5 ways the cloud can boost your business

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Cloud-based software has revolutionised every industry in the world – it’s hard to think of any type of business that hasn’t benefitted from online systems. Here are the top ways you can use the cloud to boost your business performance:

1.     Accounting software

Using a cloud-based accounting system like Xero means no more boxes of receipts, no more hand-written reconciliations, no more printed invoices. It’s also incredibly helpful to see up-to-date data, both for your accountants and for your own business management. At any moment you can get an accurate snapshot of how your business is performing and compare it to any other period. It’s a tool that’s incredibly effective for tracking performance almost in real time.

2.     Document storage

Filing and sharing have never been easier with apps like Dropbox and Google Drive. Our business used to spend time and money sending documents into storage and trying to find the right piece of paperwork. Using an online storage system means you can search easily, file rapidly and retrieve your documents from any device.

3.     Tracking your tax-deductibles

If you travel for your work or spend money on your personal accounts, you no longer need to keep a physical logbook or hold onto faded receipts. There’s an app for that! Scan and retain receipts using an app like Receipts by Wave or Shoeboxed. Use the Driversnote logbook app and your tax-deductible mileage is taken care of completely – and stored securely.

4.     Xero add-ons

Using Xero is a great start, but you can get even more out of it by making use of the add-ons. WorkflowMax, for instance, helps with timesheeting, quoting and task management – perfect for professional services. ServiceM8 is brilliant for builders and tradies because it works from appointment to completion on any contract. Kounta is fabulous for cafes because it speeds up point-of-sale transactions. Whatever industry you’re in, you can streamline admin tasks with a tailored Xero add-on.

5.     Software as a service

Instead of paying thousands of dollars for software packages that are out of date in two years, cloud-based software subscriptions let you pay in instalments and always have the latest technology. With many services, you can also turn them on and off on demand, so you can pay for cloud-based Photoshop when you need it for one month, then not pay for six months, then turn it on again for another month or two at a later date. So simple and cost-effective.

Part of effectively managing your business means reviewing your spending – use cloud-based services and apps to tailor your spending so you’re only paying for exactly what you need and no more.

 

Kiwi builders: the cashflow nightmare

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It’s surprisingly tough being a Kiwi builder. Everyone complains about the price of construction, which has gone up dramatically over the past five years. Yet construction companies are still struggling: from Fletcher Building to Bella Vista to the ex-Hawkins Group, the flow-on effect from large businesses who can’t pay their creditors means the small contract builders get stuck with cashflow nightmares.

How does it happen?

  • A larger, well-established company uses you as subcontractor and you assume that they have the money to pay you – no reason to think otherwise.
  • You spend your money on materials and possibly other subbies.
  • Your big client doesn’t pay you.
  • You’re uncertain about chasing money from someone who’s also potentially going to put a whole lot more business your way, and you’re a one-man-band so there’s nobody else to do it for you.
  • You’re really busy doing your work and your invoicing isn’t top of your priority list; you’re tired at night and you don’t get around to doing the accounts.
  • The client says they’ll pay at a certain time, and you believe them, so you keep working and incurring more costs.
  • You always pay your debts, so you’re the one left out of pocket.
  • If the client or the project becomes insolvent and is liquidated or bankrupted, you may end up dragged into the same quicksand.

Unfortunately we hear these stories often from our new clients – we are experts in construction sector finance and assurance. There are ways to make sure this doesn’t happen to your building business. To protect yourself it takes time and commitment to having protective systems in place. For instance:

  • Changing your payment terms so your outgoings are always matched by money coming in.
  • Being ruthless about being paid. If the money stops arriving, so should you.
  • Treating your invoicing like it’s as important as the actual construction, because it is. Not leaving it until late at night.
  • Chasing arrears earlier and more aggressively.

Turning down work if the client has a history of non-payment. Not working at all is better than working and not getting paid. At least if you’re not working at all, you can go out and quote on jobs with a chance of making you some money.

Keeping our financial information right up to date means we can also analyse where your biggest profits are coming from: Who are your best clients? Which projects have the biggest margins? That helps you to know what work to pursue in future. If you’re a builder who wants to avoid being caught in a cashflow nightmare, we can help.

Introducing assurance services at SME

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SME now has an assurance services division, headed by Shelley Keery. She’s working alongside the SME team to help those in the construction industry – one of our speciality areas – make sure they’re getting full value from their contracts.

Assurance services can help out in several different areas, including:

Subcontractor reviews

Are your subcontractor contracts reflecting fair risk allocation between the parties? Are they meeting the NZS3910:2013 Standard? We review your project subcontractor files and make sure everything is correctly aligned.

Plant and vehicle rates

We can review your plant and vehicle rates to check that additional charges and margins aren’t being introduced – and make sure the plant and vehicles are being used as agreed. Are the rates you’re being charged correct or are you overpaying compared to what’s been agreed?

Payment approvals and bank reconciliations

You need robust controls over cash management and banking activities. Our team will review your policies and processes to highlight any weaknesses that could expose your organisation to fraud or overpayment.

Salary and wage rates

Are the correct salary and wage rates being charged to projects?

We’ll review the proposed uplift percentage applied to employees’ base rates covers paid time off and statutory on-costs and liabilities and no additional costs are being included. We can also review annual remuneration increases to ensure the correct rates have been calculated.

Time tracking software

Checking the ways time-tracking software is used can be time-consuming. We can review and assess that timesheet data is correctly being integrated into your financial system.

Internal audits

Internal auditing is an objective assurance and consulting activity designed to add value and improve an organisation’s operations.  By outsourcing your internal audits, you can reduce costs and free up capital so your organisation can focus on your core business. With our extensive experience, we can delve deeper and deliver more by conducting specialist audits for particular areas in your organisation on an “as needed” basis.

Establishment audits for organisations entering cost-plus contracts

We review the methodologies and processes for costs being claimed align with the terms of the cost-pus contract.  We will also confirm that the agreed margin fairly reflects actual overhead costs and business as usual profit levels.

Monthly claims for cost-plus contracts

We review the monthly progress claim for payment and ensure they are being made in accordance with the contracts and agreements with a focus on cash neutrality for all parties. We’ll look for cost over-runs, ensure reimbursement of costs are project related and do not contain any margin, and the process is transparent to all parties.

If you would like to get a quote on assurance services, email Shelley at shelley@smefinancial.co.nz or phone us on 09 366 7025.

Six simple ways to improve your cashflow

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Small businesses live and die by cashflow – it’s your lifeblood as a business owner. With several Inland Revenue bills to pay around this time, it’s the perfect opportunity to drum up a little extra money. Here are six quick ways to help improve your cashflow:

1. Chase those outstanding invoices

Follow up on invoices that need to be paid – send emails and call your customers and try to get that money in.

2. Change your payment terms

Even if it’s only for new customers, reduce your payment times and think about introducing part payments up front. One of our clients who makes e-learning modules recently switched to 30% upfront, 60% on delivery and 10% on completion of all the changes – she’s no longer waiting for a client to finally sign off before she can get paid after months of work.

3. Make it easy for your customers to pay you

Can you sign your clients up for direct debit payments? Can you accept credit cards? Is there a prompt payment discount that would help get the money in sooner? Consider all the barriers that might prevent your customers from paying you and see if you can go some way to breaking them down.

4. Analyse your regular payments

We’ve all forgotten to cancel subscriptions – it’s so easy to do. Make sure your company isn’t paying outdated subscriptions, paying too much for utilities or paying for online software that’s not good value. Shop around and see if you can cut your costs.

5. Put your prices up

If you can put your prices up, this is the best and easiest way to boost your business’s income. Investigate what your competitors charge and don’t underrate your skills – this is so common with Kiwi business owners. We have many clients who think that because they’re small or their overheads are low, they can’t charge much. We help them see the value they provide, and how rare this quality can be in a small country like New Zealand. You’re worth it!

6. Analyse and forecast your cashflow

Sort out your cashflow before it becomes critical by first knowing where your cash is coming from and what you’re spending it on. Like your personal finance, knowing what you earn and how you spend it is vital for accurate budgeting. Then we can help you create a cashflow forecast so you’re not left floundering when you need to pay your GST or provisional tax. Forecasting your income will help you manage your money and prevent cashflow problems from slowing down the business.  

Get ready for March 31

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As far as your accounts go, this is the biggest month of the year. The end of March is the end of the financial year for most businesses, so it’s time to get everything organised so we can get all your compliance sorted as quickly as possible

What do you need to do to make your accounts run more smoothly? A few simple things will ensure a hassle-free process:

  • Reconcile all your transactions in accounting your system.
  • Make sure you’ve sent out all your invoices for the year.
  • PDF a copy of all March bank statements including loans and credit card statements to us.
  • Gather any hire purchase documents and send them through
  • Are you paying bonuses? There are rules about when they need to be paid in order to claim a deduction this year, so let us know if you’re going to hand out a bonus – including shareholder drawings.
  • Work out the value of the stock on March 31.
  • Have you sold or thrown out any assets? Let us know so we can write them off.
  • Have you purchased any assets? Please ensure you include all details with your records i.e. what was purchased, when and for how much.
  • Consider writing off any bad debts – if you’re really not going to see the money, you can at least make it tax deductible.

So what are we going to do once we’ve got all that information? This is our busiest time of year – collecting, reviewing and analysing all your accounts. Here are a few of the jobs for the SME team at the end of the financial year:

  • Check your accounts are reconciled.
  • Figure out where those incorrectly coded transactions should really go.
  • Make sure you’ve paid the right amount of GST.
  • Run your depreciation.
  • Adjust your profit for non-deductibles.
  • Make sure you’ve completed your annual return and that your shareholdings match up.
  • Decide on a tax strategy for your business – we try to make sure you’re not paying even a dollar more tax than you need to, but also to check you’re not underpaying.
  • Complete your tax return and file it electronically with Inland Revenue.

We know that accounts and tax aren’t the fun part of being in business. But it’s well worth investing a chunk of your time this month in getting them right. It will help us to give you the best going forward. For more details on what you can do, or what we can do for you, give us a call on 09 366 7025.