What Your Cash Flow Forecast Says About Your Business

Cash management is one of the biggest obstacles standing in the way of small business success. Having the right amount of cash on hand at the right time is key, it can determine if you’re able to expand internationally or whether you can even afford to pay next month’s salaries.

Luckily, there are plenty of tools available to help business owners stay on top of their cash flow. A cash flow forecast is one such tool and can be used to diagnose the health of your business. Below we’ve written a list of many of the insights that can be gained by simply looking at your cash flow forecast.

Your cash flow forecast reveals…

1. Your level of financial security

Your cash flow forecast shows exactly when – and how much – cash is going to enter and leave your business’s bank account over the next week, month, or year. Knowing this, you’ll be able to predict the security of your business’s future cash position and see whether your financials are in good shape or whether can even continue operating at all.

2. Whether or not you can afford to make certain business decisions

With an accurate cash flow forecast, you can estimate the impact that different scenarios, such as hiring a new employee or a 10% sales decrease, will have on your business. Maybe you’ll have to wait until next year to hire that operations manager or maybe you’ll need to downgrade your software subscription to avoid burning up the cash you’ll have on hand.

3. Early warning signs that your business should prepare for cash shortages

A cash flow forecast can tell you well in advance when your business will be strapped for cash. You’ll be able to see if you need to improve the efficiency of certain business areas or if you should take out a loan or find ways to cut costs.

4. The accuracy of your budgets

Your cash flow forecast will allow you to compare the budgets you’ve estimated for sales and outgoings with the actual amount of cash that flows into and out of your business. By doing this, you can see if your budgets are accurate, or if you need to go back to the drawing board and make some changes to your budgeting strategy.

5. How realistic you’re being about invoice due dates

If you’re unable to pay your employees or suppliers at the end of the month, you should make sure money is coming into your business as expected. A cash flow forecast tells you when cash will actually enter or leave your business rather than the date the bill or invoice was raised. If you find less cash in your account at the end of the month than expected, you may need to do a better job of chasing your clients to pay their invoices.

Consider adding an ‘expected payment date’ to your invoices in addition to their due dates, which will show a more accurate picture of when funds will actually hit your bank account. Cash flow forecasting apps such as Float for can link to your accounting software (i.e. Xero) allowing you to factor expected payment dates directly into your cash flow.

6. If you should seek out where you can reinvest excess cash

You can also anticipate when your business will have more cash at its disposal than usual. With a cash flow forecast, you can know exactly when these cash-rich periods will happen and explore what you can do with these excess funds, such as reinvesting in other areas of the business like employees’ salaries or buying more inventory.

7. If your business is on track to meet its goals and objectives

A cash flow forecast will allow you to see if your business can meet expectations in sales, client growth, turnover, etc. If you’re not on track to meet these goals, your cash flow forecast can also flag the specific areas of your business that need attention – maybe you’ve overspent on marketing & advertising or maybe you need to cancel that weekly fruit basket delivery. Your cash flow forecast will be able to help you identify these areas.

8. If you need to improve your business’s financial planning

Even if you’re developing a revolutionary new product that will change people’s lives, your business’s financial situation cannot – and should not – be ignored. If your cash flow forecast needs help, it’s time to consider investing time to formalise your business’s financial planning efforts with things like cloud accounting software, better cash flow forecasting, or management reporting. Seek advice for your accountant or bookkeeper, who will be able to advise you what strategies are best for your business.

This is a guest blog by Float, for more information visit floatapp.com.


Do I Need Business Interruption Insurance?

As a small business owner, you’ve probably got an adequate level of business insurance to protect the equipment you use, loss in terms of theft, and damage as a result of fire or other natural disaster. But have you considered business interruption insurance? Too many small business owners fail to think about how they would manage if their business couldn’t operate temporarily resulting from a disaster.

Business interruption insurance, often referred to as business income insurance, covers you in the event you suffer an interruption or interference to your business following an insured event which results in a reduction in gross profit. An example of this may be a furniture manufacturing business suffering damage caused by fire. The business not only suffers a material damage loss to contents and equipment (covered in general business insurance), but also suffers a large financial loss due to a reduction in trade. In many cases, this loss can exceed the initial material or physical loss. This is where business interruption insurance comes in.

Business interruption insurance is made up of several key elements such as;

• The indemnity period
• The sum insured
• Increased costs of working

The key focus of this blog is around the indemnity period. The indemnity period is the period of time that a business is interrupted. The indemnity period commences from the date the insured event has taken place through to when the business is back up and running to the same level is was prior to the loss or the indemnity period on your insurance policy expires.

When discussing the indemnity period with your broker, the following points are crucial to ensuring you are adequately covered;

• Dependency on the premises and or location
• The availability of another premises that suits your businesses requirements
• The availability of machinery and equipment to replace the damage items

The above points can have big impacts on the time it may take to get the business back up and running to the same level it was prior to the loss. It’s important to consider these when choosing a business insurance package that suits your needs. Unsure what you’re covered for? Contact the insurance brokers at Carbon Group for a confidential chat. Call us on (08) 9446 8588.

Tips-on-Lodging-Tax-Return Carbon Group Perth

Tips & Tricks To Lodging Your Income Tax Return

We’ve closed the books on the 2016/17 financial year, so now it’s time to lodge your tax return. But before you sit down to complete your lodgment, it’s important you’re armed with the correct information to get started.

Do I need to lodge a tax return?

If any of the following apply you, are required to lodge a return:

• Resident individuals whose assessable income is greater than the $18,200 tax free threshold for the income year
• If you had tax withheld from your employment income
• If you were carrying on a business
• If you paid PAYG instalments during the year and wish to claim back the tax
• A minor who received income from dividends or distributions greater than $416 and had franking credits or PAYG withheld
• The ATO has requested you to lodge a return

When is my 2017 tax return due?

If you are lodging your return yourself (without the assistance of a tax agent) then your deadline is the 31st of October

If you use a tax Agent like carbon Accounting, your due date can be extended. Please contact our office to check your due date as every tax payer is different.

What documents do I need to complete my tax return?

To help make preparing and lodging your tax return easier and quicker, set aside some time to gather the following documents:

• Payment summaries
• Bank statements
• Dividend statements
• Buy and sell documents for investments (i.e. shares or property). This is needed to calculate your capital gains or losses
• Income and expenses for your rental properties
• Details of any foreign income
• Private health insurance statements
• Details of any work-related expenses/deductions you have incurred throughout the year

What expenses can I claim for my tax return?

If you’ve incurred any work-related costs that you haven’t been reimbursed for, you may be able to claim them in your tax return. It’s important to be able to verify costs if requested, so ensure you have invoices, receipts or log books at hand.

• Vehicle and travel expenses
• Clothing, laundry and uniform expenses
• Gifts and donations to deductible gift recipients
• Home office expenses
• Interest, dividend and other investment expenses
• Self-education expenses
• Tools and equipment
• Other expenses such as tax agent fees, union fees, income protection*

These are just a guide so if you want further clarification please make an appointment with Carbon Accounting to discuss your individual affairs.

What expenses can’t I claim on my tax return?

The ATO may be on the lookout for red flags that identify people who are claiming costs which they shouldn’t be. We’ve outlined some of these below:

• Travel between home and work – this is considered private
• Car expenses – the exception to this is if you are carrying bulky tools or equipment that is required for your job and you are unable to keep them at work
• Everyday clothes – i.e. suit, shirt and tie is generally not deductible even if your employer requires you to wear them. Clothes need to be job or company specific in order to claim the deduction.
• Self-education expenses that does not have a directed connection to your current employment i.e. if your new qualifications will enable you to get a better more high paying job then these expenses are not deductible
• Private use of your phone or internet
• Meal expenses – where you are not required to work away from home

There are several ways to lodge your tax. MyTax is a great place to start. If you get stuck, we’re only a phone call away. If you’d like assistance with your tax return, make an appointment with Carbon Accounting to discuss your individual affairs. Call us on (08) 9446 8588.

Understanding-Super-Guarantee-Thresholds-for-Different-Industry-Awards Carbon Bookkeeping Perth

Understanding Super Guarantee Thresholds for Different Industry Awards

If you’re responsible for paying wages, then you’ll be fairly clued-up when it comes to super. The Super Guarantee Act requires employers to provide sufficient super support for their employees. Employers are obliged to contribute a minimum percentage (currently 9.5%) of each employee’s ordinary time earnings to a complying super fund or retirement savings account. Superannuation has to be paid at least quarterly and is due by the 28th day after the quarter end.

Super Guarantee Threshold

Generally, if you pay an employee $450 or more (before tax) in a calendar month, you have to pay super guarantee on top of their wages. If your employee is under 18 or is a private or domestic worker, such as a nanny, they must also work for more than 30 hours per week to qualify for superannuation guarantee regardless of their earnings.

You have to pay super for some contractors, even if they quote an Australian business number (ABN).

You have to pay super no matter whether the employee:

  • Is full-time, part-time or casual
  • Receives a super pension or annuity while still working – including those who qualify for the transition-to-retirement measure
  • Is a temporary resident – when they leave Australia, they can claim the payments you made through a ‘departing Australia superannuation payment’
  • Is a company director
  • Is a family member working in your business – provided they are eligible for super guarantee

What Are The Exceptions When It Comes To Paying Superannuation?

Some industry awards have a reduced superannuation threshold from the standard threshold of $450 gross of ordinary times earnings per calendar month.

Restaurant Industry Award 2010
(Section 30.2 – – Employer contributions (b) The employer must make contributions for each employee for such month where the employee earns $350.00 or more in a calendar month.)

Hospitality Industry (General) Award 2010
(Section 28.2 – Employer contributions (b) The employer must make contributions for each employee for such month where the employee earns $350.00 or more in a calendar month.)

For Employers under the Fast Food Industry Award 2010 the usual threshold of $450 gross per calendar month applies.

If you are classified within these industries, would like help with updating your payroll software with these limits, or would like some superannuation guarantee assistance, please contact our bookkeeping team today on (08) 9446 8588.

why-do-some-businesses-stop-growing-Carbon Group Perth

Why Do Some Businesses Stop Growing?

The goal of most businesses is to grow, whether that be in terms of sales, profit, number of locations/sites, or client base. Whilst some businesses are quick to blame the current economic situation for a slowdown in growth, there are several other factors that should be assessed first. Below we’ve highlighted three reasons why some businesses stop growing.

How Much Do You Value Your Customers?

Customers should always be the number one priority, but as your business grows, it’s often the case that business owners lose focus on their customers. Whether that’s servicing existing ones or finding new ones. Too many businesses get caught in the day-to-day routine and forget that without customers their business wouldn’t exist.

A great way to keep in touch with clients is to offer them the opportunity to give you feedback on a regular basis. This helps business owners and management to keep a check-in with the services they’re providing, making sure it’s in-line with expectations. Add short surveys to your monthly emails, or even better, set-up monthly or quarterly face-to-face meetings. Although technology has replaced the need for some personal interaction, it’s still important to meet in person where possible. After all, you’re not the only business that provides the service/product that you offer, so personal interactions help to differentiate you from your competitors. Another great way to assess the service you offer is to do a mystery shop. Call your office and see how the phone is answered, or get a friend to visit your store and see how they’re greeted.

High Overheads and Manual Processes

When was the last time you assessed the systems you use within your business? What may have worked fine when you were small won’t necessarily work, or be the most efficient method, as you expand. It is quite common to see admin staff support sales, with the salesperson generating an order and manually typing it up, only for admin to re-type the same information into the accounting software to generate an invoice. This makes it hard for growth as every new sales person needs a new admin assistant. A small business may think they don’t have the funds for technology that automates these processes, and the team may have the capacity to be doing tasks manually. However, with the influx of cloud applications, an online system is more affordable than you think. The time saved by removing the manual tasks can be better spent elsewhere, or even save expenses by reducing the number of administration staff required. Get started with making your business run more efficiently, by speaking to a cloud integrator about integrated business management solutions. Imagine telling your admin staff they no longer need to manually re-enter 100 sales invoices every day. Sensational for morale!

It Takes Money to Make Money

How is your cash flow looking? Whilst you’re growing your business, it’s crucial to keep on top of getting paid, so that you have the cash to make investments and action opportunities as and when they arise. The way money flows through a business can make or break growth. You need money coming in on time to pay for outgoings. There will always be a lag between being paid and paying but a successful business controls this. No matter what payment terms your suppliers issue, such as cash on delivery (COD) or 180 day pay cycles, the core principle remains the same. The earlier you are paid, the greater your cash flow. The more cash you have on hand, the easier it is to invest in expanding your business. A major challenge for businesses when they become larger is the volume of invoices and debts as well as the manual work involved in collating the information.

Our advice? Consider better software to control and automate invoicing and debtor management. Not only will this cut-out hours of manual administration work as previously outlined, but you’ll have access to sophisticated dashboards and reports that help to understand your business performance. Reports are great for identifying areas of weakness that can be resolved before they cause too much of a barrier to growth for your business.

what-is-invoice-financing Carbon Group Perth

What Is Invoice Financing

Should you be using invoice financing as part of your business operations? Read on to find out more about invoice financing and how it can drive your business forward.

Invoice financing describes the process of asset based lending, giving companies finance while they wait for slow-paying receivables. Invoice finance allows businesses to borrow money based on sales assets, creating a revolving line of credit. This credit helps business owners to keep on top of cash flow, pay employees and reinvest in company operations without adding any extra liabilities. You are also able to reduce finance costs quickly and easily by making a payment and re-drawing money as and when your business needs it.

Put simply, invoice financing uses the money owed to you to finance your business in between client payments. There are many great reasons to use invoice financing, such as:

  • Your credit line is tied to your sales, meaning you won’t add any extra debts to your account
  • You won’t need to offer any property as security to finance your business
  • Your personal assets are separated from your business
  • No weekly/monthly repayments
  • Your line of credit grows as your business does, allowing you to do more when the time is right

As well as being tailored to your business needs, invoice financing gives your business greater flexibility and allows you to manage your cash flow more effectively.

Invoice Financing in a Digital Space

As technology has advanced there has been a rise in the use of cloud accounting and online invoice financing. With helpful features and real time data, cloud-based technology has revolutionised how businesses manage their accounts and finance.

Now that we are all better connected, it is much easier to keep on top of payments and payees using apps and cloud storage online. Working in real-time, these types of online accounting software programs, such as Waddle, Xero and MYOB allow you access to automated funding that instantly updates your line of credit and live bookkeeping that keeps an account of your transactions.

As we enter a new financial year, now is the perfect opportunity to spend time reviewing your business plan. Carbon Group Perth.

Get Your Business Off To A Great Start This New Financial Year

The 2016-17 financial year seemed to have been and gone before we knew it. How did your business perform? Did you reach your targets? Now that we’ve started a fresh year, it provides the perfect opportunity to dedicate time to reviewing your business plan and performance. Below we’ve highlighted just a few topics to get you started. Spend time on these now for the best possible financial year ahead!

Help With Cash Flow Forecasting

It’s important to plan the year ahead to ensure that your business has the cash to sustain it throughout the course of the year. A cash flow forecast can give you a bit of insight into where you think your business can be, whilst giving you an idea of when those big bills (BAS payments, insurance renewals, tax payments etc) are coming. With that information, you can have an idea of what your business can potentially spend money on in the new year, whilst giving you an idea of how profitable you will be. Online accounting software such as Xero, MYOB or QuickBooks provide a great basis for a cash flow forecast, since data is based on actual figures, available in real-time.

What Is The Ideal Structure

You have so many options as a business owner, with regards to the right business structure for you. The start of the new year presents a great time to reassess your goals, and see if the structure you are currently in is still appropriate for you. Throughout the lifespan of a business, there is often a need to move from one structure (such a sole trader business setup) to another (like a company). This is especially important now, as recent changes to tax legislation has made it less costly to move between structures. Often these changes lead to protection of your personal assets, as well as reduced tax obligations so it’s worth considering your options.

Re-Address/Write Your Business Plan

Every business owner should have goals. Your business plan can help you map a path to achieving those goals. Your goals don’t all have to be financial in nature. Maybe you are looking to spend more time at home, or even exit the business in the near future. A good business plan will not only address your goals, but also give you guidance when making big decisions throughout the course of the year. Assess what’s worked this past year, and what could do with some attention going forward.

We hope that’s got you thinking about your business plan, and given you a few topics to consider straight away. Spend time with your team to gain insights from difference perspectives on your business performance and what you’d like to achieve going forward. If you need any assistance, our accounting team are just a phone call away. Contact them for a complimentary consultation today, on (08) 9446 8588.

Gay pay gap Carbon Group

The Gay Pay Gap

You’ve heard of the gender pay gap, but what about the gay pay gap?

While the phrase ‘end of financial year’ has a variety of meanings for those in the financial services industry, it has only one for those in HR – salary reviews. There is much to consider when reviewing the remuneration of your employees including performance, skills, experience and the market.

It has also been well publicised in recent years that there is a significant gender pay gap in the workforce. The current pay gap sits at 16% and has been hovering between 15% and 19% over the past 20 years. But perhaps less publicised is what is referred to as the ‘gay pay gap’.

Haven’t heard of the gay pay gap? Here’s a rundown.

A 2015 study by the University of Melbourne found that sexual orientation affects wages in the workplace with homosexual men being paid up to 18% less than their heterosexual equivalents. However, when looking at the gay pay gap in women, the findings showed that homosexual women were the ones to earn a higher wage. More specifically, lesbians earned at least 33% more than their heterosexual counterparts. The gay pay gap is not an issue isolated to Australia with studies conducted in Europe and the US finding similar results.

In summary, the studies found that if you are a heterosexual male then you will be paid the highest wages, followed by homosexual males and homosexual females, with heterosexual females sitting in at last place with the lowest wages.

So, what does the gender pay gap and the gay pay gap have to do with remuneration reviews? Unfortunately, the evidence is clear that there is a bias in the workplace (whether it is unconscious or not) in relation to employees based on their gender and sexual orientation. It is important for HR and management to consider this when undertaking salary reviews and to do their part in bringing about equity to the workplace.

Further, if this wasn’t reason enough, discrimination based on sexual orientation or gender is unlawful in Australia and no organisation wants a messy discrimination case on their hands!

Carbon Bookkeeping's EOFY tips to get your bookkeeping in order

EOFY Tips To Get Your Bookkeeping In Order

In most cases the financial year runs 1st July to 30th June the following year. This is the time when the businesses close their books for the year and then start afresh for the new financial year. To enable the business to close their books, most bookkeepers have the unenviable task of dotting all the Is and crossing all the Ts. Each business needs to have their books reflect the exact financial position at year end.

Monthly Procedures that can help at EOFY

With the end of financial year nearly upon us, planning ahead can assist with completing all the tasks required. When you have great procedures already in place at the end of the month and end of quarter, this really helps burden the load throughout the year rather than have it all to be completed at once. By introducing these procedures monthly, it means that a lot of items have already been checked come end of year. Here is a list of some items to check on a monthly basis so there are no surprises that pop-up end of year:

• Statement Balances – All bank accounts can be checked every month, including credit cards, back to the physical statement. Online accounting software with bank feeds is fantastic, but it’s still worth double-checking.
• Wages Payable – Confirming wages paid every month matches with payrolls generated in the online system.
• General Ledger – Ensure all transactions have been coded to the correct account along with the correct GST Coding.
• Manual Journals – Complete all end of month journals as required including accruals and prepayments.
• Review Balance Sheet – Look for any movements and ensure all items are coded correctly.
• Profit and Loss – Check through the report to notice any consistent patterns. Any significant variances are to be checked and corrected if necessary.
• Inter Entity Accounts – Ensure these are reconciled and match in both bookkeeping software accounts.
• ATO Liabilities – check the amounts agree with the ATO Portal.

Procedures for EOFY

Once a final check as above has been completed on a monthly basis, the task of finishing the end of year checks becomes a bit easier. All of the above need to be checked over again for the entire financial year as well as the following:

• Confirm that the trial balance from the last financial year matches with the year-end balance per your accountant as they will often make minor adjustments to your file.
• Acquire the bank statements so they can be added to the work papers to show all bank balances and credit cards are correct, allowing easy verification for your accountant
• Ensure the payment summaries match up with the wages figures on the profit and loss and the monthly/quarterly activity statements during the year.
• GST Reconciliation – ensure that this is all matched up and reconciled for the year, matching the monthly/quarterly activity statements and reconciling with any adjustment between cash and accrual accounting.
• Have all invoices and bills been entered so a list can be completed to see how much money is owed to creditors and how much is still to be received from debtors.
• Confirm all current year activity statements are completed and lodged in order to ensure that any necessary adjustments are included in the final BAS
Once these checks have all been completed, the work papers are compiled which confirms all balances at the end of the financial year.

This saves time for your accountant as the checks have already been completed for them and they can concentrate their efforts on proactive advice for your business. Happy accountants + happy bookkeepers = happy businesses. Feeling a bit overwhelmed? Contact Carbon Bookkeeping if you need assistance, on (08) 9446 8588.

Carbon group bogan bingo 2017 raising funds for Vinnies WA CEO Sleepout

Carbon Goes Bogan To Raise Funds For Homelessness

In the busy and stressful time of EOFY, many business owners and workers need an excuse to let their hair down and have a laugh, and that’s exactly what they did at our annual Bogan Bingo charity night on Friday!

Half game show, half party, this is the third year that Carbon have hosted the event. And it gets bigger and better each year! We had 150 bogans join us at The Rise in Maylands for a night full of laughs, jokes, air guitar competitions, biggest bogan competitions, and of course, some bingo. Jokes aside, there was a serious side to the night, since the purpose was to raise funds for Vinnie’s CEO Sleepout. Carbon’s co-founders, Jamie Davison and Nathan Hood are due to sleep outdoors on 22nd June with other CEOs in Perth, to raise awareness of homelessness; an initiative run by Vinnies since 2006. It will be the third year the guys have participated, and they have raised a total of $26,422 between them to date.

Friday’s event is about to boost that up massively, since we raised more than $9,000 on the night, through ticket sales, drink and food sales, raffles, auctions and door games. Big thanks to our clients who donated gifts as prizes for our raffle: Grazie Gifts, Life Ready Physio, Pigeonhole, House of Honey and Viva Photography.

Vinnie’s spokesperson Stephanie Rullo started the night by reminding the bogans of the work that Vinnies do, and how their donations would help.

“Vinnies was absolutely overwhelmed by the support of the community that attended the Bogan Bingo night put on by Carbon Group. Both Jamie and Nathan have been supporting Vinnies and the CEO Sleepout, with this being their 3rd year.”

On any given night in WA over 9,500 people are experiencing homelessness. Of these people, 25% are under the age of 18 – an alarming statistic! Growing unemployment , domestic violence, family breakdown and housing stress are major causes, proving that homelessness can happen to anyone at any time. “Support from leaders like Jamie and Nathan is truly vital in ensuring we can turn the light on homelessness and continue to help people experiencing homelessness in our community.”

Carbon’s Nathan Hood acknowledged the support the community showed on the night. “It’s fantastic that we are able to leverage from our clients, family and wider networks to promote these events and make them so successful. Without their support, we wouldn’t have so many people attending our events and therefore raising the amount we have reached.”

Thank you to everyone who attended for making it such a great night, we really value you supporting Carbon’s events and making them a success. If you couldn’t make the night, there is still chance to donate through the donation’s page on the CEO Sleepout website. Our Bogan Bingo night will return next year so keep an eye out for information on Carbon’s event page early next year!