Focus on Your Cashflow in the Lead up to the Christmas & New Year Holiday
Brentnalls Affiliation National Conference 2018
My Learnings from China – What Makes a Success Business & Do You Measure Your Competitive Advantage?
Proposed Changes to Division 7A
Practical Advice on Agile Leadership
Brentnalls Affiliation in the Top 100 Accounting Firms for 2018
Every Bit Counts
Did You Know We’re on LinkedIn?
By Tony Monisse
A handy checklist for business owners who want to successfully manage their cashflow over the upcoming holidays.
The upcoming Christmas and New Year holidays require business owners to give thought to how they are going to run their businesses over that period and what actions are they going to take to successfully manage their cashflows. The checklist below is a reminder of the key actions that all business owners should take in regards to sales, staffing, expenses, and funding related matters.
- Make sure you invoice earlier in December so you do not miss your customers’ processing run and their timely payment. If appropriate, you might even raise an interim invoice;
- Focus on collecting your debtors before your customers close their office for the holidays;
- To increase cashflow in the short term, close any outstanding sales orders and focus on sales that have a short sales cycle versus more complex sales;
- Focus on sales where there is the opportunity to run down inventory, including your fast-moving inventory items;
- Invoice your outstanding work in progress;
- Quit slow moving and old stock – if you have not sold it now, take the loss and convert it into cash.
- Review your staff levels;
- Encourage people to take leave;
- Review your level of casual staffing versus permanent employees;
- Review overtime levels.
- Review all discretionary expenditure, including training, travel etc.;
- Return any hire equipment not needed over the holiday period.
- Prepare your December, January, and February weekly cashflow forecast to identify any funding shortfalls;
- If needed, renegotiate terms with key suppliers, speak the tax office or seek additional funding from your bank.
If you need any assistance with the above, please contact our office.
By Chris Mandzufas
At our recent Brentnalls National Affiliation Conference in Singapore, we focused on the ways in which each of the Brentnalls Affiliates can better support and help their clients grow.
In late October, along with Chris Smith, I attended the bi-annual Brentnalls National Affiliation Conference in Singapore. Delegates attending the conference consisted of Directors and Practice Managers representing all seven Brentnalls Affiliation offices from across Australia and New Zealand. As it has been in the past, it was a great opportunity to network and share knowledge with other like-minded business advisors from across the Affiliation, which is positive for the Brentnalls WA team and all our clients.
This year’s conference was focused on the various ways in which each of the Brentnalls Affiliate offices could better support and help their clients grow their businesses. It is worth noting that many of the conference presenters were well known amongst the Singaporean business community. Presenters included advisory firms specialising in investment and family office services and whose expertise will directly benefit the Brentnalls Affiliation’s clients.
My Learnings from China – What Makes a Successful Business & Do you Measure Your Competitive Advantage?
By Tony Monisse
Can you run a successful business without living your life by the “996” rule? Read on and learn from two successful Shanghai’s entrepreneurs.
I recently visited Shanghai, where I had an opportunity to meet with a number of business owners. Here are a few learnings from my trip I’d like to share with you.
In Shanghai, a city with a population larger than Australia, there are numerous opportunities to grow your business, provided you are prepared to adopt the “996” life. That is you need to be available and online for business from 9am to 9pm, 6 days per week. I expect we, business owners, do that already!
Two business owners who I met during my trip stood out for me.
One was a property developer who from his humble beginnings in Shanghai has grown his business to where he now has a significant property portfolio in China and Australia. I asked him what he attributed his success to and he provided me with this simple checklist, which I believe to be applicable to any business owner.
- A great team,
- A product that the market wants,
- Ready access to capital.
The second stand out business was a manufacturer and distributor of gloves. This business is growing at a rapid rate through a strategy of not focusing on the tier 1 cities (Beijing, Shanghai, etc.), but instead focusing on the tier 2 cities and below. In China, these tier 2 cities have populations of over 5 million! The owner attributes the success of his business to the range of products that they have available to their customers.
The key measure of success for the business is the number of customers who buy eight or more types of gloves from them. The reason for this is that any customer who buys eight or more types of gloves is unlikely to switch to another supplier. As such, the business actively focuses to grow this KPI as a measure of their success.
I believe that measuring your competitive advantage is crucial to any business success so that you can then focus on strategies to strengthen your competitive advantage.
By Chris Smith
What you need to know about the proposed changes to the Division 7A and how they will affect you when they are introduced.
The consultation paper released by Treasury on October 22 (please refer to my recent blog article for more information) proposes a change which requires the principal for a Division 7A loan to be paid down equally each year for the 10-year term.
If the changes are legislated, there will be a real cash flow impact to taxpayers.
To illustrate the impact, consider the following example:
- $1m loan at 30 June 2019
- Interest rate 8.3% for life of loan
- Company tax rate 30% for term of loan
- Individual tax rate 47% for term of loan
Loan Repayment Schedule
As shown above, the annual repayments and top up tax payable are substantially higher in year 1, compared to year 10.
This is in contrast to a standard principal and interest loan with the same facts, which would have repayments of $151k per year, and top up tax payable of $36,684 per year.
Why is this important?
Obviously, the benefit of deferring tax under Division 7A is diminished due to increased repayments in the earlier years of the loan.
Not so obvious is that, while administering these loans in a closely held family group may be manageable, the Division 7A rules apply on loans to “associates” which has a broad definition. As the loan repayment terms proposed are not commercial, as seen in the above example, it will be critical to review the terms of any loan from a private company to an associate prior to executing the agreements to ensure the Division 7A deemed dividends rule will not inadvertently apply to this loan.
This is one of many examples where proposed rules intended to simplify Division 7A will do the opposite.
If you have any questions on the proposed Division 7A changes and the structuring opportunities available please contact our office to discuss.
By Chris Mandzufas
We’ve been sharing with clients, alliance partners, and our team what is agile leadership and its foundation concepts of Communication, Commitment, and Collaboration. Read on and see how agile your management style is.
The last quarter of 2018, saw Brentnalls WA sharing knowledge with clients, alliance partners and our team on the key concepts related to agile leadership. Our Business Growth Network (BGN) and Business Getting Results (BGR) events explored the issue of agility in a business context and introduced the foundations of agility, which are Communication, Commitment, and Collaboration. Follow the link to our recent blog article on agile leadership and lessons from a study conducted by Michael Porter and Nitin Nohria from the Harvard Business School, and in particular their insights into the habits and day-to-day activities of successful CEOs of a number of large global organisations.
By Aleks Williams
We are pleased to announce the Brentnalls National Accounting Firm Affiliation, has been listed in the Australian Financial Review ranking of the Top 100 Accounting Firms for 2018.
As part of the Brentnalls National Accounting Firm Affiliation, we have been listed in the Australian Financial Review ranking of the Top 100 Accounting Firms for 2018. This year, we are proud to have reached rank 29! We would like to take this opportunity to thank all our clients, alliance partners, and the Brentnalls team across Australia and New Zealand for making this possible. You can read the full article here.
By Aleks Williams
Brentnalls WA takes a step to create a more sustainable business by going green and healthy.
At Brentnalls WA our mission is to help our clients grow sustainable and profitable businesses, achieve their goals and protect their interests. One of our key learnings from recent times is that to grow a sustainable business, we need to become a more sustainable office. This means keeping our staff healthy and improving the bottom line while helping the environment! This most likely does not come as a surprise to any of you as this is a popular topic widely discussed across all Australian media.
In light of the above, we decided to make a change and do our bit to help the environment. As a team, we made a decision to go green and healthy! We have significantly reduced waste, stopped using plastic bottles, do not have individually wrapped snacks at our meetings, making healthier food choices and using re-usable food containers and coffee cups, to name just a few changes we have made.
We strongly encourage you to join us and make a difference in your office and home!
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