- Focus on Your Cashflow in the Lead up to the Christmas and New Year Holiday
- Fringe Benefits Tax at Christmas
- How to Get the Most From Your People in 2020
- Brentnalls WA News
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 they are going to take to successfully manage their cashflow. 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;
- 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;
- Invoice your outstanding work in progress;
- Focus on sales where there is the opportunity to run down inventory, including your fast-moving inventory items;
- Quit slow moving and old stock – if you have not sold it now, take the loss and convert it into cash.
- Focus on collecting your debtors before your customers close their office for the holidays;
- Offer other payment options, including credit card and fee funding.
- 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 to the tax office or seek additional funding from your bank.
If you would like to discuss how you can better manage your business’s cashflow over the holiday period, please contact your advisor or our office on (08) 6212 7200.
By Chris Smith
With the festive season almost in full swing, it’s important to be aware of the tax implications on providing your employees with gifts, and throwing the end of year team function.
Depending on the type of gift or entertainment provided, the business will have different Fringe Benefits Tax (FBT), Tax and GST consequences.
A table has been provided below to help navigate these complex rules.
Entertainment vs Gifts – potentially different tax treatment:
The Christmas party thrown for employees and their associates is considered entertainment.
Gifts, however, can fall into one of two categories,
- entertainment (eg: theatre tickets, sporting events), and
- non-entertainment (eg: hampers, flowers, wines, perfumes, gift vouchers).
Entertainment provided to employees is not tax deductible unless FBT applies (refer to table below).
Non-Entertainment gifts on the other hand, are tax deductible – whether or not FBT applies.
$300 – an important number:
A FBT exemption applies for benefits provided to employees LESS THAN $300 (including GST), as long as that benefit is “minor and infrequent”.
If the benefit provided is $300 OR MORE, then FBT will apply.
Cheat Sheet – what is subject to FBT, what is tax deductible, and what can GST be claimed on:
The below table provides a summary on when FBT applies, what you can claim a tax deduction for, and what you can claim GST credits back on.
- Benefits provided less than $300 are minor and infrequent
- Business is not relying on the 50/50 method for FBT purposes
The above is only a high level summary of some complex tax consequences of throwing a Christmas Party, and giving gifts to your staff to thank them for the hard work over the last 12 months.
If you have any questions, or would like more specific information on the above, please contact Chris Smith at firstname.lastname@example.org or on (08) 6212 7200.
By Chris Mandzufas
The topic of our Business Growth Network event this month was People Performance and I was struck by how familiar the ‘people challenges and opportunities’ raised by the business owners in the room were. In business we are faced with the same common challenges (and opportunities), regardless of the industry we operate in, being communication and inefficiency. That is we are generally all seeking ways to increase the effectiveness of our communication and looking to identify and address areas of inefficiency.
Identifying and addressing business inefficiences
In the current market, businesses need to be find efficiencies in order to improve profitability and strengthen business operations. What are the strategies we can employ to do less and achieve more? In relation to people performance, efficiency is a key issue.
We identify the six areas of inefficiency in people performance as:
- Poor communication
- Poor leadership
- Poor role clarity
- Lack of accountability
- Poor vision / strategy
- Poor capability
In our waste audit process, we often look at these and other areas of inefficiency, to identify the areas in which businesses have room to improve their performance. There are strategies which can be employed to address inefficiencies in each of these areas, some examples of which are improving processes for clarifying roles, decision making, and accountability; and ways to develop, clearly articulate and bring your team on board with a compelling vision.
Another key challenge expressed by business owners around people performance is communication. And in particular the issue of communication using technology. There are ever more systems and tools available to companies, and this increase in the array of technologies available can cause distraction and confusion. Any technology introduced for communication needs to serve the purpose of actually improving communication effectiveness and efficiency and not just add additional complexity and cost. Consider how new tools are implemented and engaged with and what purpose they serve.
Our top four tips for effective business communication are:
- Invest in people and technology
- Reduce the number of tools being used
- Embrace the evolving workplace
- Shared Storage – have data constantly accessible
What habits or insights do you have to communicate more effectively using technology with your people / teams?
The Brentnalls Affiliation is once again in Australia’s top 100 Accounting Firms, this year making it into the top 30 firms in AFR’s Top 100 Accounting Firms list. This accomplishment reflects the commitment and passion of the Brentnalls Accounting Alliance to making an impact for our clients and continuing to strive for growth and success both for ourselves and for our clients.
This month we hosted another sold out ‘Growth, Profit and Cashflow’ Business Breakfast for small business owners and managers. It was once again a well-received presentation by Tony Monisse, with great engagement and interaction by the attendees.
“Relevant, informative and energising!”
Stay posted for the next event which will be held in February 2020 and cover the topic of ‘Business Growth Strategies’.