Home' Border Enterprise : Enterprise Spring-Summer 2009 Contents 43
or going to a new product line, without knowing
the financial ramifications," he says.
McAskill runs financial health checks over
businesses using a software program which can
also demonstrate how different decisions might
affect both the company's bottom line and cash
Taking a step back from day-to-day operations
and looking at the bigger picture is another way for
small business owners to improve their decision
making, according to Stuart Boyers from SME
Business Accountants, which provides tax and
accounting advice to small business.
He says a quarterly review of the financial
statements with an accountant is one way for
business owners to get a new perspective on their
"What it does is take the person out of the
operations and looking into the business, rather
than working in the business," he says. "It takes
the person out of the role of operations director
and into the role of shareholder. So now they
are wearing a different cap and they gain from
Another benefit of the quarterly review is it
ensures business owners have the most up-to-
date information about tax laws, so that they can
incorporate relevant rebates, offsets or deductions
into business planning.
Boyers says tax rules, such as the 50 per cent
tax break available to small businesses until the
end of the year or the interest-free tax-payment
plans, are examples of tax rules that small business
owners might miss if they see their accountant only
for an end-of-year review.
"About 90 per cent
of business failures
are because of
poor cash flow...
it's not that people
don't make the
sales; it's because
they don't get paid
Stay on target
■ Develop a cash flow projection and ensure
you monitor and update it regularly.
■ Minimise bad debts through an established
■ Establish an accounts-payable policy at the
outset of every credit relationship.
■ Establish a deposit policy for work in
■ Monitor your customers' use of credit and
adjust their credit limits accordingly.
■ Closely manage your invoice process and
■ Re-arrange annual payments such as
insurance so you pay small instalments
frequently. This will help smooth out lumps in
your cash-flow cycle.
■ Select an appropriate source of funding for
your requirements and pay the debt before the
interest kicks in.
■ Use short-term cash surpluses wisely. Don't
keep them in accounts that don't pay interest.
Source: Dun & Bradstreet Australia
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