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From all the Directors and staff at Byfields, we wish you a very Merry Christmas and a happy and safe New Year. We hope you enjoy the time with your families and the season’s festivities.
Our offices will be closed from 12pm on Friday 23 December 2016 and will reopen as normal on Tuesday 3 January 2017.
10 Ways to Help Increase Your Cashflow
As any small business owner knows, maintaining smooth cash flow requires juggling nearly every facet of a business, from staying on top of accounts receivable, to extending lines of credit, to managing inventory.
The essence of successful cash flow management is regulating the money flowing in and out of your business. Increasing your cash flow reduces the amount of fixed capital that you need to support the given level of your business. An increased, consistent cash flow also creates a predictable business pattern, making it easier to plan and budget for future growth.
Here are 10 things you can do to increase your cash flow:
1. Organize your billing schedule
The faster your receivables turn over, the more capital you'll be able to spend on growing your business. To help you bill early and often, put yourself on a billing schedule with an accounting software program as it allows you to act immediately on overdue accounts.
2. Review banking products
Using the right banking transaction products can have the money in your pocket sooner. Review loan interest rates, consider a mobile EFTPOS device or investigate services to take payments over the phone or online.
3. Take advantage of early payment incentives
If your suppliers offer you a discount for paying early (usually within two weeks of receiving the bill), take them up on it. Think of it this way: a 2% on a 30-day invoice is equal to a 24% annual return if the money was invested. If your suppliers don't offer this kind of incentive, ask for it; they may be willing to offer the discount in return for speeding up their receivables.
4. Balance your client base
Many service and professional companies work with certain clients on a project-by-project basis. Look for ways to convert some of these clients to a retainer relationship, where they pay you a set amount of money per month for a certain number of services. You might want to offer them some kind of incentive -- value-added services, a discount -- to encourage them to shift to a retainer. This might reduce your profit margin, but it will help make your cash flow more predictable.
5. Check your pricing
Have your prices kept pace with your rising costs? When was the last time you raised your prices? Many small businesses hesitate to increase their rates because they're afraid they'll lose customers. However, customers actually expect their suppliers to institute small, regular price hikes. Also, be sure to check out your competition on a consistent basis. If they're charging higher prices, you should too.
6. Don't buy all in one place
You can save money by splitting your business between suppliers. Closely examine where you need to pay for added service, and where you can save money by paying commodity prices. For example, you might want to buy your computer hardware from a value-added reseller who can help you choose the right system to meet your business needs, while you can purchase other items -- such as printer cartridges, cables, or off-the-shelf software -- from a mail order catalogue or other price merchant.
7. Form a buying cooperative
Save money on supplies by rounding up a few colleagues and buying supplies in bulk, then divvying them up amongst yourselves.
8. Renegotiate your insurance and supplier policies
Are you getting the best possible deal on insurance, phone service, and other regular business expenses? Review each of your insurance policies annually and get three quotes for each to ensure you're getting the most for your money. Keep a close eye on price sensitive services such as your long distance phone service or your Internet access service. Regularly examine these bills and call around to make sure you're getting the lowest available rate.
9. Tighten your inventory
Overstocking inventory can tie up significant amounts of cash. Regularly gauge your inventory turns to make sure they are within industry norms. Avoid buying more than you know you need when suppliers lure you with big discounts; this can tie up cash. Periodically check your inventory for old or outdated stock, and either defer upcoming orders to use that stock or sell it at cost to improve your liquidity.
10. Consider leasing instead of buying
Leasing generally costs more than buying, but these costs often can be justified by the cash flow benefits. By leasing computer equipment, cars, or other tools you need to expand your business, you will avoid tying up cash or lines of credit that might better be used for running your business day-to-day. Lease payments are also considered a business expense, so the tax benefits are maintained even though the items are not purchased.
High Deductions on ATO's Radar
The Australian Taxation Office (ATO) has issued a warning that it's paying extra attention to taxpayers claiming higher than expected deductions for the 2015-16 income year.
Assistant Commissioner, Graham Whyte said that the ATO's ability to check work-related expense claims has become more sophisticated through use of technology and data analysis.
The ATO notes that taxpayers using myTax to lodge their returns will receive a real-time warning if their claims for work-related deductions are unusually high compared to other taxpayers in similar occupations, and recommends that in future income years taxpayers use the myDeductions tool in the ATO app to record their expenses to avoid the problems of lost or faded receipts.
Specifically, the ATO warns that taxpayers should ensure:
- Their claims are justified;
- They have not already been reimbursed for the expenses by their employer;
- They are getting good advice;
- They have evidence to support their claims;
- The claims are related to their work;
- They know what is and is not deductible; and
- They back up their data.
The Importance of Job Descriptions
As a small to medium business owner or manager you may think that you have a million other things that are more important and useful to do rather than spending time developing job descriptions. However you could not be further from the truth.
Developing job descriptions is essential to the success and efficiency of your business. One of the biggest motivating factors is clarity within the employee’s role. That is, they know what they’re supposed to do and how to do it.
A job description, or position description, is a written statement explaining why a job exists, what the job holder actually does, how they do it and under what conditions the job is performed.
Why have job descriptions
Job descriptions improve an organisation's ability to manage people and roles in the following ways:
- Clarifies employer expectations for employee;
- Provides basis of measuring job performance;
- Provides clear description of role for job candidates;
- Provides a structure and discipline for company to understand and structure all jobs and ensure necessary activities, duties and responsibilities are covered by one job or another;
- Provides continuity of role parameters irrespective of manager interpretation;
- Enables pay and grading systems to be structured fairly and logically;
- Prevents arbitrary interpretation of role content and limit by employee and employer and manager;
- Essential reference tool in issues of employee/employer dispute;
- Essential reference tool for discipline issues;
- Provides important reference points for training and development areas;
- Provides neutral and objective reference points for appraisals, performance reviews and counselling;
- Enables formulation of skill set and behaviour set requirements per role;
- Enables organisation to structure and manage roles in a uniform way, thus increasing efficiency and effectiveness of recruitment, training and development, organisational structure, work flow and activities, customer service, etc;
- Enables factual view to be taken by employees and managers in career progression and succession planning;
- Used in the recruitment process to assist you and the applicants to understand the role and what is required, ensuring that the selected person can properly commit to the job.
How to write a job description
The process of writing job descriptions is actually quite easy and straight-forward. The most difficult part is the Key Responsibilities and Accountabilities section. Smaller businesses commonly require staff and managers to cover a wider or more mixed range of responsibilities than in larger organisations. Therefore in smaller organisations, job descriptions might necessarily contain a greater number of listed responsibilities, perhaps 15-16. However, whatever the circumstances, the number of responsibilities should not exceed this or the job description becomes unwieldy and ineffective.
If you have to create a job description from scratch, use this method to produce the responsibilities:
When putting a job description together there is no standard format used, it just depends on management preference and how the job description will be used.
- Note down in a completely random fashion all of the aspects of the job.
- Think about: processes, planning, executing, monitoring, reporting, communicating, and managing people, resources, time. Many people tend to start off with a list of 20-30 tasks but this needs refining to far fewer points, around 8-12 is the ideal.
- Next combine and develop the random collection of ideas into a set of key responsibilities. (A junior position will not need more than 8. A senior one might need 15.) You will find that you can cluster most of the tasks on your list into a list of far fewer broad (but still specific) responsibilities areas.
- Rank them roughly in order of importance.
- Have someone who knows or has done the job well check your list and amend as appropriate.
- Double check that everything on the list is genuinely important and achievable.
- Wherever possible refer the detail of standards and process to your 'operational manual' or 'agreed procedures' or 'agreed standards' rather than allowing the job description to become a sort of operating manual.
Developing strong job descriptions and keeping them up to date is time well spent. Whether you're a small business or a large, multi-site organization, well-written employee job descriptions will help you align employee direction. Alignment of the people you employ with your goals, vision, and mission spells success for your organization.