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Larger businesses have a Chief Financial Officer (CFO) on staff. But what can small and medium sized businesses do in this regard?

Clearly, larger businesses can afford an in-house CFO. But it goes beyond an affordability issue: Large, successful businesses also understand how crucial the CFO role is to their business performance…

The CFO keeps an eye on the numbers, helps management create sound forecasts, ensures the cash inflows and outflows are managed well, reports on revenues achieved compared with targets, gives solid information on a range of Key Performance Indicators (KPIs) to the business decision makers, and also helps with decision making.

This is management input that all businesses require regardless of their size. But how can small and medium sized business access CFO input and guidance?

The answer: You out-source it. You get a part-time, out-sourced CFO until you can afford one full-time.

That’s where we can play a role.

Our ‘Insight’ service has been developed with input from our clients to make sure it’s the ideal mix of support services and affordability.

With our ‘Insight’ service we roll our sleeves up and work with you as Your CFO in management meetings throughout the year on: 

• Cash flow – Efficient management of cash flow to provide cash for saving or growth
• Profitability – Identifying key drivers of profit and focusing on these
• Business value – Growing a valuable and saleable business asset
• Structure management – Staying on top of risk and taxation issues

As business owners we all know we need to measure and monitor Key Performance Indicators (KPIs). That is, the handful of numbers that really matter in running our business.

It is also important that you have a ‘KPI dashboard’ to display your KPI targets compared with your current KPI performance. This helps tremendously in monitoring and managing your business’ performance and ultimately hitting your targets.

The targets need to be relevant to your business direction and strategy and the current identified issues.

As your outsourced CFO, we will bring to each meeting that we conduct with you clear financial reports, easy-to-understand KPI information, as well as our commercial experience to interpret the information, make suggestions and help guide your business decision making.

Items we’ll discuss each meeting include: 

• Profit (historical and future)
• Cash flow (historical and future)
• KPIs: A mixture of focusing on Lead Indicators which drive performance and Lag Indicators that measure the outcomes
• Marketing activity and effectiveness
• Operational efficiencies such as work-in-progress or workflow
• Financial indicators such as debtor turnover
• Team efficiences, knowledge management, morale and safety.

By helping with your forward planning for achieving the next period’s targets, and by being a sounding board for you as you strive to meet your targets, our ‘Insight’ service and support gives you a crystal clear focus for what needs to be done to achieve the goals of your business.

Your next step … Contact us for a no cost and no obligation meeting to discuss how we can work with you as your outsourced CFO. We’ll outline for you what’s included and what costs are involved so you know exactly what lies ahead.

An invoice is a legal financial document of which you have to keep records by law. Invoice layout and design can be used as part of your marketing and reinforcement of your business brand - by using your company colours and logo. However, there are certain information that you must include on your invoices to meet the basic legal requirements.

Here are 3 tips in making sure that your invoices get paid quickly.

Make sure you indicate all the important information

Your invoices may be the most important documents in your business; without them, you won't be paid. Your invoices should always include the following information:

1. The amount due. While this may seem obvious, it's essential to clearly display the exact amount of the payment due. Any confusion could lead a customer to delay payment.

2. The payment due date. Along with the amount of payment due, this is one of the most important elements of your invoice. Without it, you can't count on being paid on time and have no real method to track your accounts receivable.

3. The date of the invoice. This shows customers when the grace period for payment begins and gives them a general idea of when the purchase was made.

4. A description of the goods or services purchased. This lets customers know what they're paying for. Without this information, the customer might not know what the invoice is for and not return payment.

5. The customer's information. Include the customer's address, phone number and any other relevant information. When a customer sends you a payment, you'll know exactly whom it's from.

Make it easy for your client to pay you

Indicate how you want to be paid. If you’re going to be paid by cheque, say clearly what the payee’s name should be. Otherwise, clients might make the cheque payable to your personal name, for example, when it should have been paid to your company name. If you’re sending a digital invoice by email, add a link your client can click on to pay you immediately. It’s also important to tell your client when payment is due. Be as specific as possible. For example, a particular due date is better than saying “due in 30 days.”

Make it trackable

Aside from the date, give each invoice a tracking number. If you’re creating invoices from an invoicing or accounting software, it will generate invoice numbers for you automatically. The invoice number makes it much easier to record, monitor, and follow-up on payments. This is especially important if you work with a lot of clients, or have plenty of projects. Nothing drives a payer and payee more crazy than non- acknowledgement of an invoice which has been settled. Give your client peace of mind by acknowledging their payment, and thanking them for the sale. This way, you come off as professional, plus you make them feel that their business is important to you.

Tax season is not a time any taxpayer particularly relishes, and small-business owners are no exception. However, entrepreneurs who play their cards right can ensure tax time is a little less burdensome.

Here are 3 ways to reduce your small-business tax

Maximize Deductions:

Two ways of maximizing deductions are keeping excellent records and receipts and relying on a tax professional for guidance. Here are some key categories to consider for write-offs: start-up costs; office expenses; furniture; education; travel; insurance; memberships; and conferences.

Hire Independent Contractors:

By hiring independent contractors, you won't need to withhold income taxes from their earnings, nor will you have to pay the employer’s share of Social Security and Medicare taxes or provide unemployment benefits. Just make sure that the tax department  doesn't consider your contractor an employee, or you'll have to pay back taxes and fines. Seek the advice of a tax professional before you classify someone as an independent contractor.

If it’s work-related, deduct it

Most people know that you can claim deductions for up to $300 in work-related expenses without having the receipts to prove it, but there are many other juicy deductions available.

CPA Australia suggests looking at the following possible deductions:

• Up to $150 in eligible laundry claims can be deducted without a receipt, even if you’re over the $300 no-receipt threshold.
• Home workers may be able to claim a deduction for heating, cooling, lighting and depreciating your office equipment or professional library, but you need to keep a diary of the hours worked at home for at least four weeks to substantiate the claim.
• Education expenses for study directly related to your field can be claimed as deductions, but not if the study is to help you obtain new qualifications in a different field.

Cloud accounting services—software stored and accessed online—is an attractive option for small business owners. When using cloud accounting software, IT tasks such as version upgrades and data backup are managed by the application vendor.

Being cloud based means that your accounting software is available 24/7, anywhere that there is an internet connection (as well as through applications for smartphones). Your online system can also be linked to bank feeds for up-to-date and accurate syncing with your accounts, which makes for super easy reconciling. The data itself is backed-up off-site, so safer than storing on your own computer system.

Track expenses, send invoices, and everything you need to manage your business finances. With double—entry accounting, you can easily prepare the financial reports that your accountant relies on.

The benefits of a cloud business accounting/bookkeeping:

• Real time, anytime
• Minimises data entry and handling
• See your finances – incomings and outgoings – at a glance
• User-friendly, summarised dashboard screens and no hard-to-understand accounting jargon
• Invoice - Create invoices in a snap. Customize the look and feel of your invoices. Easily record payments.
• Easy collaboration and sharing between business owner, bookkeeper, accountant and any other accounts staff.
• Easily identify trends, opportunities and weaknesses through reporting and analytics
• No software updates required; you’ll always be using the latest version
• Expenses - Enter expenses easily, snap and attach a receipt image, and import from your bank.
• Multi-Currency - Invoice and collect payments from customers all over the world using their native currencies.
• Security - Bank level security, with automatic backups, encryption, and unlimited data storage
• Low start-up costs and no term commitment.
• Reports -Get instant insight into the health of your business with real financial reports.

If above-stated benefits still have not convinced you to switch to cloud accounting, then here are the over advantages:

1. It is more convenient than your trusty ol’ desktop.

First of all, consider your accessibility preferences. Desktop software sits on your computer whereas cloud software can be accessed from anywhere, of course if you don’t have an internet connection then you also won’t have access to your software. Cloud software generally has an on-going monthly fee whereas desktop software will have a set purchase price. Don’t forget though, that you will need to purchase updates for desktop software regularly. Sending backups to your accountant can be a pain, but with cloud based accounting you can simply grant your bookkeeper and/or accountant access so they can log in and do their thing.

2. It integrates with other software and applications.

Bottom line, functionality for your business is key. The beauty of cloud computing is that you can tailor-make a streamlined system to suit the functions and processes of your company through the integration of other software. Be sure to check that you are going to be able to integrate your accounting software with other third-party systems, or other software you may come to require, such as inventory management, CRM systems, task management etc. You don’t want to have to take information from one system and enter it into another. Make sure the systems you’re going to use can talk to one another. 

3. It is easy to use.

Design is a critical part of any solution and although accounting software isn’t exactly exciting the design doesn’t have to be dull. A well designed system should be enjoyable and above all easy to use. 

4. You have dependable customer support.

If you don’t have an IT team behind you, you want to know that you can contact a technical support, or at least support articles, when you need.  You can get support the way you want it—phone, live, chat, email, and social media. Plus a video training library!

One of the most important aspects of running a small business is successful bookkeeping. It keeps everything organised, transactions remain on record (in case evidence is needed or you simply need to refer to an old transaction), and makes filing tax returns a lot easier.

The following tips should help you maintain affective bookkeeping so that you can spend your real energy on running the business and making profit.

Always keep hard copies of receipts and invoices

Computerised statements are great and easier to manage, but as with anything digital, unless you periodically check on files, a simple computer bug can wipe them put in one fell sweep. If you computerize your accounting you may not need to keep as much paper, but you still want a paper trail in case something happens to your computer records or you need the backup information for a transaction that is questioned at a later date. Having all your files in the computer also enslaves your business to dependency on electricity – so what to do when the lights/current go out?

Always print your invoices when you issue them and put them in a folder organised into months then invoice number order. You can get an A4 ring binder and hole punch from Staples (and don't forget to keep the receipt!).

Do the same for any invoices you receive yourself, either via the post or sent in an email. Make sure you pay them before you file them away though! If you use a receipt pad for cash payments from clients then you can do the same if they're large ones or leave them in the book if there's a carbon copy. Don't lose the books!

Update records dailly

You should keep your books and records updated on a daily basis. At the end of every day go through, collect receipts, add up the sums and keep your books clean. In some businesses waiting a week to update your records can be very hectic. You may misplace something, forget that you put some cash aside or you may make errors due to the large amounts of data. If you wait months or even the whole year you’re setting yourself up for big trouble. If you want to have a firm grasp on the financial stability of your business then daily bookkeeping is a must.

The bottom line is to keep everything organised and at hand at the end of every day; so it 3 months you will still have everything organised and at hand.

Keep separate bank accounts for personal and business expenses

Open a business bank account and use it to pay your business expenses. Don’t use it for personal expenses, and don’t use your personal bank account to pay for your business expenses either.

Have a separate bank account for your business and for your personal spending and keep the bank statements in a ring binder. Most definitely, keep file of the business statements, but it also makes good practice to keep your personal ones in case you get confused. This practice will save you precious time, money and energy.

Cash flow is truly the lifeblood of any small business. So when tight credit starts choking your cash flow, it's important that you act right away to remove the blockage and get your business's cash flow flowing again. Here are five quick things you can do to improve your small business's cash flow.

To help get that money in the door, here are three tips for improving your cash flow:

Invoice promptly.

Many small businesses have a regular billing routine such as invoicing clients and/or customers at the end of the month - leaving money that could be sitting in their bank accounts improving their cash flow in someone else's pockets! Instead of waiting to invoice, bill right away when the job is completed. If your business involves billing for hours of time, invoice twice monthly instead of once to get some of your money coming in sooner.

Require a down payment on projects so that your customers fund the project, not you. Ask for partial payment up front - ask for a percentage of the bill to be paid before the work starts. For instance, you might charge 40% of the bill as a retainer or proof of good faith with the remainder due on completion of the task. Or break the bill into thirds, asking for a third before work starts, a third while the project is ongoing and a third upon completion. It's a common business practice and one you should be taking advantage of if you can.

Manage accounts

Follow up on overdue accounts. Managing debtors and having good credit policies will keep your cash coming in. Have a collection process in place, and follow through. When your customers delay payments, they're using your cash. You need to ensure that you're being diligent in collecting from your customers.

You may also be able to negotiate longer payment terms with your suppliers. If you can get payment from your customers before you pay your suppliers, you will have zero out of pocket.

Reduce overheads

Think about reducing staff overtime and controlling overheads. Make your business more environmentally friendly and you may reduce costs such as power and water bills and minimise wastage. Remember to clearly communicate your policies on these items to your staff.

If you earn money, then you have to pay tax. Unfortunately, Australians pay more tax than almost any other nation in the world. With one of the highest taxing systems in existence, it’s small wonder that we all dread the annual tax season. However, there are legitimate ways in which you can minimize the amount you have to pay – and without running the risk of being accused of tax avoidance.

Here are some tips:

If it’s work-related, deduct it

Most people know that you can claim deductions for up to $300 in work-related expenses without having the receipts to prove it, but there are many other juicy deductions available. Look at the following possible deductions:

• Up to $150 in eligible laundry claims can be deducted without a receipt, even if you’re over the $300 no-receipt threshold.
• Home workers may be able to claim a deduction for heating, cooling, lighting and depreciating your office equipment or professional library, but you need to keep a diary of the hours worked at home for at least four weeks to substantiate the claim.
• Education expenses for study directly related to your field can be claimed as deductions, but not if the study is to help you obtain new qualifications in a different field.

But, non-work related expenses can be deductible, too. A partial or full deduction can be claimed for a wide variety of non-work related expenses, including:

• Fees paid to a tax agent for the preparation of your tax return.
• Management fees paid to a financial planner, provided the advice relates to income producing assets.
• Bank charges or, in many cases, interest payments on funds borrowed to purchase investment assets.
• Donations to charities or professional association or union membership fees.

Depreciation has its advantages

Small businesses can obtain significant tax benefits by keeping their depreciation schedules up to date. Small businesses can obtain significant benefits by being able to write off any depreciating assets costing less than $1000, and by pooling assets over $1000 and depreciating them at accelerated rates. Businesses can also claim immediate deductions for certain pre-paid expenses.

Interest and Expenses on investment property

Prepay the interest on your investment property so that you can claim the deduction now. Regardless of whether the property is positively or negatively geared, rental property owners can generally claim deductions for advertising, bank charges, body corporate fees, cleaning, council rates, electricity and gas, gardening, insurance, interest on loans, land tax, lease preparation expenses, legal costs, pest control, postage and stationery, property agent fees and commissions, repairs, secretarial and bookkeeping fees, security patrol fees, telephone calls and water rates. You may also be able to write off the cost of certain buildings, depreciating assets and borrowing costs over time.

With an organized and simplified work ethic, you can expect to have more time to get things done and stay focused on producing better results for your business.

Many businesses spend an unnecessary amount of time each day browsing through email, checking social media accounts, and doing a number of irrelevant online tasks. Others overload themselves with so much work that they have no form of organization, and still manage to get nothing productive done throughout the day.

When you strip your daily activities and organizational structure down to the basics, you’ll get a whole new perspective on what’s really important. This allows you to focus on getting some real progress done during the day, which will you to have more time for yourself and other activities without suffering from stress or procrastination.

Below are 3 tips on how to better organise your business.

1.    Clear your desk

A clear work environment reflects a clear mind. Try stacking up all those loose papers and trash as much of it as you can. It’s amazing how many expired coupons, brochures, junk mail, and other clutter you accumulate on your desk in a week without clearing things up regularly.

Try going paperless and keep many of your documents saved on a thumb drive or a portable hard drive. Whether you work at home or in an office, make sure you schedule 5 to 10 minutes out of your day to tidy up your work space and throw out anything unnecessary.

You can also do with this with your computer desktop as well. Your desktop is just as much a part of your work environment as your actual desk. Get rid of any shortcuts to programs that you don’t regular use. Make sure that you always save documents into categorized folders, instead of directly onto your desktop screen. Also, make sure you close any open tabs or windows that you’re no longer using on your Internet browser or desktop. And finally, remember to regularly delete any unnecessary files and programs you might have off of your computer’s hard drive. Not only will this make you more productive, but it will also make your computer run faster.

2.    Get your files in order

Nothing reflects disorganisation more than the inability to locate important physical documents when you need them. Actually, when you are at this point, you know in your mind that you badly NEED to get your files in order.

Get help! If keeping your files and papers organised seems like too much of a challenge for you to handle yourself (because there is a good chance of that happening), hire someone (or just get a family member if you don't want to have to pay) to help you and even advise you on how you should arrange all things business. Make sure everything is easily accessible, so if a customer asks a question over the phone or in person, you can quickly grab a file (already knowing where it is) and show it to him/her, instead of him/her waiting, watching you scramble through all your bundles of files.

3.    Have an organisation schedule.

Do an organisation check every 3-4 days, week, or 2 weeks at max. Go through and check that everything you need is where it is supposed to be, and that everything you don't isn't taking up valuable space. One way to check is to have a friend or co-worker ask where a certain paper is. If you can't find that paper within 7-10 seconds, you may need to rethink your strategy.

To increase profits you either need to generate more sales or you need to cut costs. In many cases cutting costs is easier and is almost certainly quicker, however many entrepreneurs do not know how to make the most out of every opportunity. Here are some common, but solid ways to save in your business

1. Pool your purchasing power.

Find other small-business owners--not necessarily home based--and team up to buy supplies in bulk. You'll save money on the cost of the materials, as well as the shipping. Don't limit group-buying partners to noncompeting companies: "Coopetition" (cooperation among competitors) is one of the hot trends in business today. Consider group purchasing with businesses that offer the same or similar services as you but that perhaps target a slightly different market or geographic area. Be sure all agreements are clearly spelled out in writing. Clarify upfront who will actually make the purchase, how the goods will be delivered, when the others will reimburse the purchaser, and how any problems with quality or service are to be handled.

2. Use independent contractors

Employers generally don't have to withhold or pay any taxes on payments to independent contractors. But be very careful that your independent contractors fit the definition provided by the IRS or you could face penalties.

3. Don't overlook any tax deductions

In addition to being able to deduct a portion of your rent or mortgage interest and utilities as a business expense, you can also deduct a percentage of various office  maintenance expenses. Check out your Revenue Service's website, or check with a knowledgeable tax advisor for more information.

4. Commission your sales force

Overhead, salaries, incentives, training costs, fringe benefits and expenses add up when you're hiring your own sales representatives. Contracting independent manufacturers' sales reps, paid on commission only, is less expensive-and often equally effective.

5. Insist on prompt payment

Don't let your clients cost you money by keeping what they owe you in their bank accounts. Set and enforce your credit terms, and take prompt collection action when appropriate. Remember that time is money. When you can save time, you're saving money.

Collect early from clients, then let that money sit in your account earning interest as long as possible. Why let the clients’ payments earn interest in their accounts, when the collections can be in your business account and thus earn interest for you?

Every business, no matter it's size, whether a start-up or a long established business, should be analysing their business to get an understanding of performance, potential growth or roadblocks that may be holding the business back. 

Now, you could simply look at a profit & loss statement and analyse variances, but let's be honest, too many numbers makes it difficult to understand what is actually going on.  You also need to take into account other non financial factors that contribute to the performance of your business as well. There must be an easier way. Guess what? There is!!

With the introduction of Spotlight Reporting, the lastest Xero Network Parter, we are now able to offer you our new Enhanced Reporting service, designed specifically to help you to get the most out of your investment in Xero. With our Enhanced Reporting service we are able to provide you with management reports that give you a quick and easy to understand representation of your business in a flash. Just look at this report below, this has to be better than looking at numbers! 

How to get these reports.

Good news, we are including a combination of these reports into our existing Advisor, AdvisorPlus and Platinum plans at no further cost. 

If you don't currently subscribe to either of these plans, or you have your own Xero subscription and are interested in benefiting from this Enhanced Reporting service, then we are pleased to say that we have also developed plans built specifically for this purpose. Stay tuned, we'll be releasing more details regarding these plans on our website shortly. If you can't wait, please contact us and we will be happy to discuss this with you in more detail.

Further Example Reports

Below are further examples of the easy to understand reports that are available through our Enhanced Reporting service, either included within our Advisor plans and above, or as a stand alone service.

Understand your Profit & Loss

Analyse the Balance Sheet

Measure other Non Financial factors

A number of different Non Financial measures that influence your business are able to be analysed.

Easily visualise your performance against target KPI's

More Information

If you like what you see and would like to find out more, then contact us now for more information.