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With the end of the financial year fast approaching on June 30, this is the perfect time to review your staff’s annual leave accrual and take positive steps towards preventing difficult a financial situation for your business arising as a result of staff’s annual leave building up, as allowing staff to accumulate too much leave could end up crippling your business.
It is important to consider the impact it could have on your small to medium-sized business, and be aware of the law regarding employees’ rights to carry accrued leave over into the following year.
If you are a small to medium-sized business, then you are likely to be running on tight profit margins and managing cash flow can be an issue. If one or more staff members leaves or resigns and you end up owing them for unused leave hours, it could be a huge obstacle. Also, consider the problems that could arise if you find that staff are owed leave at the end of the working year and more than one employee wants to book time off at the same time, or at an inconvenient time for you.
Delays, a poor impression of your processes, or departments not working effectively could leave your customers with a negative impression of your business – and financial hardship for you. In addition, staff might ask to carry leave over to the following year, creating problems at a later date.
Employees can carry over accrued annual leave to the next year, but by law, there are two situations in which you can direct an employee to take annual leave. According to the Fair Work Ombudsman, an employer can direct an employee to take annual leave if the business is closing for holidays (over Christmas or Easter for example), or if an employee has accumulated excess annual leave. What constitutes ”excessive” differs between industries; more information is available on the Australian Government’s website, and it’s extremely important to know your rights as an employer in your industry so you can enforce leave on staff members with excessive accrual.
Larger companies have HR departments to keep on top of annual leave, but without that resource how do you keep on top of the leave hours of all of your staff members and still push forward with your business? It’s not easy! But good accounting and business management software can really help you out.
An EPR platform, like MYOB EXO, is the simplest way to keep on top of it. Most ERPs come with a core finance / accounting software, and can be integrated with a payroll module, which will not only allow you to keep track of accrued and taken leave for each staff member, you can also get a snapshot of how your financial situation would look should you have to pay out a lump sum for accrued leave if a team member were to hand in their notice.
Payroll tracks the amount of leave that has accrued and shows the monetary equivalent of the days that are owed to individuals. Add-ons can calculate leave entitlement, manage requests and approvals, and monitor and show accruals and deductions of leave hours. The software can effectively manage the full life cycle of an individual’s leave, whilst ensuring compliance with employment laws and regulations.
Once you know what leave is owed, you can think about how you will finance this in the event the leave must be paid out. This is a good topic to discuss with your accountant when you do year-end tax planning.
We’re nearing the end of the financial year with 30 June right around the corner, which translates to stressful times for Australian businesses. Don’t fret, you can make the process slightly less stressful for your organisation by following these simple tips.
Because of the high volume of documents required to lodge your business taxes, it is crucial that you get everything in order before you begin. Taking some extra time at the start to get organised can save you delays and headaches further down the track.
Be sure that you have statements dealing with your pay-as-you-go (PAYG) withholdings, goods and service taxes, and any documentation of deductions you are claiming so that you can prepare your Business Activity Statement (BAS) to formally lodge your taxes. Getting this done early means you will not have to scramble at the last minute to put everything together.
Keep in mind that the ATO has changed the way in which they accept payment summaries in 2016. Allow plenty of time to convert documents to the proper format so you can comply with the new requirements. The ATO has provided a guide to help explain the changes to make it easier for businesses to comply.
Your business accountant can help you navigate your financial data to find the information you need to lodge your taxes. Be sure to have your accountant go over the books in detail to ensure that there are no errors in your financial reporting. Have them remedy any mistakes as quickly as possible so that you can move forward with lodging your taxes.
Using good business accounting software (like MYOB Finance) can streamline this process, giving you easy access to detailed account statements, financial summaries, and trend analysis. The Exo Accountant’s Assistant module is also indispensable at tax time – you can follow pre-defined checklists for tax return processing, see the financial health of the business from a high level and easily identify any areas that are incomplete or need review.
Ask your accountant to review your account balances to determine if you can qualify for any tax deductions, as explained in the sections to follow.
If your accountant confirms that you have funds available in your business accounts, spending some money on your business now can save you in tax liability later. Paying your employees’ superannuation before tax day can result in a large deduction for your business. Be sure to make your payments well in advance to allow for processing time. Your business can also take a deduction for paying your bills in advance, like rent, utilities and subscription services. Keep in mind, though, that you may not be able to claim the deduction if the expense covers more than 12 months.
The ATO also offers deductions regarding debts your business is owed. If you and your accountant have determined that a debt is unlikely to be repaid, you should write it off as a bad debt. Your accountant can help you determine which accounts are deductible for the current tax year. If you or any of your colleagues have taken personal loans from the business, try to pay them back before the end of the tax year to avoid a large increase in personal income taxes. At the very least, submit a minimum payment incorporating interest for the business. MYOB accounting software can aid your business in keeping track of debts paid and debts payable.
Go through your inventory and determine if any of it is expired or obsolete, as you can write these off on your taxes. Also, if the current value of your inventory is lower than what you had at the beginning of the year, you can deduct this as a business loss. If your business needs to increase inventory or purchase new tools or equipment, presuming it fits in the budget, a portion of these expenses may be able to be deducted. The regulations on this change frequently, so be sure to consult with your accountant or check the ATO’s website before making any large purchases. The EXO Fixed Assets Module allows you to keep track of asset value and depreciation.
It is never too early to start planning for next year, and investing in good accounting and business management software will keep you on track for next year Get in touch with us today to learn more about our software solutions and how we can help your business breeze through tax time! You can also check out our MYOB EXO EOFY webinar below for some more great tips.
As a business owner, there will come a time when you need to decide whether or not it’s worth it to replace a particular tool or piece of machinery. Timing your replacements is critically important. You want to get as much value as possible out of your equipment, but you don’t want to allow old or worn machinery to have a negative impact on your business.
As you carry out a cost/benefit analysis of your equipment upgrade investment, consider these points and our pro tips on how your business management software can make it easier.
When your machinery and tools break down or need maintenance, it can cause backups and delays in production. Other tools can end up being overused to compensate, which can cause them to wear out more quickly.
Weighing up the cost of maintenance with the cost of new machinery is not enough – you also need to take into account the opportunity cost associated with outages. Check your ERP software (e.g. the MYOB Exo Job Costing Module) to can get an insight into the average revenue/profit you make per job. If the combination of missed revenue opportunities from outages combined with foreseeable maintenance costs is starting to cost you more in the long run then it’s time to make the investment in upgrading your equipment.
Business experts often consider cashflow one of the biggest struggles for small business owners. Knowing when to replace a tool is a question not just of when the tool has ceased to be effective, it is also a question of when the business can afford to replace it. If a tool breaks down at the beginning of the tightest cash-flow season, there may be no solution but to limp along until cash is available again.
Purchasing at the wrong time can cause your business not to have the available cash you need to buy inventory, make marketing changes, or even to pay employees.
Your accounting and finance software is an invaluable asset for cashflow planning. Use it to get an insight to predict when you’ll have the available cash to make a big purchase. Sometimes it can make sense to replace a tool that is still technically functional, if the timing of the purchase is right.
The 2015 Australian Budget contained a great benefit for businesses that need to replace aging machinery: an instant tax deduction for assets that cost up to $20,000. The instant deduction is only available for qualifying businesses, so make sure to read up on the deduction or speak to a professional accountant. But for businesses who turn-over less than $2,000,000 annually, an instant deduction may be a better deal tax-wise than depreciating equipment over the expected life of the machine.
If you’ve previously depreciated your assets, or if your business doesn’t qualify for the instant deduction, again your ERP functionality can help. The MYOB Exo Fixed Assets Module can help you get insight into how your taxes will be affected.
There are hundreds of different types of business management software applications on the market, and it can be difficult to determine which is right for your particular business. These software programs can be divided into two main categories: 1) dedicated standalone software (software with a single purpose like accounting or CRM etc.); and 2) single integrated business management software (aka ERP software, which integrates all of, or the majority of, the functions covered by various standalone software solutions).
Here we will discuss the benefits and drawbacks of each option and how they can be applied to your business.
The struggle of multiple standalone software packages. Image Credit
Dedicated standalone software applications are those that are designed to address a specific single aspect of business operations, such as accounting, human resources, customer relationship management (CRM) etc. Each application is dedicated to just one area of your business, so it delivers focused, highly detailed reports about that segment. A variety of specific functions allow you to manipulate the data as needed to obtain the information you are looking for. Because these programs focus on a specific department, it is easy to find the data you need without having to sift through information from other areas or struggle with reports that don’t tell you exactly what you need to know. Standalone software often offers more in depth reporting capabilities and advanced functions than you would find in an integrated ERP solution.
However, standalone software programs do have their drawbacks. They are designed to be used on their own and often do not integrate well with other standalone software products. This can make it difficult to compare and correlate data across different departments (for example comparing invoicing to accounts paid, or checking the status of orders against client communication in the CRM), as you may need to export data to another software program or to Excel to manipulate and align data from various sources yourself. Not only is this time consuming but it also leaves a wide-open gap for human error.
With a single business management solution, the data for all of the departments within your business is all stored in one program. The different integrated aspects, add-ons and plugins of the program are all designed to work together seamlessly, so it is easy to generate reports and comparisons that encompass the entire workings of your organisation. The data in the reports is automatically generated in a way that is easy to understand and gives a full overview of the state of the business at a particular point in time or over a specified time period. Employees from various departments can access information from other departments without the need for complicated conversions and data manipulation.
The main drawback of using a single business management solution is that the reporting and functionality in each area of the software does not go into as much detail as with a standalone software program. However, it’s equally important to note that the functions and reporting features offered in integrated software generally tend to be satisfactory to meet the day-to-day needs of the majority of businesses, and those advanced functions found in standalone software would likely go unused for most if not all of the year.
For a business with a heavy focus on a specific area, like sales or finance, a dedicated standalone software application will provide the detail necessary for that specific department. On the other hand, a business with a more general outlook will appreciate the simplicity and ease of use that a single business management solution provides. The majority of businesses fall into this second category, so single business management solutions offer them the functions and reports they need without weighing them down with too many extraneous functions.
At Horizon Business Systems we offer MYOB Exo and MYOB Advanced software, which is one of the leading integrated business management solutions used by Australian companies. MYOB can incorporate many functions, including finance, payroll, customer relationship management, point of sale, job costing and many others. We can also custom develop additional add-ons for MYOB Exo to integrate any other departments or functions required by your business that are not covered in the current software range. Get in touch with us today to find out more.
We know that growing companies need business management software that can be adapted to the way you do business, rather than the other way around. So keep in mind Goldilocks and the three bears product offerings as ERP’s can simply be viewed as too hot (big), too cold (small)… and look for one that’s “just right” for you!
Don’t always think that the biggest (and most expensive) will always be the best for you. As a growing business, you need to make every dollar in the investment in your ERP system count. Often the large-scale ERP’s are an over-investment in the time, money and needs of your business and an under-investment in the system’s flexibility to actually fit your business.
Many large-scale ERP software solutions discourage or refuse to alter programming to allow customisation to fit your business, so you could find that your very expensive solution does not work with how your company actually does business. It’s also worth noting that large scale ERP’s are not as quick to adapt to new technologies (think mobile/social trends) as mid sized versions. This is simply because large corporations/government entities that use the “big system ERPs” are rarely the type to be at the forefront of changing technologies as their own internal processes are more regimented.
However it IS well worth obtaining your ERP product from an established organisation so that you can be assured that the product will continue to be developed and supported, or that the company won’t just one day ‘disappear’ into a puff of smoke (or cloud!).
So are we back to basic software then? Well, no – you are most likely reading this as you’ve reached the end of the capabilities of a smaller ‘off the shelf’ version which have not been designed to fit the needs of a growing company or provide for the complexities of mid to large sized enterprises. You would also be aware that customisation of smaller products is not worth the investment as there will still be gaps in the product’s capabilities and reporting.
Therefore, what is the solution if:
As an ERP software solution, MYOB EXO offers the security of a well known software provider that is a world leader with continued product development and an established network of implementation and support through it’s partners. However, as a mid to large sized product offering, MYOB EXO is still flexible enough to adapt to new market trends (mobile / social etc) and is customisable to suit individual business processes and needs.
MYOB EXO the perfect solution.
One of the best parts about MYOB EXO is that you can add functionality with plug-ins as your business changes and grows. Each module within the software has a different task – whether it’s payroll, invoicing, tracking customer relationships, managing stock levels, etc. The software is modulative so you only pay for what you need.
For more information and to see MYOB EXO in action, contact Horizon Business Systems today.
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