06 Jun Are your clients ready for EOFY? Important business insights in the lead up to ticking over a new financial year.
For businesses across the country, End of Financial Year is the time to wrap up the year that was and plan for success over the next 12 months.
The end of financial year means change – some good and some that can a bit more challenging. With the right planning and preparation these things can become a seamless transition and benefit both you and your clients.
SmartFee provides an overview of some flavoursome topics right now including superannuation changes, Single Touch Payroll, price reviews, debt recovery or write off and importantly cashflow.
Earlier this year, the government passed its Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018, which was proposed to reduce the depletion of superannuation balances, excess fees and unfair insurance arrangements.
The new changes mean that superannuation accounts with balances below $6,000 that have been inactive for 13 months will be transferred over to the Australian Taxation Office (ATO). It will also require all Australian Prudential Regulation Authority – regulated super funds to report and pay inactive low-balance accounts to the ATO as a new category of unclaimed super money for the first time by 31 October. Self-managed super funds won’t be required to report though they may receive roll-in’s from other inactive accounts.
This provides a vital opportunity for accountants to proactively discuss with clients, the advantages of superannuation consolidation before funds are closed and transferred to the ATO.
Single Touch Payroll
Single Touch Payroll (STP) is arguably the biggest compliance event since the introduction of GST in 2000 and comes into effect on July 1st 2019 for all small businesses. Australian employers will finally have to put away their paper payroll ledgers and excel spreadsheets to swap for a digital system that allows regular reporting of tax and super information to the ATO.
For those that need to implement digital payroll software, it will come at quite a cost and it is more than likely these clients will need further advice around how and what they need to report. Fortunately, the ATO have announced it will now permit accountants and tax agents to act on the behalf of small and medium businesses for STP lodgements, especially those that have been struggling with implementing the new payroll system.
This is an advantageous opening for accountants or tax agents to reach out to their entire client base to ensure they are STP ready and compliant by June 30.
In business, sometimes difficult or awkward decisions need to be made that may impact future ‘sales’. A pricing increase on goods and services can be one of those. Many businesses are concerned about losing customers over a price increase, but one thing to keep in mind is if a business is concerned about price, it may be a question of value for goods and services. Maybe it’s time to consider ‘value add’ products and services? If they are receiving value a small price increase shouldn’t be a concern. Service based businesses often review their client service experience mid-year, to implement improvements to increase sales and revenue for the new financial year.
If businesses are considering a price change on goods and services, it is important to consider if this is consistent with direct competitors and if the client will be receiving the same (if not better) service experience to justify the price change.
Debt recovery or write Off
Debt is in every business, it’s just part of doing business, however businesses can of course have tools/systems and processes in play to manage it. Often, the end of financial year is the perfect time to review how a business is managing their debt and to tidy up their accounts receivable. The Australian Government’s Department of Industry, Innovation and Science, has published key points for consideration to assist businesses:
- Ensure the invoices look professional and are easy to understand.
- Get your client to research each payment method. It’s important to choose payment methods that meet the needs of your clients business finances, as well as their customers
- Get your client to set payment terms and have payment policies in place to help ensure that they receive payment on time. Make sure everyone is clear about timeframes and expectations for payment.
- Ensure your clients are making invoicing a regular part of their business activity. This will not only help with cash-flow, but they’ll be able to keep a track of their clients more easily.
Everywhere we look today, there’s a lot of noise about cashflow, and with good reason. According to Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, 90% of small business failures are due to poor cash flow. In addition, the Australian Taxation Office’s (ATO) Small Business Education Research found almost half of small businesses are under financial pressure within the first year of starting business and this pressure increases in years 1-3.
The Small Business Engagement Research Report 2017 by the ATO found that cashflow is one of the top 3 most sought advice by from businesses provided by tax professionals, along with Business Structure & Business Planning.
SmartFee is the monthly payment option for professional fees. Simply put, SmartFee helps business owners pay invoices over set monthly schedule (3-12 instalments) allowing better cashflow for the SME while the firm is paid in full. With cashflow being a hot topic for Accounting Professionals and SMEs in Australia, SmartFee just makes sense.