Financial Management
8 Bad Money Habits to Kick – Part 2
David Balwin
CPA | Accountant | Business Advisor
Welcome to Part Two of four blogs in which we are looking at 8 money habits business owners should make sure are NOT occurring in their business.
So far we have looked at:
- Spending without a Budget
- Carrying a Balance on Credit Cards
Read on for this blog’s money habits not to have.
Not Monitoring Interest Rates
Whether it is your investment rate or what you could get on a borrowing refinancing it pays to continuously monitor borrowing and investing prices. No one wants to lose money if they could have got a better investment rate – and no one wants to pay more than they have to for debt. With profit margins reducing and costs of running businesses rising it is good management to stay on top of interest rates and trends which impact both your business and personal finances.
Not properly insuring for income protection and disability
Anyone who runs their own business and supporting themselves needs to consciously assess the risks of not properly insuring for loss of income due to injury or illness. If something prevents you from working for a few weeks or more, proper insurance could be the difference between tightening the businesses expenditure for a while until you are back on your feet and closing the doors. Business insurance coverage can be expensive with defined conditions. Do your homework and shop around for the best value for money for your price range. Remember, with the benefits of being your own boss comes the responsibility to ensure proper business coverage.
If you wish to find out more, follow our Blogs or contact Balanix Solutions for a free one hour consultation.
8 Bad Money Habits to Kick – Part 1
David Balwin
CPA | Accountant | Business Advisor
Generally, I am seeing and hearing slight improvement in business confidence now and for the future. This is a great time to take stock of money habits and put in place improvements to strengthen your business. Over four Blogs, we will look at eight money habits business Owners/Managers should make sure are NOT occurring in their business.
Spending without a Budget
When in business, there is a tendency to focus on sales/billable hours and customer service, without always keeping an eye on what it is costing to provide these services and products. It is vital, to ensure success of a business, to operate with a budget. Business owners need to plan and monitor for the money going out as much as for the money coming in.
Businesses owners need to forecast and track expenditure to understand and optimise where the money is going. Businesses owners also need to account for the non regular spending and perhaps put a bit aside for the emergencies.
Carrying a Balance on Credit Cards
Carrying a balance on credit cards is a very expensive way to do business. Even with relatively small amounts owing, add up over time. For example, if a business is carrying $5,000 on a credit facility with a 18% rate, and makes minimum repayments each month, it would take approximately 26 years to pay the debt off at an all up approximate cost of $12,000 (assuming the original debt is never increased, payments are made on time and not fees are incurred).
Consider paying credit balances in full each month. If budgets and cashflows have been developed and are being monitored, utilising credit should be manageable. If an unforeseen situation arose requiring an emergency use of the credit facility, consider not using credit again until the balance is paid in full.
If you wish to find out more, follow our Blogs or contact Balanix Solutions for a free one hour consultation.
Stay safe – is your BAS agent registered
David Balwin
CPA | Accountant | Business Advisor
The Australian Taxation Office advises that if you use someone to prepare or lodge your business activity statement (BAS), you need to make sure they are registered with the Tax Practitioners Board (TPB). If they are not registered, there are significant risks to you and your business because they:
- are acting illegally
- may not have the qualifications and experience required of a registered BAS agent
- may not have professional indemnity insurance cover
- disqualify you from the protection available under the penalty safe harbour provisions which we administer.
The transitional registration option is only available until 28 February 2013.
Don’t take their word for it … ask to see their registration certificate or check the Register of registered and deregistered tax agents and BAS agents on the TPB website.
You will find Balanix Solutions on the register! Need a professional bookkeeper on Brisbane North (Strathpine) – Call us – we can help!
(Source: ATO SME Communicator December 2012)
Your Business, Your Money, Your Books – Protect Them
David Balwin
CPA | Accountant | Business Advisor
Well, my three recent blogs on choosing a bookkeeper was very timely. As reported by the Courier Mail yesterday (15 January 2013) a bookkeeper employed by Brisbane Greyhound Racing Club stole $250,000 from the club to feed her gambling addiction.
The Bookkeeper commenced siphoning money in March 2010 and her stealing wasn’t detected for two years until March 2012 when the club’s CEO stumbled upon a number of anomalies.
It was revealed that the bookkeeper mainly stole from cash floats at the racing club, which she topped up with money from a club bank account. The bookkeeper then fudged account records to hide her fraud and falsified documents to present to the club committee at its monthly meetings.
In court, the bookkeeper indicated that she would return to a career in Graphic Design when released from goal.
There are a number of issues coming out of this situation. Without knowing in detail the person’s qualifications and experience, it would appear they were not a professional bookkeeper of long standing having come from a different career background. Further, although it is difficult to ascertain an addiction in the recruitment process, it does highlight the importance of rigorous referee reports and processes.
Finally, it also highlights the importance of separating the handling of money and bank accounts from the person doing the books. Good professional bookkeepers will suggest they not have access to bank accounts in order to protect their integrity and the integrity of their work. Where it is necessary for them to have access, it is necessary that you, the business owner with your bookkeeper, put in place transparent processes to ensure there is limited opportunity for stealing and fraud.
Remember, it is your business, your money and your books – protect them.
Contact Balanix Solutions for your free 1 hour consultation in relation to your bookkeeping needs – we can help.
Choosing a Bookkeeper – Part 3
David Balwin
CPA | Accountant | Business Advisor
OK, from the previous two Blogs in this series we have gone through the process of establishing a potential bookkeeper is qualified, experienced and professional to do your bookwork. The final hurdle is what value to your business can they be. Good bookkeepers will recommend good financial processes and systems to ensure sound financial controls. Further, they will use audit controls, back-ups and reconciliation reports to ensure control and accuracy of the accounts. Good bookkeepers will have the skill and knowledge to develop financial reports required by your business and assist with cashflows and budgets. Check that your bookkeeper:
- suggests and recommends changes to financial processes and systems to ensure better financial controls.
- uses quality systems and controls.
- uses audit controls in their bookkeeping.
- can produce management and financial reports regularly to support you and your business.
- can assist with the development of cashflows and budgets.
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