Month: November 2015
5 Reasons for Cash Flow Problems in Small Businesses
Many small businesses run into cash flow issues. Here are five common reasons for cash flow crises, and what can be done to avoid them in your small business.
(more…)Key man insurance, who do you need to insure?
The most valuable asset for any business is the key people who run it. Loss of staff with essential skills or years of knowledge can impact revenue, profit, goodwill and ultimately the value of the business. Key man insurance compensates for financial losses should the unexpected arise and having adequate insurance in place is an important part of succession planning.
(more…)Can better inventory management improve business performance for Manufacturers?
Any manufacturing business has to grapple with two major variables, namely, the demand for its products and the supply of the raw materials required for the manufacturing activity. While on the demand front the quantity of the product demanded and the time of delivery can be uncertain, on the supply front, the timely availability of the raw materials and their prices can be uncertain also.
(more…)5 Top Causes Of Stress for Small Business Owners Open page Preview for 5 Top Causes Of Stress for Small Business Owners
Buying a business is a big investment, and it can be a nerve-wracking process – especially for a first timer. If you’re thinking of taking the plunge and becoming a business owner, here are five obvious warning signs that an enterprise might be a bigger risk than you’re prepared for.
(more…)7 Useful Web-Based Software Programs for SMEs
The use of web-based or ‘cloud’ software in SMEs is gradually becoming more the norm than otherwise. In fact, many of us have been using the cloud for years – such as through email and more recently through social media. While cloud-based applications for business are still relatively new, they are in the process of maturing and evolving, with new types of tools and applications popping up all the time.
One of the main advantages of cloud software is that you usually don’t have to commit to the purchase of a full program and updates are generally included. You can try out most of the programs through free trials to see how well they work for you and your business. Many of the programs have different levels of subscription which you can select depending on the size of your business, and the features you want, and come with the flexibility to change plans or add new features as your business needs change.
Here are some of the more useful cloud-based programs for SMEs.
Office and data management
- Office Time – time-tracking software that records billable time worked, calculates costs, and generates invoices and reports. It may suit service businesses that bill by the hour. There is a 21-day free trial available and a one-off cost of around $68 to purchase, which includes upgrades.
- Office 365 for Business – this software comes with Microsoft programs including Word, Excel, Outlook, Publisher, OneNote and others. Plans start at $7 per user per month.
- Sales Force – this is a Customer Relationship Management (CRM) platform for businesses of all sizes. It comes with analytical tools, sales forecasting, reports, data sharing and other features. Plans start at $35 per user per month and come with free trials.
- Box – online data storage and secure file sharing software that provides 5GB of free storage. Prices start at $6 per user per month.
- Xero – excellent full accounting program that includes bank feeds, invoicing, reconciliations, payroll, inventory, reports, depreciation, multi-currency capacity and other features, plus compatible add-ons for specialist solutions. There is a 30-day free trial, with prices starting at $25 per month.
- Sprout Social – this software pulls all your social network activities onto the one dashboard. It can also be used to schedule posts, collect messages from all your social media accounts from the one inbox, and measure marketing campaigns using analytical tools. Starts at $59 per month.
- Hootesuite – includes post scheduling, analytics and other features for all your social media accounts with the capacity to connect with popular apps. There is a free version for up to three networks. Paid versions start at $11 per month.
Finance options for buying a car
If you’re looking to purchase a vehicle for your business, there are a number of different finance options available. Before you enter into a finance agreement it’s important to do some research to determine which finance is suitable for your business structure, as well as understanding the implications for cash flow and tax liability. We explain three of the most common types of vehicle finance for businesses:
Finance Lease
Finance leases are a common form of finance for businesses that update their vehicles on a regular basis. The financier purchases the vehicle on your behalf; you then lease the vehicle from the financier and pay a fixed monthly rent for an agreed period. At the end of the lease many businesses will trade in the vehicle and start a new lease, but there is also the option to pay a residual (final instalment) on the lease and take ownership of the car, or re-finance the residual and continue the lease.
Benefits of a Finance Lease:
- Monthly rental payments are fixed for the lease period so you can avoid Interest rate fluctuations and budget accordingly.
- You can continue to upgrade your vehicle at the end of each lease as new models/features become available.
- GST on the car purchase is claimed back by the financier, so the finance is exclusive of GST, lowering monthly repayments.
- Depending on the lease structure rental payments may be tax deductible.
Commercial Loan (Chattel Mortgage)
A commercial loan or chattel mortgage generally suits businesses that wish to retain ownership of the vehicle at the end of the loan period. With a commercial loan you source and own the vehicle and the financier lends you the money secured by the asset. With this type of finance arrangement the vehicle is an asset of your business even while you’re paying it off. At the end of the loan period (assuming there is no balloon final payment) you own the vehicle outright.
Benefits of a Commercial Loan:
- Opportunities for income tax deductions through depreciation and interest charges.
- Interest rate is fixed over the finance term, plus you can make additional payments that reduce the total interest payable.
- Ability to reduce monthly payments by making a balloon final payment to free up business cash flow (although there may be fees associated).
Commercial Hire Purchase
Commercial hire purchase finance arrangements suit companies that are registered for GST. You can claim the GST on the purchase price upfront and GST on any Interest charges can be claimed over the life of the loan. With commercial hire purchase the financier pays for the vehicle on your behalf with an offer to hire it back to you in return for regular payments over an agreed time frame. You are hiring with intent to purchase and when the final payment is made the title passes to you.
Benefits of Commercial Hire purchase:
- Ownership of the asset after the final payment.
- Opportunities for income tax deductions through depreciation and interest charges.
- GST on purchase price can be claimed up-front.
If you’re considering purchasing a vehicle for business use, talk to a YML Finance Specialist today.
