EOFY alert! Financial year end just days away

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Small business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the cost only have a few days to act this financial year.

To be eligible to claim the full deduction this financial year the asset must be installed and ready to use by June 30.

And with June 30 just days away, time is running out for your business to take advantage of the federal government’s temporary full expensing scheme this financial year.

What is temporary full expensing?

Temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.

It allows businesses that are keen to invest in their future to immediately write off the full value of any eligible depreciable asset purchased, subject to the ATO limits.

This your business through better capital management and cash flow as it allows you to reinvest the funds back into your business sooner.

There is a small catch though: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.

But rest assured that even if you do order the asset, and then miss the June 30 deadline because it doesn’t arrive in time, you can still write it off next financial year because the scheme is set to run until 30 June 2023.

Asset eligibility

To be eligible for temporary full expensing, the depreciating asset you purchase for your business must be:

– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);

– first held by you at or after 7.30pm AEDT on 6 October 2020;

– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023; and

– used principally in Australia.

Obtaining finance that’s right for your business

Being able to immediately write off assets is all well and good, but if you don’t have access to the funds to purchase them, the scheme won’t be of much use to you this financial year.

So if you’d like help obtaining finance to make the most of temporary full expensing ahead of the impending EOFY deadline, get in touch with us today!

We can present you with financing options that are well suited to your business’s needs now, and into the future.   Just call us

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

8 ideas to improve your business’s cash flow over the festive season

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The festive season is fast approaching and this year, more than ever, it’s important for businesses to ensure they have their cash flow management in order. Here are our top 8 ideas to help you through the upcoming period.

While the holiday period is usually a boon for retailers, cash flow problems still hamper many businesses, as accounts departments across the country take a much needed holiday.

With COVID-19 causing all sorts of headaches and heartaches for businesses big and small in 2020, you’ll want to make sure you’re transitioning into 2021 with your best foot forward.

So, with the festive season just around the corner, below are 8 cash flow tips for navigating the silly season.

Top tips

1. Invoice now: Begin sending out your invoices now, and start with clients who have a history of being tardy.

2. Discounts: If you want invoices paid super fast, consider offering a 10% discount to clients who pay within 7 days.

3. Extension, please? Chat to your major suppliers about possibly extending your terms over the upcoming period to 30 days (or more, if possible).

4. Outsource: If you don’t want to personally ask clients to pay overdue invoices for fear of getting them offside, use accounting software such as Xero, or hire a third-party bookkeeper, to chase up the payments on your behalf.

5. Invoice Financing: If you don’t want to hassle your clients to pay you promptly, another option is Invoice Financing, which is a line of credit secured by unpaid sales invoices (get in touch to find out more).

6. Request deposits: For new projects over this period, consider requesting a 20% to 50% deposit from the client.

7. Minimise expenses: Minimise unneeded expenses where possible. For example, if you don’t have the personnel to onboard new clients during the holiday period, consider switching off or dialling back your Google and/or Facebook ads.

8. Last but not least, get in touch

If you think you’ll still have a gap in your business’s funding over the months ahead – especially with JobKeeper winding down – then it’s important to start considering your financing options as soon as possible.

It’s worth noting that the RBA recently cut the official cash rate to record low levels, and many lenders are offering competitive financing options to businesses as a result.

So to find out more about what financing options are available to you and your business, get in touch today.  Just talk to us.

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

3 questions SME owners should ask themselves before JobKeeper 2.0

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JobKeeper is due for a big shake-up next month, which means if you’ve been relying on it to get your business through these rocky times, you need to start planning ahead now.

With the small business ombudsman and many economists concerned about an “insolvency tsunami” hitting small businesses, it’s critical that you start thinking about your ongoing funding plans now to avoid being swept up in the tide.

JobKeeper support is set to end for many businesses on September 27, while it will continue for other eligible businesses under a reduced amount until March 28.

So with that in mind, you may want to start assessing your business’s ability to make loan repayments, pay staff without JobKeeper support, take care of ATO debts, as well as any other financial obligations.

So, what are the big 3 questions?

Businesses that have been drawing on JobKeeper should start asking the below three questions, says Wayne Smith, Group Executive of SME lender Scottish Pacific.

1. What support will I lose, and has my business got the cash available to replace it?

2. What payments will I have to make from October or March that I’m not making now?

3. Do I have any pressing creditors ready and able to take action against me once they are able to?

Why these questions are so important

The unfortunate fact is that over the coming months many businesses will have a funding gap and have to face some very tough decisions.

“Your answers to (the above) questions will guide whether you seek extra funding or make a tough call on your business,” Mr Smith says.

“You don’t want the business to accumulate debt if it’s not going to be viable.”

Mr Smith says businesses can consider seeking rent reductions, JobKeeper, government grants, and ATO deferments.

“These initiatives have helped many businesses hibernate or trade through the tough times. However it’s important to consider how this will pan out when commercial evictions for non-payment of rent return, and creditors are able to present winding up petitions,” Mr Smith adds.

Financing options you may consider

It’s important to note that the federal government’s Coronavirus SME Guarantee Scheme is being extended, with the initiative allowing lenders to provide eligible SMEs unsecured loans “more cheaply and more freely”.

Mr Smith says another option business owners could consider is Invoice Finance, which makes use of assets already in the business rather than using the family home for security.

“Put simply, using Invoice Finance brings forward payment of your invoices so you have cash in hand. You get 80% paid earlier, and the remainder later,” Mr Smith says.

Now may also be a good time to consider whether your business could benefit from a self-liquidating revolving line of credit facility, says Mr Smith, rather than further exposing yourself by taking on more loan repayments.

Get in touch

As mentioned earlier, if you think you might have a funding gap in your business, it’s good to act in advance – not when you’re scrambling to make ends meet.

So if you’d like to explore some funding options for your business please get in touch today – we’re here to help your business however we can.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Loan repayments deferred six months for small businesses affected by COVID-19

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If your small business is being affected by the coronavirus your loan repayments will be deferred for six months, says the Australian Banking Association (ABA).

ABA CEO Anna Bligh today announced a small business relief package from Australia’s banks.

“Small businesses can rest assured that if they need help, they will get it,” Ms Bligh said.

The assistance package will apply to more than $100 billion worth of existing small business loans and, depending on customer take-up, could put as much as $8 billion back into the pockets of small businesses.

“This is a multi-billion dollar lifeline for small businesses when they need it most, to help keep the doors open and keep people in jobs,” Ms Bligh said.

Ms Bligh added that banks were putting in place a fast track approval process.

“Banks are already reaching out to their customers to offer assistance and packages will start rolling out in full on Monday [23 March],” she said.

Government to invest up to $15 billion in support of SME lending

The ABA loan deferral announcement came one day after the federal government announced a $15 billion commitment to enabling smaller lenders to continue supporting Australian consumers and small businesses.

The government said it hoped that the investment would enable customers of smaller lenders to continue to access affordable credit as the world deals with the significant challenges presented by the spread of coronavirus.

The government announcement came shortly after the RBA cut the cash rate to a record low of 0.25% following an emergency meeting due to coronavirus.

But wait, there’s more.

Earlier in the week the federal government announced a range of measures to stimulate SME spending via tax incentives and other initiatives.

One measure included changes to instant asset write-off provisions – the threshold was increased from $30,000 to $150,000 (ex GST) and write-off provisions were opened up to businesses with an annual turnover of up to $500 million (the previous cut-off was $50 million) until June 30 2020.

Get in touch

It’s fair to say there has been a lot of news to get your head around this week.

And while it can seem overwhelming during these uncertain times, rest assured that we’re keeping on top of the announcements that matter to you.

So if you’d like to explore any of the changes outlined above – including the six-month loan repayment deferral – please get in touch. We’re here to help you any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.