Don’t fall off the Financial Management Cliff

The 8 Most Common Small Business Financial Management and Accounting Mistakes

As a business owner, it is important to be involved in all aspects of your operation. However it is impossible to be an expert at everything. Many business owners struggle when it comes to looking after the Financial Management and Accounting of the business.

Some Financial Management and Accounting mistakes could have a significant effect on your business’ growth and adversely impact your bottom line, clog cash flow and potentially leading to damaged reputations with suppliers, customers and staff.

The following are the top eight common Financial Management and Accounting mistakes that small business owners make.

  1. Substituting a Professional Accountant with an amateur.

Employing a competent Accountant will free up your time and will allow you to focus on both the day-to-day managerial aspects of the business, and the long term strategic decisions. Having a good Bookkeeper and a proactive Accountant means you can know their Financial Position at any time. 

  1. Not understanding the importance of Cash Flow

Every business fails when they run out of cash.

The majority of business owners focus on sales and profits, but cash flow is critical to the success of your business.

A company could be profitable but if it isn’t operated efficiently, it could still have negative cash flow.

New businesses may be able to endure negative cash flow in the short-term in hopes of achieving long-term success. Eventually, every company must focus on creating positive cash flow. 

  1. Failing to plan

Few small businesses have a working budget and cash flow forecast. As a result, they make decisions based on guesswork and have no idea whether their business’s actual performance is better or worse than what they expected. How can you know how your business is performing if you have got nothing to compare it to? Not only is it important to have a budget and a cash flow forecast, but you need to compare your actual results on a regular basis. 

  1. Failing to properly reconcile accounts.

Bank accounts, Accounts Receivables, Accounts Payables and Payroll should be reconciled at least monthly, as a cross check to ensure all transactions are accurately and completely recorded. 

  1. Mixing personal with business funds.

One of the most common Accounting mistakes business owners make is to mix their business and personal finances. Keep a separate bank account and credit card for the business and only use them on business-specific transactions. 

  1. Not keeping a proper paper trail

Paper trails still count, but even those can become digitised. However receipts are kept, the point is that they need to be retained. Receipts provide answers to any mistakes or gaps in Accounting Records and many offer additional deduction opportunities come tax time.

  1. Making critical mistakes with Payroll

Payroll is one of the essential components for a small business and any issues with staff payment can cause demotivation and poor productivity as a result. Some common errors are:

  • Not understanding superannuation requirements for contractors
  • Errors in salary sacrifice arrangements
  • Failing to recognise Fringe Benefits and register for Fringe Benefits Tax
  • Paying employees under the wrong Award
  • Failing to ensure that long service or holiday leave is being accrued at the correct rates and leave loading is paid for any annual leave taken, if applicable.
  • Incorrect calculation of overtime and time worked on Public Holidays
  1. Not embracing a Cloud Based Accounting System.

The ‘cloud’ is here and businesses should be on it. The key features of Cloud Accounting are automated bank feeds, automatically recorded recurring transactions, multi-user access so that your Bookkeeper and Accountant have real-time access, and having a better chance of recovering information if your system is damaged.

 If you want to ensure that you avoid making these common Financial Management and Accounting mistakes, contact Nick Pollins today and find out how CloudForce can help you achieve your business goals.

Stop trying to produce more with less:

Employees are a Company’s greatest asset – they’re your competitive advantage.” – Anne M. Mulcahy

While businesses seek to maintain competitive advantage, they may be failing to maximise the potential of their most valuable resource: their employees. This comes down to one key question – do you see you employees as assets or as an expense and liability?

How many businesses could be successful without people? The answer is obvious: none. People are necessary to the success of any business, yet many Managers view their people as liabilities rather than assets.

While most Managers know how valuable their employees are to the success of their business, especially their top employees, they often invest very little in them. Instead, they strive to see how much they can get out of them with as little investment as possible. In an era of short-term decision making, businesses quickly forget the contributions made by their employees and bonds of loyalty have been broken.

Many companies treat their employees as yet another expense and what do most companies do with expenses? They try to reduce them every way possible; keep wages as low as possible; no training that is not necessary; make do with outdated equipment; produce more with less.

If you look at what is happening in the workplace today, a recent Gallup Report shows that less than one-third of employees are engaged at work, more than half are not engaged in their jobs and nearly one-fifth of employees are actively disengaged. That is a long way from the optimum of people feeling valued.

Employees are assets. An employee’s knowledge, attitude and skills provide an organisation with its key points of differentiation. Treating employees as assets means an employer invests to develop and maintain the skills of those employees. They provide generous training allowances and work with their employees to choose courses and programs that not only benefit the company, they also develop the value of the person as a whole.

As a Manager or business owner, one of your top priorities should be the continuous development of your employees as assets. This involves focusing on three areas:

  1. Your employees should be assigned to roles that maximise their strengths.People are unique. They each bring different capabilities to your business. Businesses that leverage the unique capabilities of their employees have a much higher overall capability than those that do not.
  1. Invest in employee training and development. High performing businesses offer training and education opportunities to their employees. Set minimum training requirements and help them identify training areas that would enable them to be more effective. Without ongoing training and education, employees fall behind on industry and management best practices.
  2. Coach your employees. Coaching has emerged as a management approach that replaces many management practices that were prevalent just ten to twenty years ago. Coaching is much more effective than telling or directing. Coaching gets at root issues that prevent employees from reaching their potential. It promotes deep understanding. Managers who coach their employees see faster employee development and overall higher performance.

To ensure your business operates at its peak potential, ensure your employees operate at theirs. Invest in them. Ensure they are in optimal roles. Offer training and education appropriate to their needs and position. Coach them toward best practices and principles that reinforce their training and on-the job learning.

Imagine what your business could accomplish with everyone in the same boat actively rowing in the same direction. Employees who feel valued gladly will compete in the race, overtake the competition, cross the finish line first and end up on the winner’s podium.

For more ways to optimise your business, contact me on 1800 CLOUDFORCE.

The Future of the Australian Job Market

As technology continues to change the way we work, there are a number of questions that need to be answered.

Will there be enough workers in the future or too many? Will more jobs be created or lost? How will the new jobs be created? What sort of industries will flourish? What will be the impact of new technology? Should we be frightened? These are just the beginning.

Australia has been surviving system and technology revolutions for centuries now. It is often forgotten that the fastest decline in jobs came via the tractor and fertiliser pre and post World War II. Once employing well over 30% of the workforce in Australia, that industry now employs less than 3% in 2015. Manufacturing employed 30% of the workforce in 1960. Now, 55 years later, it employs less than 8% due to technology, productivity, consumer saturation and import displacement, yet our standard of living has increased fivefold in 100 years.

Indications for job prospects over the next decade show that the number of employment opportunities will increase steadily. Australia has five big-picture advantages that give it a head-start: world-class resources in land, minerals and energy; proximity to the world’s fastest-growing markets in Asia; the use of English, the world’s business language; a temperate climate; and well-understood tax and regulatory regimes.

The pace of technological advancement in the last 20 years has been unprecedented and that pace is likely to continue for the next 20 years. While automation has replaced some jobs in areas such as agriculture, mining and manufacturing, other areas which are likely to see change in the future, such as the health sector, currently remain largely untouched by technological change.

Australia’s Federal Department of Employment indicates that there will be numerous industries showing major growth by 2020. The top three over that period will be:

  1. Health Care / Social Assistance (projected to make the largest contribution to employment growth in the next five years – increasing by 258,000)
  2. Education and Training (increasing by 142,700)
  3. Professional, Scientific and Technical Services (increasing by 136,600)

It may come as no surprise that these are the industries in which growth is most expected; as such fields play an integral role in the success and well-being of a society.

Health and Social Care Driving Australia Forward

In five years time, Australia will have jobs we have not yet dreamed of. However, the people that we will need the most will be from an already well-known occupation – Nursing.

In the healthcare field, top occupations to look out for include Registered Nurses, Nursing Support Workers, Disability Carers and Aged Carers. In fact, many experts believed age care and associated needs will yield significant job growth, as Australia manages an ageing population. Retirement living, community care and an ageing workforce are just a few of the factors that may contribute to expansion in the healthcare industry and other fields. As Care becomes more digital, the requirement for highly-skilled workers in other arenas will also increase.

Nurses are already in high demand in Australia, with projections showing it is expected to become the fastest growing occupation by 2050. As it currently stands, the Department of Employment reports that by 2017, the healthcare and social assistance industry will become Australia’s largest employer, accounting for one in every four jobs created between now and then.

Education and Training

In the same vein, education and training will be important as society moves forward technologically. Education will always be part of the backbone of a healthy society and its anticipated growth shows that Australia is on the right track. In this field, the greatest number of careers will be Secondary and Primary School Teachers, Tutors, Child Carers and Educational Aides.

However, recent  Department of Employment figures show that they are expecting a below average 12% rise in Preschool and School Education positions in the next five years while the greatest growth area, with an above average 26%, is expected in the Adult  Community and Other Education sector.

This growth is expected to be supported by above average growth in the school aged population, improving strength in the international education sector as a result of the lower Australian dollar and continuing growth in part-time workers and non-teaching staff.

Skills and Technology

Professional, Scientific and Technical Services will see growth across the board. As in years past, skills and technology remain at the forefront of job growth.

Statistics suggest that the following positions will experience an up-swing: sales managers, advertising managers, software developers, programmers, accountants, project administrators, general managers and electricians. Again, technology is influencing these expected outcomes and a need for high-level skills, experience and guidance will be paramount.

The projected high rate of employment growth in the industry reflects ongoing strength in demand for the services of qualified and highly educated workers throughout the economy.

When looking to the future as a whole, Australia’s job market looks somewhat like an hourglass  – lots of jobs at the top and at the bottom, with slim pickings in between. Routine jobs like bookkeeping and factory work are being replaced by technology. More people will be looking for jobs where technology increases productivity, rather than replaces the worker.

Five Ways Outsourcing Can Help You Grow Your Business

Accurate and current financial information is an effective resource for developing businesses. Having accurate financial information allows business owners to obtain resources, grow profitability and make better strategic decisions. However, the process of collecting, compiling and conveying your financial information can be a major strain on resources. Compiling meaningful financial information about your business will often either slow down your business or cost you a small fortune to put together.

Some business owners struggle through their monthly accounting by doing it on their own, devoting precious time counting money when they could be making money. Other business owners will have a dedicated internal Accounting Department for their day to day needs, wasting increasingly scarce resources to count money.

If you are spending too much of your time managing Accounting processes or find your organisation isn’t getting the value it should from financial information, maybe you should consider working with a cost-effective professional firm that specialises in Outsourced Accounting Services.

Here are the 5 Ways Outsourced Accounting Helps Your Business:

1. FREES UP TIME TO FOCUS ON YOUR BUSINESS

In many businesses it is a lack of time that is one of the dominating factors when looking to outsource. You are generally the most expensive resource in your business so you need to spend your time wisely. It is generally your time that is taken up when processes break down, new policies need to be implemented and resources become scarce.

Outsourcing your Accounting gives you the time to focus on your core competencies. What is your business best at? What can you do better than anyone else? What produces revenue and growth? Spending more time on these core competencies and less time on the administrative burdens of your business accounting will give you better results: Results that far outweigh the cost of outsourcing.

2. REDUCES COMPANY OVERHEADS

There are a lot of ways one could argue the cost-saving benefits of outsourcing your Accounting services (especially in terms of driving efficiency) and no one way is greater than the immediate reduction of overhead costs.

When you outsource to CloudForce, you are not responsible for the cost of your Accounting Team’s health insurance, sick time, holiday time, superannuation, long service leave or payroll tax. You no longer have to worry about new computers or desk space and as you are outsourcing to experts, you alleviate the financial burden of managing employees, the drain of bad hires and the training and retraining of employees.

3. MAINTAINS A HIGHER LEVEL OF SECURITY

When considering Outsourced Accounting, the biggest concern for any business owner is the privacy of critical financial information and company data. What you might not realise is that your outsourced accounting department is capable of providing a higher level of security, privacy and backup system than you would be able to achieve in-house.

To maintain 100% privacy and confidentiality, CloudForce maintains your data and financial information on a secure, encrypted and password protected portal, only accessible by authorised individuals who are required to keep all information confidential. All contracts are written and enforced under Australian Law operated under the Australian Privacy Laws for your protection.

4. REDUCE THE RISK OF INTERNAL FRAUD

Unfortunately, internal fraud is more common than you might think. In fact, more than one in five small businesses will have money stolen from them by trusted employees and the average loss is $240,000.

When you partner with an Outsourced Accounting service, you have a third party to audit your money trail. The Accounting service helps by establishing checks and balances that are entirely impartial. These outsourced experts are also highly capable of spotting financial discrepancies through years of experience.

5. REDUCE THE RISK OF INTERNAL FRAUD

Finding and keeping good Accountants and Bookkeepers with years of experience has gotten much tougher over the past few years, including upward pressure on salaries.

With CloudForce you’re partnering with experts in the Accounting field who have access to new applications and the latest technology. What’s more, your work is only undertaken by professional Accountants, not data-entry operators who constantly hone their skills to keep up with the competition, ever increasing the quality of their work.

CloudForce specialises in Bookkeeping and Accounting, so we are the perfect resource for getting your projects done. Everything is taken care of and work is delivered of the highest quality.

There’s a reason so many small to midsized companies are turning towards Outsourced Accounting services. Their cost-effective expertise provides your company with invaluable advice and strategies to drive efficiency while saving your business time and money.

Get in Touch
Ready to speak with a CloudForce expert about implementing Outsourced Accounting services to boost your business’s profit potential? Call 1800 CLOUDFORCE to schedule a free 30-minute consultation.

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