February is an exciting time for the team at Signum. Adam and Olga welcomed 2 baby girls to the Signum family. Anna Sophia and Eva Mary arrived on Friday 12 February and mum and bubs are doing well.
The 29 February sees us starting the day in our new office. We would like to thank everybody for their understanding during this period and we look forward to welcoming you to our new office.
The beginning of the year is a good time to revisit the cashflow controls that you've introduced within your business.
You need to ensure that the administration for the opening of accounts for new customers in your business is being closely supervised, to ensure that you're not just attracting someone else's problem customers.
It's a good idea to establish the credit worthiness of each customer. You can subscribe to services that Dun & Bradstreet provides, which will assist you with getting credit worthiness information on your potential and new customers. You need to determine the Terms of Trade and make sure these are communicated to your new customer.
It's a good idea to be very conscious of the impact of the Personal Property Securities Register (PPSR). To do this, you need to ensure that you have Terms of Trade Agreements and Retention of Title Agreements that have been drafted by a solicitor after 31st January 2012. Send these documents to your new customer, requesting them to sign and return the documents to you before any sales are made. The decision then needs to be made within your business on whether you're going to proceed with a registration of the new customer on the PPSR.
Another key aspect of cashflow management is to ensure that the debtors are invoiced promptly and that the invoices are being dispatched to your customers as soon as they're prepared. This time of the year is a good idea to review how easy you've made it for your customers to pay you. Can customers pay you by electronic banking or credit card? Are you still relying on cash and cheques? Most businesses have found it's a good idea to offer a number of payment options to customers, to ensure that you get paid promptly.
With a new customer, it's always a good idea to consider whether you're going to ask for an upfront deposit.
Are you receiving details of your debtors' days outstanding each month? Are you reviewing your debtors' days analysis and issuing prompt follow-up action against any debtor who's not paying you in accordance with your Terms of Trade?
· How much money do you have tied up in your stock (inventory system)?
· What's your stock turn rate? Could it be improved?
· How much investment in stock did you budget for?
· What do you need to do to reduce your investment in stock?
· Are you building up old, out of fashion and damaged stock? If so, should you be giving consideration to holding "sales" to liquidate those items in stock as soon as possible so you return cash to your business?
Cashflow management is vital for business success. Some of the ways you might be able to improve your cashflow performance is to negotiate longer payment terms with your suppliers.
Insurance for SMEs
Small/medium enterprises need a properly constructed insurance portfolio. To enable this to be done, you will need to identify business risks that apply to your business.
Insurance brokers are a very important member of the "insurance system" for small businesses to utilise. The insurance broker represents you as the small business operator. You need to tell your broker everything about your business so that they clearly understand the risks that apply to your business. The insurance broker will give you advice – you need to remember that insurance companies are not required to give you advice.
The main insurance policies for small/medium enterprises identified by insurance brokers include:
· Public Liability
· Professional Indemnity
· Product Liability
· Workers' Compensation
Most small businesses have public liability covers of around $20M.
Product liability is very important for businesses producing products.
Professional indemnity is important for anyone who is supplying professional services (eg lawyers, doctors, engineers, accountants) and shouldn't be confused with public liability.
If you have businesses operating in different states, you need to take out separate Workers' Compensation policies in each of those states.
When reviewing your insurance policies, look very closely at the exclusions and make sure you're happy with the items excluded.
When signing up for an insurance cover, you have a duty of disclosure, which includes:
· details of any insurance that has been declined or cancelled
· information as to whether the applicant has ever been declared bankrupt
· information on whether any claims have been made by the applicant in the past
· details of any exceptional circumstances relative to the risks which may affect the insurer's decision as to whether to offer the insurance cover to the applicant
The more information you give, the more likelihood of "less perceived risk", which will lower the insurance premium.
The premium is determined on things such as:
· the nature of your business
· claims history
· the location of your business
· types of cover your business requires
· size of your business
· sums for which your business is insuring
You should be including your insurance costs in your budget. Remember that you can pay most insurance premiums monthly.
Insurance is something that every business needs. It could be quite costly; however you need to ask a question: can your business afford to wear a loss because you were under-insured or have no insurance at all? Insurance brokers work for the business and their role is to make sure you get an adequate insurance cover.
Government Grants for SMEs
Business Growth Grants – Available for Hundreds of Different Types of Businesses
The Business Growth Grant, part of the Entrepreneurs' Program, is targeted at the Australian government's "priority industries", which include:
· Advanced Manufacturing
· Food and Agribusiness
· Medical Technologies and Pharmaceuticals
· Mining Equipment, Technology and Services
· Oil, Gas and Energy Resources
· Enabling technology and service industries that support one or more of the priority industries listed, including:
- Freight and Logistics
- Infrastructure Related Construction
- Information and Communication Technology
- Professional Services – Scientific
Some people believe that this is a very narrow group of businesses because only 9 major sectors are mentioned. These 9 sectors actually relate to over 550 different types of business activities. Virtually every "trade business" could be included within this definition, as long as the business is undertaking new types of activities and meets the turnover requirements.
The other major requirements of this grant include:
· Applicants must be companies
· Minimum turnover:
- For companies operating in locations other than Northern Australia – $1.5M
- For companies operating in Northern Australia (defined as any location North of the Tropic of Capricorn) and remote locations – $750,000
Grants available are up to $20,000 on a 50% basis, meaning that the total project can involve $40,000 with the client's contribution.
The type of work that can be undertaken under the Business Growth Grant basically includes virtually anything that might be able to improve the business' performance. When an application is made, the business will probably receive a visit from an Entrepreneurs' Program Business Growth Grant case manager, who will undertake a free review of the business, to determine the eligibility and the types of services that the business could implement to improve the overall business activities.