Monthly Archives: September 2015

An unpleasant conversation

We have a client’s whose business model no longer works.

To make matters worse, the couple who have run the business have separated. So now they have to pay market wages within an industry where employees don’t work as hard nor are as productive as their owners (isn’t that usually the case?)

So the ugly question to be confronted was can the business continue to work, particularly as it requires a large outlay in the form of its re-licencing.

Yes, I could have done a whole lot of calculations using Excel, calculator, back of an envelope, or combinations thereof. However, someone has almost always built a better mouse trap and using cutting edge software, I was able to present within minutes a number of scenarios that would be required for the business to continue to be viable. These scenarios included:-

  • How much prices would need to be increased to generate the required profit/wages.
  • Adjusted to work out how many customers could afford to be lost.
  • How many more customers would have to be obtained.
  • How many more times a customer would have to return.
  • An examination the impact of increasing the average transaction value (do you want fries with that?).
  • Made adjustments for the cost of the re-financing.

All of this required proper recording of the clients cost of sales as well as understanding of which costs are fixed, which are variable and which ones may increase in steps. Our clients know these things, break-even points and more – do you know or more importantly, does your accountant ensure you know such things within your business.

I’d rather be talking to clients about how they can increase the profit of their business and therefore its end selling value. Whilst the topic was unpleasant, it was a rewarding one as the client clearly understood from this analysis that the business was no longer viable. I repeat, this was made clear to them. Without such an analysis, they could have made an ill-informed decision to continue or to close the business (and wondered whether it was the right decision).

So why not speak to us and make the right decisions in your business.  Our initial meetings with new clients are free of cost or obligation.

At MRS, we will spend today planning for your success tomorrow.

The 10 benefits of cloud accounting

One seemingly today can’t spend five minutes without hearing about cloud services and, in particular, cloud accounting packages.

However, we believe that there are now compelling reasons as to why most businesses should upgrade to a cloud-based solution if they have not done so already (please note the use of the words solution rather than version and most but not all clients).

Here are our top 10 benefits of using cloud accounting:-

  1. You can access your numbers anytime from anywhere and do so easily. So can we.  So can your bookkeeper.  So can someone else in another store.  So can anyone else that you need or wish to give access to.  Access can be granted with differing rights to access certain areas and perform various functions (such as access payroll records and generate a profit and loss).
  2. You can issue invoices from anywhere at anytime, even from a tablet or mobile.  No more waiting until you get back to the office.  You might even be able to speed up your cash flow by taking payments on the go.
  3. The three big players in this space, Xero, MYOB and Reckon Hosted (QuickBooks), all include the option to automatically upload bank transactions.  You don’t have to, but it does save time.  The first time a payee name appears in a data feed, you assign an account to it – so, for example, the first time Maggs Reid Stewart appears, you link our name to accounting fees.  Thereafter, Maggs Reid Stewart is automatically posted to accounting fees unless you otherwise edit the transaction.  As you can imagine, data entry progressively takes less and less time and it is for this reason that there are a lot of good bookkeepers out there scratching for work.  The fees for these bank transaction data feeds are now very reasonable.  So the benefit to you is that you either pay your bookkeeper less or spend less time yourself bent over the keyboard.
  4. With automatic bank feeds, it becomes much easier to keep your numbers up-to-date.  Remember that old saying – what you can measure you can manage (and by extension, what you can manage you can control and what you can control gets done).  You will have the power to know what is happening in your business at all times.  The days of business owners being in the dark as to their true situation until a Tax Return is prepared some time after 30th June should, finally, be a thing of the past.
  5. As multiple people can access the same file, gone will be the common problem of the client, the bookkeeper and the accountant all wanting to work on the file at the same time yet only one having the current file at any one time.  No more re-entering invoices, no more incorrect restores, no more avoidable time wasting, no more wasted and costly time in delivering or collecting a back-up of a desktop file and other such annoying problems.
  6. It is sometimes months after year end before we finalise a client’s financials (we only have two arms so we can’t finalise them all in July).  Cloud accounting packages allow us to access a client file at all times.  The closer we are to the time of each transaction, the greater value we can be to our clients.
  7. You don’t have to load upgrades to the software – it is done for you.
  8. No more version control problems between a client and their accountant.
  9. We have for some years used programs such as LogMeIn to access clients’ computers remotely whether that be to obtain reports, fix problems, etc.  Those remote access programs are comparatively cumbersome.  With cloud based programs, we can just login once you have set us up as a user.  We can then answer your queries far more quickly and efficiently.
  10. When up and running and used properly, cloud accounting should reduce accounting fees and, more importantly, enable us to provide a better service.

Is cloud accounting the way to go for your business.  And if so, which program will better suit your needs?  Call us fro a free initial meeting to discuss your business and its needs.

At MRS, we will spend today planning for your success tomorrow.

Pay tax and earn frequent flyer points

In our September edition of Tips & Traps (*) we explored the ability to maximise your frequent flyer points from using a credit card (wisely).

Another way to maximise your points is to pay your business or personal tax debts by credit card. Whilst the ATO do charge credit card payment fees, they are the same that they are charged by the various card providers. As such, the rates charged are very low.

You can pay by credit card by:-

At MRS, we will spend today planning for your success tomorrow.


(*)        Tips and Traps is a free quarterly newsletter issued to our business clients full of, as the name suggests, tips and traps. Please call Alex Stewart if you would like to be added to the mailing list.

Avoid the avoidable

The ATO is progressively becoming more and more active in demanding the lodgement outstanding documents and issuing fines.

Fines have become more expensive from last month as the basic penalty unit has increased from $170 to $180.

By way of example, this means that:-

  • A small business which lodges a BAS will be fined $180 for every month that it is lodged late up to a maximum of $900.
  • Under the trustee penalty regime that has applied to self managed super fund trustees since July 2014, the maximum fine per trustee (and which must be paid from their own funds, not the super funds) has increased to $17,000 from $18,000. So, for say a mum and dad fund for which they are trustees in their own name which commits two serious breaches, the fines are $34,000 to both trustees. If a company was trustee, then the directors would collectively be fined $34,000.

Some people decide not to lodge as they can’t pay the tax then and there. This is not the best course of action. It can be said that the ATO issue fines and interest to encourage people to lodge as they just want to know who owes them what. They are actually quite reasonable in offering payment plans for up to six months and to do so on an interest free basis.

So don’t be afraid of lodging – and avoid the fines.