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Switching to a better deal in the new financial year

For businesses, the new financial year can be the natural time to review your services, service providers and systems and processes. We asked a variety of experts for their advice for making the switch in the 2012/13 financial year.

Peter Langham, CEO, Scottish Pacific

How can a small business owner review their cashflow health for the last year and work out how to improve things for the next financial year?

Start off by reviewing your customer base and determine who paid you the quickest over the past 12 months. Make sure they become the focus for new business for your sales teams for the following year. For slow-paying customers make sure your margins cover the additional borrowing cost to your business and try to match the timing of supplier payments with customer payments. If you sell on credit, monitor your debt turnover. Debts longer than 90 days are a red flag and need to be addressed immediately. Compare your debt turnover levels to the industry average.

Consider how well you are managing your working capital. Take your overall investment in stock and debtors for the past 12 months and compare this against your overall working capital availability (i.e. the total of your overdraft plus any available trade credit from suppliers). If they are well matched on a monthly basis, you know you are on the right track. However, if there is a significant discrepancy between the two, you should consider a more flexible working capital facility.

Effective cash management comes down to:

  • A good level of debt turnover;
  • Planning and prioritising payments; and
  • Having the appropriate mix of facilities with regard to the needs of the business.

Provided you have a sound business model, any business getting these basics right should have a healthy cashflow.

Tim Wolfenden, director, www.makeitcheaper.com.au

How often should you review your office power bill?

My advice is to review your bills regularly – quarterly if you can. If you don’t use a broker service you must stay on top of your bills and regularly check what other retailers in your area are offering. Small businesses in NSW could currently save up to 15 percent on their bills with some retailers. Providers offer cashback, bonuses and shopping vouchers as well as traditional discounts, so it’s worth considering what suits you best before you shop around.

But remember, the electricity market is complex and the details of any deal are important. Always read the small print before you sign:

  • Don’t fall for the ‘sign up now and save’ pitch. Salespeople may put the pressure on but take your time over making your decision
  • Make sure the ‘great rate’ isn’t just a short-term introductory deal
  • Check you won’t be automatically churned to a premium rate when your deal expires
  • If a deal sounds too good to be true it probably is.

Anthony Roberts, Head of Commercial Finance, FlexiCommercial

Looking ahead towards the next financial year, with new tax reforms coming into effect for FY12/13, business owners need to be well informed when it comes to budget planning and decision making.

Upgrade considerations: for small businesses looking to invest in and purchase new office equipment in the new year, you’ll be pleased to learn that you will now be able to immediately write off assets valued at less than $6,500, up from the previous limit of $1,000. It is also a great time to upgrade to new equipment to boost productivity and increase competitiveness.

To lease or buy: for more costly equipment upgrades, some businesses may find it difficult to source the capital upfront for purchasing without disrupting their cashflow. In these instances, leasing equipment could be a beneficial alternative. By leasing instead of buying, you’ll be making convenient monthly payments for the use of the equipment throughout its useful life. These payments may also be tax deductible as an operational expense for business purposes. Deciding on whether to lease or purchase an asset outright will depend on your specific business and its needs – your tax advisor will be the best resource for more information.

Lisa Spiden, director fibreHR

Is it good practice to consider your staff needs one a year rather than waiting until there are problems in the workplace?

Individual’s needs change frequently so it is important that managers are monitoring staff needs on an ongoing basis not just annually. Managers should be having frequent conversations with their staff to provide feedback on their performance, discuss current and future job requirements and monitor/address any work issues. It is always important to balance the needs of the individual and the business to get the most out of staff whilst achieving business objectives.

What will be the key HR challenges for SMEs this coming fiancial year?

The core HR issues that continue to face SMEs is making sure they have the right staff in their business to meet their business objectives (and addressing poor performers swiftly when they are not achieving their targets as this has a huge cost impact on SMEs). Another core issue is compliance, making sure businesses know their legal obligations when it comes to employing staff and ensuring their HR processes and practises are legally compliant to avoid morale, costs and legal issues. Another issue that may face SMEs in the next financial year is in regards to the uncertain political climate, depending on when the next election is held and what party leads the country will have a significant impact on employer obligations.

Mark Troselj, managing director Asia Pacific, NetSuite (PIC) 

When is a good time for businesses to review their software needs? How often should they do this?

Software is a critical component to how your business operates. Like all critical components, you should review on a regular basis. Information must be in real-time and relevant to ensure that your software enables you to meet customer requirements and expectations. True cloud-based applications are version-less, never need upgrading and are always up-to-date. The best are also highly customisable and built as a development platform.

Should all small businesses consider moving things like CRM into the cloud? Why? What should they consider other than cost?

Yes. Cloud is fast becoming the common delivery model for business applications, with customer relationship management (CRM) continuing to be the largest market for software-as-a-service (SaaS). This software delivery model offers simple installation, minimal configuration, easy access from anywhere using a web browser or mobile device, automated upgrades, as well as integrated web-based data backup. Simplicity, cost, increased flexibility, minimal IT investment, scalability, security, anywhere access and never having to upgrade, are some examples of why cloud is such an attractive option for SMEs. SMEs can now access software applications that traditionally have only been available to larger enterprises, due to the way cloud is built, delivered and charged. Managed and hosted by a cloud provider, a cloud application is built to service companies with one to 100,000 employees. You only pay for number of users on a subscription basis. The result: enterprise level functionality with none of the IT overhead.

Greg Bader, Head of iiNet Business (PIC)

What are the things business owners should compare when deciding whether to change their ISP?

Business owners naturally have an eye towards the horizon and when making the switch to a new ISP, will need to factor in not only what the business needs now but also what it will need in three-to-five years’ time. The number of employees, customers and partners will undoubtedly shift over the years and business owners need to select an ISP that is flexible enough to change with the company. When selecting an ISP, it’s easy to get caught up in the speeds and specs and settle for a standardised plan rather than building a solution that’s specifically tailored to fit the business, particularly if the business is experiencing clear growth. While business owners may often wear the IT hat, on top off many others, it’s the responsibility of the ISP to match the technology to the business – and not the other way around. The difference between a good and a great ISP is in the level of consultation and support they provide to customers – and business owners need to choose a trusted ISP that is experienced in working with businesses throughout its peaks and troughs. For small businesses with limited or no internal IT resources, it’s important that if anything goes wrong they can have a single communications provider to call and great customer service allows them to quickly get back to what they do best.

What should be their biggest consideration?

Speed connections, data packages and storage fees can often bamboozle the most tech-savviest of business owners, yet a great ISP can translate how the technology features will allow a business to meet its objectives. Small business owners are experts in running the business and as they have limited to internal IT resources, they shouldn’t need to have an intricate understanding of the technology to confidently make a purchase – and that’s why selecting an ISP that offers quality customer support is absolutely critical.

Rene Sugo, CEO, MyNetFone (PIC)

What should you consider when weighing up a possible move from fixed line to VOIP?

The three most important considerations when making the decision to move to VoIP are:

  • The quality of your internet connection
    A reliable, high-speed internet connection is the key to good quality VoIP. Make sure that you have a good quality internet connection (typically at least a broadband connection) to the office or location where you plan on using the VoIP service. Sometimes getting an additional internet connection dedicated to VoIP is even recommended if you plan to use a lot of VoIP (multiple VoIP lines), or if your current internet is slow or congested.
  • Number portability
    Changing phone numbers is a hassle for anyone, let alone an established business. It’s important to know that you don’t have to lose your phone number when you move to VoIP. Make sure your new VoIP provider has the ability to bring your number to their network easily and that you have the flexibility to port it out again if you ever change your mind.
  • Find a reputable provider
    As with any new service, finding a reliable provider is key. There are a lot of small providers who are resellers or who have minimal equipment and support resources. The key things to look for are a provider with a good reputation and service guarantees who is willing to work with your needs to give you the best value. Ultimately, you want to choose a provider who is big enough to serve you well, and small enough to care about every customer.

John Corias, senior partner, m.a.s accountants

Why are some SMEs nervous about changing accountants?

It’s quite normal for an SME to feel nervous, as it is not a decision that should be taken lightly when it comes to finding a new trusted advisor. However if it is a decision that you are contemplating then you must evaluate your reasons and once a decision is made to change, back yourself and don’t look back. Accountants must earn your trust to help you overcome those initial nerves and make you feel like the only client they have.

Even if you’re happy with your accountant, should you still review their service periodically?

An accountant should never be someone you only go to when you are in trouble with your business. You need to have an ongoing, fluid relationship with your accountant so that the services provided to you change as your business changes. If this is not happening, at the accountant’s initiative, then a review of the relationship and services offered is definitely in order

What sort of questions should you ask when comparing accountants?

When comparing accountants you need to find a firm that you can trust and build a rapport with. You also need to make sure that they are a registered tax agent with the ATO and are members of a peak accounting body to ensure they are up to date with the latest tax laws. Ask if they specialise in a particular industry or if they have other clients in the same field as yours. Perhaps even ask for referrals from existing clients.

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Jen Bishop

Jen Bishop

Jen was the publisher at Loyalty Media and editor of Dynamic Business, Australia's largest circulating small business magazine, from 2008 until 2012. She is now a full-time blogger at The Interiors Addict.

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