Category: Small Business Management

A handy tip for small businesses

The Australian Tax Office (ATO) only allows deductions for superannuation payments which are actually paid on or prior to the 30th of June. If you are looking at minimising your tax liability, it is recommended that businesses try and process their June quarter Superannuation payments prior to the cut off date – 30th of June. That said if your business has been running at a loss, year to date and Cash Flow is a concern then it is recommended that you consult your Tax Accountant about prior to the 30th of June to consider the best option for you.

No-one likes dealing in Bad Debts, and it’s definitely a case of “Prevention is better than cure”.

Cash Flow is important for any business and for Small Businesses in particular, it is often tight. Bad Debts push this even further.

The ATO published a story titled “Protect yourself from illegal phoenix activity. Do you know who you’re going into business with?”. In this article they discuss ways to reduce your exposure to bad debts. Helpful for developing new business relationships, but it wasn’t about day to day processes.

Manage the risk of Bad Debts

Even businesses that are “cash up front”, are still exposed to Bad Debt by broken promises and this risk is increased by offering any credit terms.

Managing your Accounts Receivable in a planned and structured manner can be instrumental. Many small business owners find it tough to discuss payment in person. Important discussions are often missed and any potential issues not managed.

Money is personal and often emotional.

Utilising a service such as Knight BPO to manage the collection of outstanding monies before they become a doubtful debt not only saves time, but stress as well!

At Knight BPO, we work with our clients to put together a structured Accounts Receivable process and execute that process.

Scenario: We have a client with a service-based business. Their standard credit terms are 14 days from service for most customers. The process that we work through for them looks like this:

• Their Knight BPO Customer Service Team calls to check in at the completion of a service, check that all is OK and confirm receipt of the invoice. This is the first check point to make sure they’re happy and all is well.
• We send a pre-written reminder email for debts that are 3 days overdue.
• Should a debt reach a week overdue, a phone call by the client (made by the Knight BPO Accounts Receivable Team) to understand the issues causing the delay and work through a plan to resolve.
  • The plan is communicated to our client.
  • The plan is actioned by us.
• If there are any issues with the new plan, we contact the client and manage each case individually.

Each and every business is unique and managing debtors is no different! The Account Receivable process is tailored to suit your business. You are involved in scripting the phone calls and emails to make sure they’re representative of your business.

The Knight BPO Accounts Receivable process takes away the stress from collecting money. It takes away some of the more painful tasks of running your business and gives you time to focus on more enjoyable tasks such as earning money – or counting it!

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Did you know Long Service Leave is an entitlement for your casual workers in a similar way to permanent staff?

Casual labour provides the flexibility needed to help ease the burden of peaks and troughs experienced by businesses. There is a direct and instant relationship between revenue, the outputs required, and costs associated. Having a workforce that is reliable, experienced and knows your business is beneficial on many levels. The responsibilities of employers to its permanent workforce compared to its casual labour pool is different in the immediate liabilities, such as annual leave and sick leave. However, longer term employee rights, such as Long Service Leave accrue in the same manner.

Casual workers are entitled to Long Service Leave.

So how does a small business manage this? The entitlements of casual workers are the same as for their permanent colleagues. Rules for Long Service Leave differ depending on things like award, the structure of a business and where it operates. If you have employees who have been with you for 7 or more years, it’s important to know the rules that apply to your business.

A common entitlement structure provides employee entitlements of 8 2/3 weeks of Long Service Leave after 10 years. From 7 years, should the employee leave for any reason, entitlements are determined on a pro rata basis. This means if an employee leaves after 8 years, they’re entitled to nearly 7 weeks of Long Service Leave.

Records for Long Service Leave need to be kept for longer than taxation requirements.

Determining Long Service Leave for permanent employees is relatively simple, as it is calculated based on their current employment conditions. For casual workers, it’s more complicated. In order to determine the amount of Long Service Leave that a casual worker is due, you need to determine the average number of hours worked over the full term of their employment. If you’re not prepared, this means trudging through old records, finding the hours worked each week for the past 8+ years!

That’s longer than you’re required to keep your taxation records!

At Knight BPO, we keep track of all of our client’s employee information so that your business is compliant. We track employee leave entitlements so you know your liabilities.

Oh. I am not yet a Knight BPO client, but I need help!

There are a number of government agencies that can provide the information you need to know your liabilities. The Fair Work Ombudsman, and WA State Government both have helpful resources, or you can speak with your accounting services provider.

Knight BPO can review your historical records to prepare a report on historical staff entitlements. It’s all a part of the onboarding service that gives you comfort that your business is compliant, that you know your liabilities, and that you have all of the information needed at your fingertips to maintain great relationships with your employees!!

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