there are many other key measures that indicate the health of your business. These measures are known as Key Performance Indicators (KPI’s ). Some of the measures we have used with our clients include:

Current order or booking intake rate

Conversion rate of sales staff

Average value of a sale

Sales Performance versus previous year

Top 5 selling products

Bottom 5 selling products

Number of sales calls made by sales staff

% of time production line is being used

Staff utilisation Rate

Wastage rates

 There are literally hundreds of measures. The important thing is selecting appropriate measures that tell you the most about your business. In the businesses we work with we take the time to understand the business and then tailor a set of Key Performance indicators.

Once you determine the KPI’s you want the next step is to put systems and processes in place to record the numbers accurately. This can require a lot of detailed process work..

The final step in the process is reporting the numbers. While presenting the numbers in a table data is OK, we prefer to present these numbers in a graphical dashboard. The visual nature of the dashboard means you can quickly view and interpret the status faster than you would a table of numbers.

 Keeping the Cash Flowing -  Finance options your business could use

No matter what size of business, no matter what situation you are in, growing or slowing, your business needs to keep the cash flowing. Growing businesses need more cash to fund expansion, Slowing businesses need to keep cash flowing until the next uptick in the business cycle. Here are a few options you might use to keep the cash flowing in your business.

Overdraft

An overdraft allows the business to continue withdrawing money even if the account has no funds in it. Basically the bank allows you to borrow upto a set limit. An overdraft  is generally covered by assets as security.

Debtor Finance

Debtor finance is a way to fund a business using its accounts receivable ledger as security. Business can borrow up to 80% of its Debtors ledger balance. In simple terms it turns unpaid invoice into cash.

Trade Finance

Trade finance is a way of funding major stock purchases from suppliers. The bank or lending institution provides funding for purchases and terms are structured in a way to meet your business trading terms with suppliers.

Equipment Finance

Businesses that need capital equipment to run or improve business efficiency can often finance these purchases. This means the business does not need the often large amounts of cash up front to fund large capital purchases.

Credit Cards

This can be an expensive financing option but purchasing on a business credit card when funds are not available can help you through situations when cash is tight.

Government Grants

There are many government grants available for all sorts of things including Research and Development, Exporting into overseas markets and attending overseas trade shows. There are a number of consultants who specialise in finding grants that are appropriate for a business.

Request deposits from Customers.

Depending on the industry and the size of transactions you have it may be appropriate to ask customers for up front deposits on orders placed

Extend credit terms with suppliers

If cashflow is tight for short periods you may consider approaching your suppliers for extending credit terms for a period of time. For example you may ask a supplier who provides 30 day terms for 60 or 90 day terms for a period while you trade through a difficult period

Related party loan – friends and family

There may be people in your immediate family or business network who are willing to support your business by providing a loan. This will generally be easier to arrange than through a financial institution

Outside Investment

If you are growing your business or in a stage of development you may consider approaching Venture Capitalists, Business Angels or even Crowd Funding

 5 Key reasons for your business should have budget

Towards the end of the financial year you may meet people talking about next year’s budget, but do you have any idea at all about what they are doing and why?  Budgeting is based on the premise “if you fail to plan you are planning to fail”, no matter how small your business it’s important to have some vision about the future and how it might be affected by change in circumstances. Here are 5 reasons your business should have a budget

Preparing a budget is a useful process for those involved to think about the future of the business and how things may turn out, no one expects a budget to be 100% correct but they can give a very good indication of what may happen in the future, particularly if they are revised to reflect the reality of the earlier months in the financial year.

A second advantage of having budgets, particularly where they are committed to and accepted by departmental managers is to impose constraints, informing those managers that their budget must not be exceeded  where otherwise there would be no restriction

If you are applying for a loan or business funding the bank will want to see your budget  to make sure you are profitable and to see when and how much cash will be needed. This ensures that the bank has all the information they need to review a loan application and may even prove to the potential borrower that they don’t need a loan if a few changes to trading are made.

Provides the basis for setting prices and determining the sales level and sales effort involved to make a profit.  A budget may show that at current prices the profit achievable is insufficient to support the continuing survival of the business, if costs cannot be reduced then prices must be increased.

Allows for regular measuring of business performance against targets and make adjustments to current activities so that the future of the business is assured.

People preparing a budget generally look to the past to forecast the future, but this is not necessarily  the best way? Over the years others have recommended “Zero based budgeting” and there are many proponents of this approach. 

Other things to consider when budgeting are whether you want to prepare a single annual budget or rolling budgets and the level of detail to which budgets are to be prepared e.g. should the budget be prepared for Wages and Salaries or broken down over administrative, production and sales staff?

If you need assistance setting up a budgeting model for your business please give us a call on 8618 6820. We have helped many businesses across all industries set up budgeting models and loaded them into their business software for easy reporting

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[infinancialcontrol]

In Financial Control - June Newsletter

Welcome to the first In Financial Control Newsletter. You have been included on our mailing list because at some point you have had contact with either Peter McLean or Mark Duggan. Through our Newsletter we aim to provide some useful accounting information you can use in your business or maybe raise some points you may not otherwise have considered.

If you are not interested in receiving future editions please unsubscribe and we will remove you from our mailing list

End of Financial year checklist and Key Dates

With the end of Financial Year just a few days away we thought we would start with a checklist of things to do for end of financial year both before and after June 30

Pre 30 June

Review Accounts Receivable for bad Debts

Complete stocktake

Review stock for obsolete stock

Prepare final payroll of year

Pay superannuation to get benefit of tax deduction

Have superstream set up to pay super via the clearing house

Check to see if eligible for 20K capital allowance deduction and make purchase if appropriate

14 July

Distribute Payment summaries to staff

21 July

Payroll tax return due (if applicable)

28 July

4th Quarter BAS return due

4th quarter super payments due

14 August 

Lodge Payment summaries with ATO

30 October

Workcover due date for declaration of 14-15 wages

Measuring profit in your business – what is making you money and what isn’t

 Profitability is key to the success of your business; after all, at least in part it is why you started out in the first place. So, with year-end upon us, how often do you measure your profitability?  and what do you measure? Some businesses are happy to measure their profit just once at the end of the year.  We on the other hand know you will have much better control of your business if you measure profitability monthly and not just overall company profitability.  You need to know the profitability of the key parts of your business.  

To really understand your business performance you need to understand what is making you money. Is it a product, a project, a store, a geographic region, a person or something else specific to your business that is making you successful?

Who is performing and who isn’t. When you know this you can put more effort into what is working and less into what isn’t

We have implemented detailed profit and loss reporting at most of the businesses we work with. With some strong systems knowledge and our years of accounting experience we have empowered business owners (some of whom have been in business many years) with far more detailed information than they have ever had before. This has allowed them to make good decisions about the direction of their business.

Some are often surprised because what they thought was happening, isn’t what the numbers show

Most business systems will allow you to report on profitability on the appropriate part of your business but not very many people use the functionality that is available to them. For advice and guidance improving your General Ledger to enable really useful measures of profitability talk to us on 03 8618 6820 or contact us through the website

The top 5 reasons we find small and mid size business owners turns to us to provide our CFO services

Most small and mid-size businesses don’t have the budget to take on a full time qualified experienced accountant in their business. In most cases a bookkeeper is engaged to run the company’s finances and while the documentation gets processed and bills get paid there is a level of expertise that even a good book-keeper cannot bring to their work. Here are the top 5 reasons why our clients have taken us on  

Growing businesses need a Part Time CFO to help manage growth, implement systems and negotiate finance with bankers

All businesses need good cashflow management and forecasting to have a view of projected cashflow positions and to address any issues before they become problems

Business owners want more accurate and more detailed reporting so they can make better informed decisions about the future direction of their business. This is often beyond the capabilities of the bookkeeper

Accurate stock management is a very common problem amongst small business owners. We put in place systems, processes and people training to put you in control of one of the business' key assets

Businesses experiencing difficult trading conditions come to us for assistance in working their way through tough times. We help them manage their business, their cashflow and reporting so that they get their way through to better times.

Of course there are many more reasons than this to take on a Part Time CFO. The bottom line is we believe all business owners need to be in control of the financial side to their business

[infinancialcontrol]

Mark Duggan joins the team

Mark Duggan joins In Financial Control. Mark comes with over 30 years of experience in accounting and business systems. Most recently he has worked with implementing MYOB Exo and he knows it inside out. Welcome aboard Mark and we look forward to you putting many small and mid size businesses In Financial Control

[infinancialcontrol]

A Price sensitive market?  Not sure that a 99 cent discount on a $99 item will make people suddenly start buying, but I could be wrong

[infinancialcontrol]

Xero and their Add Ons – do they really add up?

I have been doing a lot of work with businesses who are using Xero and a number of their add-on products. While there is no doubt that good add-ons really add the extra functionality needed by some businesses to do key processing, you do need to be careful.  I am seeing a number of issues with some of the add-on products and the integrity of the data being passed to Xero. This must be managed carefully or you will end up with numbers that are not right and that will effect your business. Here are a few of the things I have seen

  Batches that should be sent are not being sent  Xero. I had an instance where batches of transactions stopped being sent to Xero from the add- on. It was only when a reconciliation was done between the two systems that it was found

Voided transactions that shouldn’t be sent Xero are being sent. I have found instances where transactions that were voided in the add-on still got passed to Xero and posted to the General Ledger. The result is sales are being recorded that aren’t sales. This overstates sales and GST liability

Transactions being sent to Xero are posting sales in different periods to the cost of sale. One of the add-ons I have used posted sales into one period and cost of sales into a different month. This made some months highly profitable while others had no Gross Margin.

Foreign exchange rates used in add-ons are not being passed to Xero. I have had an instance of an add-on using an exchange rate to convert USD into AUD. The transaction got passed across to Xero and a different exchange rate was used in Xero. This led to a sub ledger that didn’t agree to the control account

There is no functionality to feed information back from Xero into Add-ons – it is all one way traffic. In some instances Add-ons should take information back from Xero and put it back into their system. When it doesn’t do this the Add-on cant be relied on for accurate information

Add-ons don’t talk to other add-ons. In some instances Add-ons need to talk to add-ons to ensure all numbers are in synch and in balance. In almost every case this does not happen and it means extra work trying to keep all the systems aligned

  So what is my message: While Xero and the Add-on community are very exciting and you can pick and choose the functionality you want, you need to be very careful to make sure your systems are aligned and numbers are reconciled between all systems or you could end up with numbers that are far from accurate.

Be careful 

[infinancialcontrol]

Making your systems work so your numbers talk

Peter McLean will be presenting "Making your systems work so your numbers talk" at the Consal Business Software Expo on the 26th of March

All businesses should have numbers that talk,  numbers that tell the story of the business so that key decisions can be made by the owners

 Achieving is not as easy as it sounds.  Businesses need to have the right system to meet their needs, the  processes need to be planned and designed to capture the right information  and you need to have appropriately qualified people on your staff to ensure you get the most out of the system

 Peter McLean will talk about his experiences in working with SME’s over the last 20 years and detail

The importance of having accurate reporting,

How to determine your businesses key metrics

How to know if you are getting the most out of your existing system

How to select the right system for your business

How to ensure you have the right skilled people in your business to run your business system

  For more details about the Consal Business Software expo please click on this link: http://www.atronics.com.au/business_software_expo_melbourne_2014.htm

[infinancialcontrol]

Rule # 1 When selecting business software

Recently I have had conversations with 3 different business owners who were about to select new business software for  their business. In each of those instances it seemed the owner had already decided which path to go down because they had seen an ad or somebody had told them about a system that might be OK for their business

 In each of these examples if the business went ahead with their “system of choice” it  would have failed miserably. The system of choice in each instance did not have some of the key functionality that their business would require to function – and they would only have found this out after they bought the software!!!!!

 So – my rule number 1 in looking for and buying software happens before your start looking for and buying the software

 Rule # 1 – make a list of the key functionality/processes that you require your business software to be able to do

 It might be Stock management, Payroll, Project management, Light manufacturing

 Whatever it is –write it down on a list. Only then should you start looking for business software