Profit and Loss are going in the wrong direction

Your business won’t be the first to experience this nor the last, but it is something that most will encounter at one time or another: your profits are decreasing and your losses are mounting up. Your bookkeeper will know your business by now and be able to navigate those accounts with a clear head and without prejudice. They will be able to find where things went wrong and why and suggest ways to turn things around. The sooner you engage them where this is the issue the quicker they can help put things right to avoid the problems becoming insurmountable.

Are you looking to grow

If you are in this position, then things are going really well! If you have done everything you know how to do and done it well, then your business is going in the right direction. A fresh pair of eyes and some new ideas can help you jump over the hurdle of taking the next leap to growth. It is often not something that you can do yourself as you are too immersed in the day-to-day running of the business and lack the time to analyse and research other avenues to branch off to.

You want more or different kinds of customers

Looking to grow your market share but not quite sure how to do it? With knowledge of similar businesses and your specific sector, as well as of the particular unique selling points of your business, your bookkeeper can come up with some fresh ideas of how to target and win a larger share of that market segment you are working in.

You need to streamline your processes

You may have reached that tipping point where things are going well but your administrative tasks and processes are beginning to take up too much time. This could be taking you away from managing the business and focusing on business development. Your accountant can assess where your processes can be restructured and streamlined to cut down the time they take and get you back on to the things that bring in the money.

Your team could do with a morale boost

Sometimes you could be doing everything right and going well, but it could mean your staff are overworked. Alternatively, if your business is suffering your staff could be too. Don’t risk giving them the opportunity to move elsewhere. With some advice from your accountant who will have seen similar situations before, you can work together to come up with solutions to raise morale again and keep your hard-working team on your side, ready to take the next steps for the business.

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Westpac is a publicly listed company with a focus on providing banking services through a portfolio of financial products and services. The selected article discloses the “fee scandal”, Westpac has been involved in lately. Predictably, by the bank to attempt to remediate the scandal resulting in reduced profits by the massive cash outflow reduction in profits that was induced by the rise in provisions. The investigation launched by the Royal Commission has negatively impacted Westpac Banking by reputation but also affected the company’s earnings. As a result, Westpac’s stock price plummeted at the time of the investigation at the amount of $23.83, the lowest in 5 years. Despite the falling stock price, Westpac has reported a higher profit compared to the previous financial year (Westpac, 2018). Reports like this lead to many business risks and the integrity of the accounts within the financial statement as it is inconsistent with the practices of generating revenue.

A business risk that is prominent in Westpac is the risk of liquidity due to the significant outflow in economic resources. According to the article, the Royal Commission is imposing a $510 million pre-tax provision on Westpac in regards to the illegal problem. The rule will have a significant impact on the bank’s liquidity as well as the availability for funds. The rising cost from the Royal Commission has dramatically impacted the bank; especially it will increase the strain on the financial position with a “potential repayment” of $297 million back to the customers. Besides, this has also driven a widespread investor pessimism which could affect the bank’s credit rating as well as the ability to raise capital. Instead, to maintain funding flexibility, the bank did not change its dividend policy. By attempting a significant positive outlook, the bank is trying to keeping it consistent, by paying the same amount of dividends as previous financial years. As the risk in liquidity increases, this will also increase the chance of Westpac’s management to manipulate the provision for remediation as a result of artificially improving the financial health of the firm. About the following standard, AASB 137 paragraph 14 – “Provisions shall be recognised when there is the present obligation with a probable outflow of economic benefits that can be reliably estimated”. The provision for remediation of accounts overcharged may not have accounted for all the customer accounts. Therefore, the 2018 & upcoming 2019, the annual report could be subjected to manipulation to increase financial capability. The compensation for the fee also comprises missed earning on interest by the bank. Consequently, the “provision account” signifies a higher audit risk since the calculation of interest is more comfortable to manipulate compared to principal payments. The result could accentuate material misstatement on the provision for remediation account and will increase the chance of providing inappropriate audit opinion (ASA 200).

January 2019

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Not setting up the chart of accounts properly

If possible, try not to use what the bookkeeping software gives you as a default, as it might not be correct or relevant. It’s far more beneficial to build your own, and we can help you with our experience to set them up to suit your industry. Which will give you only the “Chart of Accounts” (codes) that are necessary to track? At the end of the Year, this will make life much more suitable to prepare your tax return. The same is applicable and also essential to make sure the GST codes are correct!

Setting up a ‘Petty Cash’ account in Assets

If you have a “Petty Cash” tin in your office for these is quite a common feature in many offices! – It is NOT an asset, so please don’t set up a “Bank Account” for it! There are more effective ways to allocate monies spent out of your pocket on business expenses.

Not setting up payroll correctly

The Payroll and Employees must be set-up accurately. Make sure you include the employee’s DOB, TFN and ensure that their penalty rates are correct. Make sure also that your linked “Chart of Accounts” are connected right (this includes superannuation, tax and many more). Let us help you and supply a checklist to follow the correct procedure.

Treating Assets or Liabilities as Expenses

You MUST know the difference between a “Balance Sheet” item and a “Profit & Loss” item and remember, your bookkeeper can help you with this. We can be explaining the Profit & Loss – what it means, what it’s telling you about your business).

Not Reconciling Property

It would include ALL bank and credit card reconciliation, BAS reconciliation, payment summaries and superannuation (Bookkeepers are EXPERTS at reconciling!)

The above are just five of the common mistakes, but in reality, there are many more. Lots are commonly made by business owners who are practising small-business bookkeeping OR sometimes offshore companies. These five, in particular, will take a lot of time and effort to fix. They also have the potential to make your bookkeeping file unusable and can cost you a lot of time and money. Especially when you need to take it to an accountant on the end of the year to have your tax returns/financials prepared, or the GST BAS return.
Now for having said that, it’s crucial to make sure you set up correctly and on track from day one. For this reason, This is why we offer training to small businesses and individuals. Depending on your chosen bookkeeping software, we specialise in Xero bookkeeping and Xero Cashbook, Myob Bookkeeping and QBO. If you think your business might benefit from bookkeeping services;

• if you someone to lodge BAS
• if you need a bookkeeping software health check
• training or assistance setting up your books

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In 2006 Xero disrupted the accounting & bookkeeping software industry in being one of the first utterly browser-based software solutions. It is fantastic as long as you’ve got a great internet connection! Our team love to practise Xero bookkeeping, but not all bookkeeping software might be right for your business! Bookkeeping software comes with various pros and cons, so it’s worth investigating before you set up your small business!

If you are self-managing your bookkeeping entry, here’s why we think Xero is an excellent choice. Compare the two cloud software and how to use it, to make life easier for both yourself, your bookkeeper and your accountant!

As you can see, Xero comes with a range of benefits including an app for complete functionality (trumping its competitor “Quickbooks” bookkeeping), automatic reconciliation and the accessibility of being cloud-based. There are many benefits from a BAS agent point of view as well. For example, it offers unlimited users, an open API, and updates don’t need to be updated and installed.

All of our bookkeepers are Xero experienced, which means you are in the very best of hands. Relax when it comes to having your Xero bookkeeping and Xero cashbook managed by one of our trained and professional Bookkeepers.

As a group, we are many times asked the question: what is bookkeeping? A bookkeeper organises your finances & documents to provide a snapshot of how your business is doing. Your bookkeeper will also prepare & lodge BAS, organise payroll, practise double-entry bookkeeping and sort your superannuation; whatever your business might need. You are not just a number to us – your success is significant! That’s why we offer training, bookkeeping and advisory; everything that you need to help your business run smoothly from day one. They say you need a good team around you to succeed, and this is true, and SOS will be your team.

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Online accounting has taken over the accounting software marketplace, with solutions to fit every industry and business type. Companies have made it simple to sign up and import data from your current program. Automated processes cut down on time spent performing routine bookkeeping tasks, and reminders keep you on top of your business.
There are many compelling reasons to enter your books in the cloud using any of the providers listed in our selection of the best accounting software. If you need convincing, we’re here to break them down for you.

Real-time data

Doing your books in the cloud means you’ll never have to wait for a bookkeeper to enter your transactions to know how much cash you have in the bank. Cloud-based accounting software programs sync with bank accounts to pull in individual bank transactions. After you set up rules to match bank transactions to an “Expense” type, cash flowing through your bank will categorise automatically for you.
Real-time data enables you to stay on top of your business’s finances, even if your bookkeeper calls in sick.

Build-in Backups – no worries

In addition to secure encryption and data protection, cloud-based accounting software providers offer free backup. With multiple realtime data recovery Servers in place. Applied SSL encryption and disaster recovery plans, they can far better protect your data than you might be able to.

Always accessible books

Many of the more prominent players in the cloud-based accounting market, such as QuickBooks Online, Wave and Xero, have invested in apps. Once you’ve downloaded an app to your phone and signed in, your data can be updated in real-time because you can access it anywhere at any time.
There are many advantages to that accessibility. If you’re on a job site and a client asks if they have past due invoices, you can check the app instead of calling a bookkeeper at the office. Some apps include built-in payment processing, so if they do have a past-due invoice, you can collect it right there.
Consider employees of project-based businesses that use Programs or Apps with built-in “Projects Functions” or Expenses, such as FreshBooks or “Xero Expenses” Apps. It can make a task very easy for the Bookkeeper and the company.

Automated Processes

Many bookkeepers perform the same tasks on a weekly or monthly basis. The likes of paying rent or electricity, invoicing clients and reconciling the books. The above are examples of functions that can become mindless and repetitive, which means they can also be left out by accident.

Conveniently Cloud-based accounting software will send recurring invoices and send out automatic late payment reminders. The software will also assign bank account transactions according to rules you define. Automating processes cuts down on user errors and forgetfulness.

Saving Time

Accounting and bookkeeping functions are cost centres because they generate no revenue for the business. Reducing the time and resources devoted to them frees resources to use elsewhere. While the automated processes in most cloud-based accounting software save time, the programs give you much more.
Businesses that bill by the hour won’t have to collect paper timesheets and manually input data if they sign up for FreshBooks’s or Xero Accounting project functions. Time tracking in the software, which employees can access through the app, feeds into invoices.

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Here is a list of questions you need to ask yourself and evaluate when deciding if you should hire a bookkeeper.

After thinking about the questions above, it is time for you to decide if you should hire a bookkeeper?

With no doubt, you do need a Bookkeeper if you answered yes to all or most of the questions above (where applicable). Having bad taxes and delaying the process can prove costly for your business.

As a business owner time is of the essence. Your day to day work is a juggling act of planning, doing, managing and delegating (to name a few!) You’re a miracle worker of the highest order, a connoisseur of efficiency.

Yet in all the hustle and bustle you may be falling behind on your books, or maybe you’re keeping up, but the effort is costing you. Is it really worth it to hire a professional to do the job for you? We think so! Here are three benefits of outsourcing your bookkeeping that we can think of right off the bat.

1. Saving time.

What if you could free up hours in your week to be able to focus on delivering quality work and solutions to your customers? Or would you like to do more in an area that you excel in already? With our team of professionals, we can save you time to get to the things that you love to do. In this particular case, the adage really is true, time is money!

2. Having it done correctly.

Your business is your baby. You’ve grown and nurtured it since the beginning. Can you really trust someone else to give it the same attention to detail or quality of care? The answer is yes! Bookkeeping can require a lot of oversight and little slip-ups along the way can cause bigger problems later on. We make sure it’s done correctly the first time, and best of all, we grow with your business.

3. Peace of mind.

That second point brings us to our last one. What if we told you, you could spend the weekend with your family or take a much-needed break without worrying about the stack of paperwork and receipts that need to be organised or data entry that needs to be logged. When you put your bookkeeping in our hands you give yourself peace of mind, and that my friend is priceless.

Well if that has been concluded, it is now time to do some research on what a good bookkeeper is like and how you can find one for your business and we are the one Bookkeepers that is the perfect partner for you.

The post Do I need a bookkeeper? appeared first on SOS Bookkeeping.

Arrange a time to talk to us about your debt. Call now.

Determine your current budget.

Keep a record of all money moving in or out of your company for two weeks—or a month. Need help to create a budget?
Acknowledge any mistakes you may have made and rather than dwelling on the past, though, try to agree on a way forward and correct in making future financial decisions.

Reduce your expenses.

With reducing cost, this is the fastest way to start floating again. Stick to the car or fleet of vehicles you have right now. Do not upgrade right now. Start with the most significant expenses and work your way down. Even the little ones can save you money. TRY THIS: Once you have prepared an initial budget, discuss how everyone, your managers and staff members can reduce expenses or increase the companies income. Involve your staff to show you where it is possible to “save” or reduce costs (money) – you be surprised what they have to say. Seeing one another’s sacrifices can help to pull you together in the fight against debt and staff will feel like part of the business. They may have noticed a saving that could be done for a long time and did not feel like saying anything and talking up. Reduce your utility costs by conserving electricity, water, and heat. Office and or workshop: If possible, move into premises with a smaller monthly payment, or if you have two locations or more – can you combine them.

Analyse your debt and act.

First, determine for each debt the interest rate, the fees, the impact of a late or missed payment, and the possibility that the payment is already overdue.
Examine the wording of the loan or bill carefully, since creditors may be deceptive. For example, one short-term loan service in the United States stated that its interest rate was 24 per cent, when, in fact, it was over 400 per cent.
Next, determine the order in which you will tackle your debts. One approach is to pay toward the debt with the highest interest rate first. Another option is to pay off smaller balances first, since receiving fewer bills each month will likely boost your morale. If you have loans with a high-interest rate, you might benefit from getting a new loan at a lower interest rate to pay off the existing ones. Talk to your bank for some advice. Get us involved to give you a budget or profit & Loss statement to convince your money lender.

Negotiate new payment plans.

Finally, if you cannot meet your obligations, try to negotiate new payment plans with your creditors. You could ask for an extension or a lower interest rate. Some creditors may even be willing to reduce what you owe if you can pay the smaller amount in full right now. Try to make a payment plan with a reduced amount until you get out of the debt. Creditors are humans as well, and it is better to have something slowly than nothing at all! Be honest and courteous in explaining your financial situation. Some people hate doing this; ask us, and we can assist you in this matter.

Put any agreements in writing.

Even if your first request is not successful, be willing to persist in asking for an adjustment if necessary.
Of course, you will need to be realistic as you manage your finances. Even the best plan can fail as a result of factors beyond your control since money often “makes wings for itself like those of an eagle and flies away toward the heavens.
The borrower must realise that until the money is paid back, he is under obligation to the lender. We have an African saying: “If you borrow a man’s legs, you will go where he directs you.” The idea is that one who is heavily in debt is no longer at liberty to do what he would like.

How can you increase your income?

If you sell products, can you buy them cheaper from another source? If you sell products that you are manufacturing, can you make it more efficient to produce, can you find better ways to make it, can you find other cheaper parts without downgrading the product.

The post In Debt appeared first on SOS Bookkeeping.

Membership

Australian Bookkeepers Network is the #1 professional bookkeepers association among Australia’s bookkeeping community. ABN membership provides value to members across Australia by providing technical publications and resources (which are relevant and topical to the bookkeeping industry), networking opportunities, bookkeeping CPE, training and education, and business-building tools to guide bookkeepers at any stage in their bookkeeping journey. As an ABN member, you get all this and more.

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