Blog Page 295

Boosting you business’ cash flow

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For small businesses to remain afloat they require healthy cash flow. Improving cash flow may sound simple; earn more and spend less, but managing cash flow can be far more challenging than it may seem.

Good cash flow management helps sustain business during times of cash shortfall and excessive expenses. Managing cash flow requires proper planning and forecasting to avoid severe cash shortages. Here are five ways to keep on top of your finances and boost your business’ cash flow:

Review payment terms
Establishing payment terms is essential for good cash flow. Encourage early payments from your customers/clients by providing discounts. Be sure to follow up on overdue accounts and include penalties for late payments such as interest or fees.

Reduce overheads
Minimising your overhead expenses such as staff overtime, utility bills etc. is one way to improve your cash flow. Many of your operating expenses can be reduced, or even eliminated, without affecting the rest of your business, for example, reducing energy use can significantly lower your power and electricity costs.

Invoice quickly
Issuing an invoice to your customers and clients as soon as the work has been completed increases your chances of getting paid quicker. Consider using cloud accounting software to prepare and send out invoices immediately, which will save time during busy periods.

Re-negotiate contracts
Re-negotiate contracts you have with long-term suppliers and service providers to work out a more cost-effective arrangement. Contracts may have add-ons, services or subscriptions that your business no longer needs.

Reevaluate your pricing
Evaluate your business’ current pricing strategy; are your prices too affordable or expensive? To remain competitive, prices need to be constantly reviewed to ensure your price point improves (not hinders) your cash flow.

Hiring the right person

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Finding the right workers can be a challenge. Since much of a small business’s success depends on the quality of the people they hire, this is a crucial task.

Here are five things to consider when hiring that should increase your chances of success:

Write a clear job description
It is difficult to recruit the right person if you are not sure what job you want them to do. Start by writing down all the tasks you need done. Next, think about the attributes, skills and experience needed. Be realistic. It is unlikely that you will find a great salesperson and bookkeeper in a single person.

Allow adequate time
Start the candidate-hunting process as early as possible. The more time you have, the less you will feel pressured to hire an unqualified candidate just to fill a position. Generally, it is better to leave a job open than to hire the wrong person.

During interviews, don’t do all the talking
It is appropriate to explain the job, and in many cases, to try and sell the job to the candidate, but most of the time the candidate should be talking. Most candidates will be a little nervous so have a few questions prepared in advance that ease the candidate. Consider asking what about the job appealed to them, what particular skills they have, and what they did not like about their last job.

Understand the person
Ask questions that help you get a feel for the applicant’s personality and attitude. Be careful not to ask questions that are or may be illegal, for instance, asking whether a candidate is planning on having a child or asking their age. It is acceptable to ask about hobbies, interests, where they grew up and what their long-term goals are. Diverse interests usually mean a candidate brings more life experiences to a job.

Check references
Even if you have no reason to doubt the honesty of an applicant, you can learn a lot by checking references. Use the reference check as a way to learn how to work more effectively with your new employee. Do not just ask about how hard they worked. Try questions like: What kind of training would you suggest to make the applicant an even better employee? What type of tasks required greater supervision? What duties did the candidate particularly enjoy or do well?

Reducing the risk of refund fraud

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Refund fraud occurs where tax returns, activity statements and other documents are deliberately falsified in order to claim a tax refund a taxpayer is not entitled to.

Fraudulent claims can be lodged by individuals on their own account or third parties on behalf of others. Often, this can involve identity crime, where taxpayer identities are used by third parties to make fraudulent claims for personal gain.

Some examples of refund fraud are deliberately over-claiming deductions, offsets, or expenses by providing false or misleading information, understating income and/or providing fictitious payment summary details, providing false information in a business activity statement and making claims through fraudulent registrations or using false or stolen identities.

The ATO have a range of controls and systems in place to detect potential refund fraud, these include:

  • analytical models that use behaviour and statistical algorithms to analyse information on income tax returns, business activity statements and other tax forms lodged
  • sharing data and intelligence with their partner agencies
  • obtaining information about suspected fraud from the community and other government agencies

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