Is your business ready for hybrid working?

Is your business ready for hybrid working?

The Covid pandemic has changed the way we work and ushered in a new era of hybrid working – but is your business ready and able to offer this mix of on-site, off-site and remote working?

When businesses were forced to close down their physical offices and workspaces, this brought technology to the fore. We’ve seen an increased use of remote working, video technologies and cloud-based business solutions – and people have got used to this ‘working from home’ ethic.

Hybrid working aims to take the best elements of remote working, and to mix these up with the undeniable advantages of working together as an in-person team. If your business is going to embrace this approach then it’s likely that employees will be spending some time in the office, some time at home and some time out and about, or at client’s worksite – but to do this, your company is going to need to provide the right environment for a hybrid approach.

The key question, then, is whether your business is ready to embrace hybrid working…

Setting the foundations for hybrid working

Any change in work patterns requires a certain amount of innovation from your business, plus the basic requirements of being able to deliver both remote and in-person working.

To get your business ready for hybrid working, it’s crucial to set the right foundations, and this means planning ahead, and keeping an open mind to the benefits of this new approach.

To prepare for a hybrid approach, your business must:

  • Have the necessary cloud infrastructure – if your employees are going to work from home, or while out on the road, you need your key systems to be in the cloud. Old-school applications on an office-based server are just not going to cut it for hybrid working. Cloud-based accounting, project management, CRM and workflow tools give you the flexibility to work from any location, with one ‘point of truth’ in the cloud for all your customer information and business data.
  • Have clear systems and processes – when people are working in different locations, at different times, it’s important to have some consistency around how the work is done. To achieve this you need well-defined operational systems, where each task has a pre-agreed process – so the whole team knows when, how and where to carry out their day-to-day work, record notes or raise expenses and bills etc.
  • Trust your employees to self-manage – when employees are no longer based in the office five days per week, it becomes more difficult to have management oversight. With some people home-working and some out at other locations, you need to place more trust in their ability to self-manage and work to a high standard. Increasing trust and reducing micro-management is key to making a hybrid approach work for the team.
  • Have performance reporting in place – trusting people to work hard is a given, but you do also need to know if the business is remaining productive. Having some form of performance reporting in place is a good idea, so you can review areas like productivity, staff attendance, sales targets and revenues generated etc.
  • Empower people to get their jobs done – when you can’t all be in the office for the traditional ‘stand up team meeting’ it can be hard to build team spirit and keep your employees motivated. Try having regular Zoom/Microsoft Teams huddles, where teams come together to talk through the work for the week, and can raise any issues. And also think about distance or in-person social events too, so people can let their hair down and enjoy being part of your business family.

Preparing for hybrid working

The companies that fully grasp the hybrid working opportunity will be more flexible, more scalable and ready to react to new challenges and changing environments. So, there’s real value in forging ahead with this new approach.

The dangers of discounting

The dangers of discounting

You might think that offering discounts is a great strategy to use when sales are falling. In reality, you’re likely to be more profitable by holding your price and accepting the reduction in sales volume than discounting a product.Let’s look at an example to show the difference in your gross profit if you discount your selling price by 10% compared to holding the price at $100 and accepting a 10% reduction in sales volume.

If sales are currently at 10,000 per annum at $100 per unit, your sales will be $1,000,000. With costs of $60 per unit, your gross profit is $400,000.Dropping the selling price by 10% might mean sales remain constant at 10,000 with a selling price of $90 per unit, so you’ll achieve $900,000 in sales. Costs remain at $60 per unit, so your gross profit will be $300,000.

If you were to accept the 10% drop in sales but hold your price at $100 per unit, your sales revenue will still be $900,000, but you’ll only have to pay for 9,000 units, so your gross profit will be $360,000.

In other words, holding your price and accepting the drop in sales results in a reduction in gross profit of $40,000 compared to a $100,000 reduction if you offered a 10% discount.

If you look at it another way, you can work out the increase in sales needed to maintain your original $400,000 gross profit if you offer a 10% discount. To calculate the increase in sales required, first calculate the gross profit for each unit: $90 selling price – $60 cost per unit = $30 gross profit per unit. This gives us a gross profit percentage of 33.33% ($30 gross profit / $90 selling price * 100).

To calculate the required increase in sales, multiply the previous sales volume figure by the gross profit percentage. To maintain your $400,000 gross profit, you’ll have to sell 13,333 units (10,000 units * 133%).

Discounting is simply not the answer – it’s a race to the bottom! Look for other alternatives to respond to a drop in sales – starting with what you can do to delight your customers so they keep coming back!

“When you realise how much you’re worth, you’ll stop giving people discounts.” – Karen Salmansohn

If you’re experiencing a drop in sales, get in touch so we can work with you to identify the reasons for this and explore alternatives to offering a discount.

Leveraging Your Technology

Leveraging Your Technology

The decisions you make in your business are only as good as the data you use to make them. The more accurate and up to date your data is, the better your decisions will be. Leveraging your technology will provide you with accurate real-time data to make more informed decisions in your business.

Processes and systems drive your business, so it’s important to ask yourself if all of yours are clearly documented and up to date? Some processes may be followed simply because they always have been. Although other processes may have evolved over time, your documentation might not necessarily reflect this.

Using technology to streamline your processes and systems increases efficiency in your business, saving time, money, and reducing stress. You’ll also prepare your business for the future, making it more sustainable, scalable, and saleable.

Leveraging your technology can help you to:

  1. Make your data accessible from the cloud, allowing you to view real-time data and make decisions on the go.
  2. Reduce human error and increase productivity by automating repetitive tasks and workflows.
  3. Track your expenses and load them directly to your accounting software simply by taking a photo.
  4. Minimise double handling and increase efficiency by integrating your apps.
  5. Collaborate with your team regardless of where they are.
  6. Save the time and money needed to travel by using online meetings.
  7. Induct new team members seamlessly with clearly documented processes.
  8. Monitor your inventory in real-time, reducing inventory days and freeing up cash.
  9. Store customer preferences to personalise customer experience, increasing customer satisfaction and retention.
  10. Make your business becomes scalable, with systems in place to allow the business to grow without the wheels falling off.

Using technology to its maximum advantage will help to improve your business. However, implementing these changes can often be overwhelming. Let us know if we can help you leverage your technology!

GoFi8ure 2020 Christmas e-book

2020 is finally almost over… we made it!

We’ve put together a short eBook (attached), providing some light reading, reflection activities (to harness any positives from 2020) and a bangin’ cocktail recipe; we hope you enjoy it!

Our office will be closing from the 24th December with skeleton crew back on the 6th of January.

Hopefully, you plan to take some time off to relax and reset for the New Year.  We’re looking forward to working together in 2021, whatever it brings.

Click here to read our 2020 Christmas e-Book

From our bubble to yours, stay safe and have the best break you can!

Take care,

The Team at GoFi8ure

How will the Trusts Act 2019 impact you and your Trust?

How will the Trusts Act 2019 impact you and your Trust?

Trusts are a common thing in New Zealand and the reasons for setting them up vary due to each person’s unique situation. For those of who you are not aware, The Trusts Act 2019 comes into effect on 30 January 2021. Changes to the act aim to make trusts more accessible. There are increased compliance obligations on trustees and duties that ensure greater transparency for beneficiaries.

The changes to the act include:

  • The age of majority (the default age that a person can inherit if not specified) changes from 20 to 18.
  • The maximum duration period of a trust is extended from 80 years to 125 years
  • Obligations on trustees to keep certain information about trusts
  • A mechanism to request the court to review the decisions and actions of trustees
  • Flexible powers for trustees to manage trusts.

Trustee duties

Trustees must be aware of their obligations and duties under the law. These are set out in the Trusts Act 2019. There are mandatory duties that are essentially to ensure trustees take their role seriously. These are:

  • A trustee must know the terms of the trust
  • A trustee must follow the terms of the trust
  • A trustee must act honestly, and in good faith
  • A trustee must act for the beneficiaries of the trust
  • A trustee must exercise the powers they have for a proper purpose.

Optional duties for trustees – The act sets out optional duties that can be changed in the trust deed. If this happens, the advisor must point this out to the settlors.

Duties regarding information keeping and sharing – These duties are regarding the information trustees must keep, and the information that must be made available to beneficiaries (including of trust assets, trustee decisions, and changes to the trust).

The additional compliance duties for trustees within the act may mean that existing trusts are no longer cost effective. Greater transparency may also require trustees to disclose information that they previously did not share.

Get in touch to discuss how the changes impact you.

What Covid taught us…

Things were certainly thrown up in the air when COVID-19’s lockdown happened in March. For many businesses, the first, most visible effects of the pandemic quickly created a challenge to their operating and business models. A lot of things came into question, from how and where employees worked, to how they engaged with customers and how their business accounts and compliance were managed.

COVID-19 kicked GoFi8ure’s agility and response plan into place, allowing us to become more agile in how our GoFi8urine’s worked together and how we worked with our clients. Thanks to the amazing cloud online tools and software available, our team of superheroes were able to continue consistent service delivery without any impact on our clients.

Our success in working remotely during this time, whilst meeting client deadlines and requirements, was thanks to our tested systems and processes which allowed us to work with agility and resilience without disruption. It is because this experience, that we made the decision to not renew our Upper Hutt Headquarters lease.

Making the decision to not renew our Upper Hutt premise was hard to make because we love our Hutt Valley community and poured our heart and soul into branding and creating the Hutt office, however, it gave us an opportunity to offer more flexibility, versatility and remote working to our GoFi8urines. We would like to assure all our clients that the upcoming changes will not cause any disruption to our workflow or delivery of services. In fact, it will allow us to work closer as a team and continue to provide superlative accounting services for our clients nationwide.

Like the sound of being more agile in your business? GoFi8ure offers a range of services that can help ensure your business is agile and responsive, so you can remain competitive. Get a quote today or contact us to find out more.

If you ever need anything, our GoFi8urine’s are just a call or email away!

Kind regards

Your dedicated GoFi8urines

 

Don’t neglect your Balance Sheet

Don’t neglect your Balance Sheet 

Business owners tend to focus on increasing profit and driving down costs. While this is important, you must not neglect your Balance Sheet. Profitable businesses can and do go broke; your Balance Sheet is a key indicator of how solvent your business is.

Here are four key areas of your Balance Sheet to focus on:

1. Profitability.
There are seven ways to grow your business and increase profit:

  • Increase customer retention
  • Generate more leads
  • Convert more prospects
  • Increase transaction value
  • Increase transaction frequency
  • Reduce variable costs
  • Reduce overheads

Focus on one or two to increase the profitability of your business.

2. Cashflow.
Improving your cashflow helps build a cash war chest to help your business weather any future downturns. Remember, cash is king and the more cash you have in your business, the stronger it will be.

Focus on strategies to reduce your Cash Conversion Cycle; that is, the time your cash is tied up in your stock and accounts receivable. Negotiating better payment terms with your suppliers to preserve cash for longer, reducing inventory or work in progress, and minimising debtor days will all help build a stronger Balance Sheet by increasing your cash on hand.

3. Solvency.
Maintaining solvency is essential to the success of your business. There are two components of solvency:

  • The ability to pay your debts as they fall due; and
  • Having greater assets than liabilities
    To determine whether you can pay your debts as they fall due, calculate your current ratio by dividing your current assets by your current liabilities. A ratio less than 1 means you don’t have enough assets to pay your debts as they fall due and the business is insolvent.

The second part of the test is calculated by taking away your total assets from your total liabilities. A negative result means your business is insolvent and requires a short-term cash injection.

If your business is currently insolvent, action must be taken immediately to remedy this.

4. Shareholder Advance Accounts.
If your Shareholder Advance Account is a current asset on your Balance Sheet, the shareholders have taken more out of the business than what they’re entitled to. This is incredibly risky as, in the event the business fails, liquidators can call up this loan and your personal assets will be at risk. To avoid an overdrawn Shareholder Advance Account, revisit your personal budget to reduce the amount of drawings you’re taking from the business and stick to a regular amount each week or month.

It’s important that you secure any advances made to the business so that, in a liquidation, you stand a higher chance of getting your money back.

Have you been neglecting your Balance Sheet? Take some time to review your profitability, cashflow, solvency and Shareholder Advance Accounts. If you need help calculating your ratios or understanding what your Balance Sheet is telling you, get in touch!

Common GST errors will impact your business

Common GST errors will impact your business

Most GST errors are unintentional. Even so, they can have a big impact on your business as they may result in you paying too much, or not enough, GST.
Whether you file the GST return yourself or whether you use our services, it’s useful to understand some of the most common errors that can happen. So, here are some tips to help you avoid the most common GST mistakes.

Before filing your GST Return

If you file GST on Payments basis you will be filing GST based on when you have paid or received money, so it’s important that you:

  • make sure that all transactions going through your bank account have been allocated to the correct expense or income account in your accounting software
  • reconcile all bank accounts and credit cards to verify that the actual bank account balance matches the balance in your accounting software. This ensures that you haven’t missed or duplicated any transactions.

If you file GST on Invoice basis you will be filing GST based on the date of your customer invoices and supplier bills, so you need to:

  • make sure that all customer invoicing has been done in your accounting software for the GST period
  • enter all supplier invoices that are dated in the GST period into your accounting software as bills to pay
  • record any cash purchases and income
  • reconcile all your bank accounts (as above) to make sure that you have captured all income and expenditure
  • Enter any expense claims to account for any business expenses paid with personal funds

Preparing your GST return

Prepare your GST with plenty of time to manage cash flow obligations ahead of the GST payment due date. Set aside time to review the GST reports. Have a look through the detail or audit reports to double check their accuracy and to ensure that you haven’t inadvertently claimed GST on something that shouldn’t have GST in it.

Here are some of the most common GST errors we see:

  • Are you GST registered? Sounds obvious but you can’t add GST to your invoices or claim GST on purchases if you are not GST registered. You have to be GST registered if you carry out a taxable activity and your turnover was $60,000 or more in the last 12 months or will be $60,000 or more in the next 12 months, or if your prices include GST.
  • Bank fees, interest and credit card commissions, Stripe and PayPal fees (financial transactions) and donations are not subject to GST
  • Check overseas purchases — many well-known online vendors are now registered for GST in New Zealand, however many of the smaller overseas vendors may not be. Always refer back to the invoice or receipt to verify.
  • Payment gateway services may have GST on their equipment rental fees but not on the commission that they charge on every transaction. Again, refer to their invoice to verify.
  • Business insurance is claimable as a GST expense (but not your own perosnal or life insurance). Check with us if you’re not sure what’s claimable.
  • If you have bought a vehicle or asset you can claim the GST on the purchase but make sure you haven’t double-claimed GST on both the purchase and the repayments. Talk to us when you are purchasing assets such as cars and equipment to ensure they are treated correctly from an accounting perspective.
  • Check the GST registration of any contractors you pay and check that you have not claimed GST if they are not registered.
  • Check that transfers between bank accounts do not have GST included.
  • Although your business may purchase goods and services for private use, you may not claim GST on these.

Remember, you need a valid tax invoice for every business purchase over $50.00 including GST. Depending which accounting software you use, there may be other checks and balances to undertake to ensure the accuracy of your reports.

Once you’re happy with the accuracy of your return, lock the GST period so that any changes to a filed period are restricted or tracked (some software packages will do this as part of their finalising and filing process).

Filing your GST return with Inland Revenue

Filing due dates are usually the 28th of the month following the end of the GST period. The exceptions are at Christmas – November GST returns are due on 15 January – and at the end of the financial year – the March GST return is due on May 5th.

Many accounting software packages now include the option to file direct to IRD through their software which saves a lot of time and duplication of entry and reduces the chance of human error.

In all cases you will need an IR login as paper returns are a thing of the past now and filing needs to be done online.

Paying your GST to Inland Revenue

If you are manually entering your GST information into the IRD’s online form you can also choose to pay your GST by direct debit. If you want to wait until the due date to pay it then remember to select the correct date at the time.

Otherwise you can easily pay GST through your internet banking. Ensure you select the right tax type (GST), enter the correct IRD number, and the correct filing period so that it is applied correctly.

You can also go into a Westpac branch and pay any of your taxes with their tellers.

Most New Zealand businesses have the option to file GST on a monthly, 2-monthly, or 6-monthly basis. Unless you are diligent about putting money aside for GST and keeping your records up-to-date, a monthly or 2-monthly GST cycle may suit best.

In summary

There are many more potential issues with GST, but these are the most common and easily fixed.

If you understand your GST obligations, use accounting software and keep on top of your bookkeeping, you will find that managing your GST can be a relatively simple process.

Ask us for advice, if you are unsure about your GST position.

Understanding your numbers to improve your results

Understanding your numbers to improve your results

Understanding your financial reports, or knowing your numbers, is critical to business success. It allows you to make better business decisions, measure the impact of those decisions, take corrective action where necessary and, ultimately, enjoy better results.

By understanding your financial reports, you’ll:

  • Know if your business is growing or shrinking
  • Discover trends in your business and be able to respond accordingly
  • Compare your actual results to your expectations
  • Identify areas of strength and weakness in your business
  • Understand the value of your business
  • Make better decisions

How to maximise results from your reports:

1. Ask yourself, is the data ‘clean’? This means that all transactions have been coded correctly and bank statements have been reconciled. Do you have monthly procedures to ensure your data is clean?
2. Inspect what you expect. You must have goals for your business, or targets you expect to achieve. Inspect your financial reports each month to see if you’re on track to achieve your expected targets.
3. Know which reports to use. Each report tells you a different story. Your Profit and Loss Statement measures your income and expenses; the Balance Sheet measures your assets, liabilities and net worth.
4. Conduct both horizontal and vertical analysis. This means comparing the current period with previous periods (horizontal analysis) and calculating each item as a percentage of a base item (vertical analysis). For example, comparing this year’s Balance Sheet with last year’s and calculating each expense item as a percentage of Sales on your Profit and Loss Statement.
5. Understand the difference between ‘as at’ or ‘for the period ending’. An ‘as at’ report, such as the Balance Sheet, shows the balances at the end of a specific period. A ‘for the period ending’ report, such as the Profit and Loss Statement, shows the results over a period of time.
6. Choose the correct date range. Ensure you correctly specify the start and end dates for the period you want to measure. Choose a month end date, such as 30 June instead of 15 June, to ensure all income and expenses have been coded and reconciled for the period.

By understanding the fundamentals behind your financial reports, you’ll know more about your numbers and be able to use that information to make better decisions. Whether you want to grow your business or increase efficiency to free up your time, we can help you interpret your financial reports and set goals for improvement.

Get in touch for our complimentary Guide to Your Financial Reports to learn more.

The importance of Tax planning for Shareholders

The importance of Tax planning for Shareholders

calendar-plannerPaying Tax is something you are likely to see as a necessary (but not hugely enjoyable) part of running your business. But are you doing enough to plan your own personal Tax liabilities?

As a Shareholder, you will pay your income Tax annually on a self-assessment basis. But there are plenty of ways to make this a less costly and onerous task to complete.

Planning ahead when it comes to Tax

By taking a forward-looking approach to your own personal finances, and working with an experienced Advisor, you can start to minimise your Tax costs and maximise the value you enjoy from your own earnings and company profits.

Working closely with us helps you:

  • Know your future Tax liabilities – by looking at factors like expected dividend payments, pension provision and additional income to determine what you will owe.
  • Set up an annual Tax plan – with provision for when payments should be made and when to set aside the funds needed to pay your income Tax bill.
  • Make use of any Tax reliefs – so you can claim the relevant reliefs and Tax initiatives that are available, to bring down the amount of your overall Tax bill
  • Maximise your earnings – by taking your earnings in the most efficient ways and managing your own personal wealth in a proactive manner.

Talk to us about your personal Tax planning

If you are a Shareholder looking to achieve the best results from your earnings, come and talk to us. We can review your Tax situation, create a robust Tax plan, and make sure you are getting the maximum value from your business earnings,