How to Become an Accounts Payable Officer

ACCOUNTS PAYABLE OFFICERS are responsible for paying invoices owed by a company to its suppliers or vendors.

They typically work in medium to large-sized businesses, where they may also be called an accounts officer and be responsible for investigating the cost of wages, materials, overheads and other operating expenses.

Here are some of the other common tasks you’ll find in an accounts payable officers job description.

Continue reading How to Become an Accounts Payable Officer

Do Bookkeepers Need to Learn All Accounting Programs?

Ways to diversify your bookkeeping skills

female bookkeeper with diverse skills
Are your bookkeeping skills diverse enough to service a multitude of clients?

NOT SO LONG AGO, bookkeepers and accountants only had to learn to work with one accounting program. That was back when MYOB, the market leader, had a strangle-hold on the industry, and though a few alternatives – Reckon, Quickbooks – tried to squeeze out a space for themselves, MYOB was too embedded in the accounting industry.

But the rise of cloud accounting has changed all that. Besides the reinvention of a couple of old brands (QuickBooks and Reckon – though the latter has exited the market again), it’s also birthed a new market leader in Xero, which now has more paid member accounts in Australia and New Zealand than arch rival MYOB.

A number of smaller players to have entered market, too. There’s Zoho, which has built an entire suite of productivity apps; and straightforward cloud accounting programs, such as Saasu and Freshbooks – to name only a few.

Xero bookkeepers

When Xero first pioneered cloud accounting, it quickly gained popularity among new and small businesses due to the ease with which you could get your accounts “online.”

There was no big, expensive outlay to buy the software – Xero offers a free trial, after all – and for the most part, setting up a Xero account, creating invoices, estimates and recording expenses was remarkably easy.

Many bookkeepers, who had been working with MYOB, quickly started offering bookkeeping services in Xero, and there are many more who work exclusively in Xero.

These bookkeepers are usually part of the Xero Partner program, but there are some that just prefer using Xero because it’s cheaper and easier for their clients to use, which makes their job a lot easier.

Diverse bookkeepers

Most bookkeepers are diversifying, not just in the services they offer (from only providing daily reconciliations services to providing BAS, payroll and credit management services) but also the programs they work with.

Many highly skilled bookkeepers not only work in MYOB and Xero, but some also work in larger enterprise reporting systems, such as Oracle and SAP.

Doing so enables, predominantly contract bookkeepers, to work with a range of different businesses and increase their income.

Even bookkeepers who don’t work with large enterprise reporting systems, but who do work with the major accounting programs Xero, MYOB and QuickBooks, are still able to increase their earning potential.

Learn the major accounting programs for one low price!

We are constantly updating our Special Offers page to include a variety of combination deals on our online training courses to provide established bookkeepers and would-be bookkeepers with the most training material for the lowest price. 

In one of our current special offers, students who enrol in our MYOB AccountRight and Xero online courses will also receive QuickBooks Online and MYOB Essentials online courses FOR FREE.

We have a host of other specials on this page as well which will suit students looking to enrol in everything from accounting software training courses, to social media marketing and business start up courses.

As with all of our online training materials, students can learn at their own pace, in a way that suits their busy schedules with 12 month’s or lifetime course access options.

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Remember, becoming proficient in a number of different software packages takes you a long way towards being able to offer diverse services to your clients. Then you only have to decide which services to offer — BAS, payroll, credit management — or perhaps all three and more? One you know what you can offer your clients, you’re well on your way to operating a successful bookkeeping business.

cashflow reports in xero and excel

 

3 Little Mistakes that Cost Thousands

How tapping into your Smartphone can win you work

online training learning tradesmen carpenter painter plumber electrician turning quote into sale
You can be more relevant and responsive to the needs of your clients if you tap into low cost technology tools at your disposal.

I RECENTLY WROTE about a Tradie Charging Too Little. In this I covered the four tell-tale signs, as told to me by a tradesperson friend of mine, that your prices are too low. But there are other business mistakes that owners, particularly tradespeople, make that can wind up costing them thousands in lost revenue — and when I say revenue I don’t just mean from existing clients but also past clients and new prospects!

The crazy thing is that most of this can be solved by using a bit of technology. And I don’t mean using a desktop computer; indeed, most tools you need are now available from your smartphone. My preference is Android and Google G Suite.

Google G Suite Training Courses - contacts, emails, calendars, appointmentsNot getting prospect’s details

Lots of business owners, including bookkeepers and tradespeople, will just hand out their business card to prospects, rather than taking down the prospect’s details so they can follow up. 

Sure, handing out your business card is a good start, but if you spend an extra minute or two getting contact details from the prospect as well as details about:

  • the work they’d like done
  • the timeframe they’re hoping for
  • their budget, etc

you can follow up in a meaningful way and hopefully win some new business. The great thing is that you can add the prospects address and contact details to your contacts and even your calendar for 3 weeks into the future and just make friendly contact with them to see whether they are ready to begin!

Learn How to use Xero with EzyLearn Online CoursesSlow to send estimates

The best time to send a prospect a quote is when you’re still at their premises. You can do this by writing them out by hand in a book with carbonated paper (but get real, you’ve got a smartphone!)

Better still is to use a cloud accounting program like Xero to email the quote through to the customer right then and there (this helps ensure you get their correct email address too). 

The biggest reason to do this prep work: Because you have a prospecting list you can call on when things get quiet in your business.

If you take the time to explain the details of the quote, you might also just get an automatic acceptance, so then you can begin scheduling a start date, arranging a deposit, and so on.

This actually happened to me when I was using a glass manufacturing business in Maitland NSW for a recent renovation I was involved in — the estimator mentioned they could do it the following Tuesday and that all they needed was a 50% deposit. He asked for the business on the spot and guess what? He got it! 

Learn more about our property investment micro courses and education guides.

The price of being disorganised

Don’t wait until the day before you’re due to start a job — or worse, until you arrive to commence work — to secure a deposit from your customer. Ask them to pay the deposit before you commence the work, so you’re not waiting around to be reimbursed for materials you’ve purchased out of your own pocket. This can have an adverse impact on your credit management processes.  

This tradie I was speaking to was thinking about getting a small loan for $2000, when I suggested that he just get his deposit for an upcoming job now rather than a day before he starts it!

 

Get a Coach or Mentor to help you through the process

EzyStartUp business startup and admin training coursesOur EzyStartup Course will you teach you about pricing your services, business planning, marketing, and developing a professional network to grow your business.

learn xero online training course videos shopping around for bookkeeping quoteVisit our website for more information or to enrol. Best of all you can engage a business coach to help you set some goals, stay on track or even project manage the using of new technology so you begin using this technology every day.


 

Do What You Know & Actually Make Money

business and marketing help for tradiesMANY SMALL BUSINESS owners get distracted thinking about what they could do or want to do and not what they can do now.

Doing what you know, and particularly, what you love doing and are passionate about, will ensure you earn money and get new clients.

Why? How? Because people see it in your body language and hear it in your voice.

Throw in some good computer skills and efficient credit and money management and you’ll be set for a great financial year profit.

People Prefer Specialists

I recently worked with a lot of different trades people on an investment property in Newcastle and found it fascinating how many trades people would promise to do a lot of things but then not be able to deliver when needed.

In particular I spoke with a painter who claimed that he was a level 3 painter (and not a level 1 painter) and then gave me reasons for it.

I soon realised that this painter simply wanted to work at a slower pace doing lots of interesting things. He didn’t want to work on intricate, complicated paint jobs — however, he was quoting on EVERYTHING in the hope of getting the work.

My strong advice: Specialise early in one or two particular areas of your field. For instance; if you’re a painter, concentrate on indoor painting, rather than spreading yourself thin doing outdoor jobs.

Similarly, don’t even bother quoting on projects that require lots of different tools and expertise you don’t necessarily have. You can branch out later, once your business is more established and you have the time and resources to take on different kinds of jobs.

Just remember, people want experts because they know the job will be be done well — and they’re willing to pay good money for that. If you’d prefer to do more basic paint jobs like renovation touch ups and/or refreshing old houses, and you are willing to accept a lower rate, there is also plenty of demand for that.

Build a network of specialist professionals

You, personally, can’t be everything to everyone, but you can build up a network of professionals so your business can provide everything to everyone.

Get to know other professionals who carrying out work in ancillary and adjacent areas to your business, and work out a mutually beneficial arrangement to pass work onto each other, where each people can earn a finder’s fee.

EzyStartUp business startup and admin training coursesLearn about setting prices, business planning

The painter recently went through the topics in our EzyStartup Course and realised he could earn a commission or referrals by passing jobs that were outside his area of expertise onto other painting companies. This has enabled him to focus more on the renovations and maintenance work that he prefers to do.

Our EzyStartup Course taught him about pricing services, business planning, and developing a professional network to grow his business. Visit our website for more information or to enrol.

Be a better tradie!

FREE Xero Accounting Training Course WorkbookDownload our FREE Xero Training Workbook.

WHEN YOU KNOW even just the basics of what Xero cloud accounting can do (or you have someone in your business who does) you’ll stand out from others. 

Why? Because you can MANAGE YOUR TIME in Google Calendar (part of Google G Suite) and GENERATE QUOTES AND INVOICES INSTANTLY using Xero accounting — it’s much simpler than you think!

You’ll earn your money faster, have better cashflow and not be left worrying about all the things you have to do in the future.

See our suite of online Xero accounting courses if you want more details


 

Running Multi-Period Profit and Loss Statements

Be Aware of the Ebbs and Flows of Your Business: Multi-Period Profit and Loss Reporting

multi-period-profit-and-loss-statement-reporting
Multi-period P&L reporting helps you capitalise on the peaks and troughs in your business.

Nearly every business has its busy periods and its quiet ones. Crucial to the success of a business is knowing when these busy periods and quiet ones occur, so you can capitalise on them. For a lot of Australian businesses offering professional services, December through January is usually when business winds down for the year. In the hospitality and accommodation industry, however, it’s typically the busiest time of the year, so planning for increased business is essential.

Muriel, a bookkeeper based in Dee Why, in Sydney’s northern beaches, encourages businesses to run a multi-period profit and loss (P&L) report in their accounting software in order to best determine these trends and to plan for them. Previously, this function was only available in MYOB and, in a roundabout way, in Xero, but the functionality has just recently been made available in QuickBooks, too.

Key Takeaways from P&L Statements

As the name of the report suggests, a profit and loss statement illustrates whether your business is making a profit or a loss, and for what period losses and profits were recorded. The best part about multi-period P&L statements is that you can run one report for, say, May, June and July off 2016 and, at the same time, run a P&L for the same period, the previous year.

multi-period-profit-and-loss-statement-reporting-well
Cause for yippee: When business slows, you may be inclined to think things are down on the previous year, but multi-period reporting can often show you’re actually ahead.

In MYOB and QuickBooks, each month will be shown in columns next to each, so you can easily compare each one, and also look for patterns or trends in your business. It also makes it easy to identify if there were any problems that should be investigated further, because they stick out like a sore thumb. Most of the time, the issues that are turned up are the result of a keying or coding error in your bookkeeping, but occasionally, it could indicate that your business isn’t as healthy as it should be — or, conversely, that it’s outperforming your expectations, in which case, yay!

If Your Business Sells Goods

In addition to running multi-period P&L reports, inventory businesses that sell goods, should get in the habit of running inventory sales and stock-on-hand reports. These reports allow you to see how your business is performing. In particular, you’ll be able to monitor your product lines, to see what’s selling, what’s not selling, what you have too much of, and what you have too little of.

Ask your bookkeeper to run regular P&L statements and, if you’re a business selling goods, inventory sales and stock-on-hand reports, too. They’ll provide you with invaluable insights to help you better understand your business.

Precious Help Finding A Bookkeeper

Like GPs, there’s usually a bookkeeper on every corner, but how do you find someone who’s top of their game, will save you time (and very probably money) and who will be a true asset to your business? Some business owners are unsure where to start when looking for a bookkeeper they can trust and rely on. It’s also extremely concerning how many Australian small businesses suffer — to the point of insolvency — as a result of inadequate cash flow. A large portion of cash flow problems stem from credit and debt management and the systems business’ put in place to do this.

Muriel is a highly experienced, accounting degree qualified bookkeeper, looking to work with businesses located in Sydney’s northern beaches suburbs of Allambie, Balgowlah, Beacon Hill, Collaroy, Dee Why, Frenchs Forest, Manly, Manly Vale, Narrabeen, Narraweena and Warriewood.

Muriel is comfortable using MYOB, Xero and SAASU accounting programs and can provide bookkeeping tasks ranging from invoicing and reconciliations, to accounts receivable, payable, business activity statements, and inventory asset management or high level financial analysis and reporting. Read more about Muriel at her profile page.

Our National Bookkeeping website has recently undergone a significant upgrade so keep a look out for more stories about featured bookkeepers in forthcoming blogs. Join now and we can feature YOU in our articles too.

 

The Secret to an Error-Free BAS Report

What To Do So You Don’t Lose Money When Doing Your BAS

lodging correct business activity statements
Why pay more money to the ATO at your expense? A good bookkeeper may save you money when it comes time to lodge your BAS.

If your business is registered for GST, it means you have to file regular activity statements with the ATO, usually each quarter. A lot of business owners export their Business Activity Statement (BAS) data straight from their accounting software, like MYOB or QuickBooks, and quickly prepare their BAS’ that way. But this is an imprecise method, and one that could be costing you money.

Tracey Marino, an experienced bookkeeper based in Rockingham, WA, knows how important it is that businesses of all sizes keep their Business Activity Statements error-free so as not to end up costing business owners money. 

An Error-Free BAS in 6 Steps

Here’s six steps you can take for an accurate BAS:

  1. Check to ensure all bank, credit card, overdraft, loan, and petty cash accounts are reconciled with the original bank statements at the end of every BAS quarter.
  2. Print your monthly profit and loss (P&L) report for the respective BAS quarter, and check for abnormalities in income or expenditure over the three months. You should also compare this quarter’s P&L report with the P&L report from the previous quarter (in the same financial year), as well as the P&L report from the same quarter in the previous financial year to detect any unexpected transactions.
  3. Print out the balance sheet as at the end of the BAS quarter. Note the balances for the wage and salary, payroll, payable, super expense and payable, and PAYG and GST accounts, and investigate any abnormalities.
  4. Generate the general ledger exceptions report to review any abnormal transactions. This report will indicate any differences in the GST codes for the same types of purchases or sales by comparing the current transactions with previous transactions.
  5. Print your BAS and compare with it with last quarter’s BAS, as well as the BAS from the same quarter of the previous year, and ensure that your GST, PAYG, sales, and purchases are consistent across all three BAS’.
  6. Lodge and pay your BAS on time to avoid penalties, and remember to record the BAS payment in your accounting software.

Although this may appear to be ‘double handling’, in fact, it eliminates double handling by ensuring that the activity statements you lodge with the ATO are correct and error-free. Typically, the mistakes this method turns up are ones that would be of benefit to the ATO and not to the business owner. So rather than give the ATO more money than you need to, make sure you follow this method for an error-free BAS lodgment.

An Experienced Bookkeeper in WA

bookkeeper-rockingham-wa
Tracey Marino is available to provide bookkeeping services in the Rockingham area of WA.

Looking for a reliable and accurate bookkeeper to manage your business’ daily or weekly bookkeeping and accounts, either in the cloud (remotely) or in-person?

Tracey Marino is available to service businesses located in Port Kennedy, Warnbro, Baldivis, Secret Harbour, Golden Bay, Safety Bay, Shoalwater, Rockingham and Cooloongup, WA. Tracey is a an expert in MYOB AccountRight, QuickBooks and Microsoft Excel and can prepare and lodge your company’s BAS, set up credit management systems, along with carrying out all manner of day-to-day accounting functions for small to medium businesses. Find out more about Tracey’s experience at her profile page.

Our National Bookkeeping website has recently undergone a significant upgrade so keep a look out for more stories about featured bookkeepers in forthcoming blogs. Join now and we can feature YOU in our articles too.

Three Things Your Bookkeeper Shouldn’t Be Doing

Is Your Bookkeeper Making Stuff Up?

how-to-find-a-good-bookkeeper
Some bookkeepers may fudge their way through your books, but you can spot this before it ends up costing your business.

In a previous post we wrote about the three tell-tale signs that your bookkeeper isn’t paying attention and we thought we’d expand on this a little further by writing about three of the things your bookkeeper shouldn’t be doing — and what it means if they are.

 1. Your Bookkeeper Adds Adjustments to Reconciliations

The reconciliation is just a comparison between your records and those of the bank, so if you see reconciliation adjustments, something’s wrong. A bookkeeper should never make reconciliation adjustments, because it means they haven’t accounted for something properly and, instead of trying to find it, they gave up and made an adjustment instead. This is a classic example of why daily reconciliations are a good idea.

2. Vague Descriptions for Transactions

A good bookkeeper should know exactly what descriptions to use for each of your transactions, so if you see strange or vague ones like “opening balance??”, it’s a sign your bookkeeper doesn’t know what they’re doing. By the same token, if you see that the description field has been left blank or there are lots of journal entries, this should likewise raise a few red flags.

3. Lots of Old Transactions in Undeposited Funds Field

In most cloud-accounting software packages, such as QuickBooks, Xero and MYOB, there’s an undeposited funds account, where certain unreconciled transactions may sit. If you see lots of old transactions sitting there, it’s a sign your bookkeeper doesn’t understand what this feature is for or how to work with it, and as such, they’re manually recording deposits, which will overstate your income or sales.

If you’re seeing any of these things happening with your bookkeeping, you should speak to your bookkeeper straight away. It’s a clear sign that they don’t understand your accounting software properly, and you will pay for it later — usually when you go to see your accountant at tax time. Ensure your bookkeeper is qualified to work with the accounting package you’re using, and, ideally, that they have the equivalent of a Cert IV in Bookkeeping or higher.

 

Finding the Right Bookkeeper

finding the right bookkeeper for your businessBookkeepers seem to be ‘ten a penny’, but like in most professions, the really good people tend to stand out. A competent bookkeeper — someone who really listens, who understands the software and who prioritises your business — is crucial to a business of any size. A quality bookkeeper will help see to it that you’re not overpaying tax and meeting your payment obligations to staff, of course, but they can also help you put in place proper credit and debt management procedures and processes, something vitally overlooked by many small businesses (and yet most small businesses go insolvent as a result of cash flow problems — many of which stem from non-paying or late paying clients).

If you are after an efficient bookkeeper and you run a business in Meadow Springs, Parklands, Silver Sands, Mandura, Halls Head, Erskine, Dudley Park, Coodanup, Furnissdal or Barragup or Rockingham in WA, Deb Crompton is a tertiary-qualified bookkeeper with plenty of experience in bank reconciliations, invoicing, accounts receivable and payable and reporting; she also has the practical experience of having operated her own business in the past. You can see more details about Deb at her profile page or request a quote for a similarly experienced bookkeeper in your area. Our directory includes many degree qualified local bookkeepers, who are ready to start working with your business, in person or in the cloud.

Check out our National Bookkeeping website which has recently undergone a significant upgrade. We will keep feature more of our bookkeepers in forthcoming blogs — join now and we can feature YOU in our articles too.

The 3 Tell-Tale Signs Your Bookkeeper Isn’t Paying Attention

Are You Getting the Best from Your Bookkeeper?

find-a-good-bookkeeper
You don’t need to be a whizz at bookkeeping to recognise when your bookkeeper isn’t prioritising your business.

MANY BUSINESS OWNERS LACK an in-depth knowledge of the bookkeeping process so they hire a bookkeeper to manage it for them.

But this can also make it hard to know whether the bookkeeper they’ve hired is paying close attention to their business’ books or not.

Ricky is a tertiary qualified bookkeepers from Blacktown in NSW, and he reveals there are three tell-tale signs your bookkeeper isn’t paying attention.

1. They’re always behind with your books

This is pretty common among a lot of bookkeepers, and it’s usually because they’re not motivated to do a good job. A good way to nip this in the bud, is to communicate key dates or timeframes with your bookkeeper.

If you need bills entered every Wednesday and a profit and loss statement on the fifth of each month, say so. That way you’ll know whether snoozing on the job or not.

2. You accountant’s bill is still high

If the bill from your accountant is still as high as it was when you didn’t have anyone managing your bookkeeping, it’s a good sign that your bookkeeper’s work isn’t up to standard. If your accounts are unorganised and unbalanced, it means your accountant will have to go through and review the information before they can do their job. That’s double handling, and you need to get to the bottom of it as soon as possible.

3. They don’t understand cash vs accrual

finding-the-best-bookkeeper
Is your bookkeeper puzzled? A good bookkeeper knows what they don’t know. If they’re unsure about cash accounting, they should let you know this.

Because many bookkeepers today, particularly contract and remote bookkeepers, got their start after cloud-accounting software became popular, lots of them don’t understand the difference between cash and accrual accounting systems simply because software like Xero and QuickBooks defaults to an accrual system.

Cash and accrual systems each have their own merits, depending on the size and complexity of the business. So it’s important that your bookkeeper knows the difference between and understand the benefits of each.

 

Does Your Business Need a GREAT Bookkeeper?

Tertiary-Qualified, Thoroughly-Vetted Bookkeeper Available in Sydney’s West

Like GPs, there’s usually a bookkeeper on every corner, but how do you find someone who you really trust and who genuinely has the best interests of your business at heart? Some business owners are unsure where to start when looking for a bookkeeper they can trust and rely on.

It’s also extremely concerning how many Australian small businesses suffer — to the point of insolvency — as a result of inadequate cash flow. A large portion of cash flow problems stem from credit and debt management and the systems business’ put in place to do this. This is something that can be handled by a competent and experienced bookkeeper. But it’s also about business owners understanding the need to make this a priority.

In finding the right bookkeeper, word of mouth can be helpful, but some people are reluctant to even do this for fear of losing a cherished and valuable resource. A great deal of trust is also placed in giving such sensitive financial information to bookkeepers and some people don’t like their bookkeeper doing work for other people they know.

If you’re looking for a reliable, thoroughly-vetted bookkeeper, capable of managing your daily/weekly bookkeeping and accounts, either remotely or in person, our National Bookkeeping directory features dozens of tertiary qualified bookkeepers available to assist you.

If you are located in Sydney’s western suburbs, Ricky from Blacktown, NSW, is a qualified bookkeeper with tertiary qualifications; he is also a registered BAS agent. Ricky has a great deal of experience in the day-to-day accounting functions of a small business, from invoicing, accounts receivable and payable, to payroll, financial analysis and reporting. Visit his profile page and request a quote for bookkeeping services.


find a local bookkeeper

Our National Bookkeeping website has recently undergone a significant upgrade so keep a look out for more stories about featured bookkeepers in forthcoming blogs. Join now and we can feature YOU in our articles too.

 

What if a Credit Check Comes Back Negative?

Do You Have to Drop a Client Because of a Bad Credit Check?

customer-with-bad-credit-rating
It’s only business: but sometimes a bad credit rating doesn’t mean you have to end the working relationship.

A Credit Check is one of the most important first steps of good credit and debt management but you can still do business if the check comes back negative.

In our previous post on credit and debt management, we recommended that all businesses — regardless of whether they offer credit to customers on a 30-day account or not — perform a credit check on any new client who will spend more than $1000 on goods or services in one sale, on an ongoing basis. But what should you do if the credit check comes back negative, and shows that the potential customer is guilty of late payments, pending legal action or already carries a significant level of debt?

It may not be a case of having to turn a potential customer away. You may still be able to offer services to the customer without the risk that they won’t pay by trying the following approach, before refusing them entirely:

Advise the Client of the Bad Credit Rating

If the client filled out your credit application or work authorisation form, which should have stated that you were collecting their information for the purpose of credit check, there may be a good chance they filled it out in good faith and they’re unaware of their bad credit rating. There may be a reason for the rating, like, for instance, that the business was recently sold. It may even, potentially, stem from an ongoing dispute with another supplier over the standard of their goods or services (although proceed with caution here, as this, too, throws up a few red flags).

Look a Little Closer

When you search deeper, you might discover that the customer experiences predictable fluctuations in trading conditions which render them more vulnerable to being cash flow poor at certain times of the year. You may be able to accommodate this in how you design your credit terms with this customer. You might also ask for a list of suppliers (ensure you get a complete list, not one that has been hand-picked by the customer to only show them in a positive light) who you can call and verify as to their likely credit risk for future.

Request Payment in Advance

This said, a bad credit rating is a bad credit rating, even if the client has a perfectly good and reasonable explanation for you. You have the upper hand here, so you’re well within your rights to only agree to do business with this client so long as they pay for your goods or services in advance.

If you’re a supplier, say, of goods and your delivery driver has the capacity to accept cash payments on delivery, you may accept COD, however it’s not recommended. If the client is unwilling to prepay for your goods or services, then there’s a good chance they’re not acting in good faith, and so you’re best to avoid doing business with them.

Need a Bookkeeper? Sydney’s North Shore

good-qualified-bookkeeper
We have qualified, professional bookkeepers available Australia-wide.

If you’re in need of some help with your own business’ credit and debt management and are seeking a reliable bookkeeper to manage your daily or weekly bookkeeping and accounts, either remotely or in-person, we are pleased to recommend Roz, qualified bookkeeper based at St Ives, with tertiary qualifications in accounting. She is a National Bookkeeping member and comes to us with the practical experience of having operated her own business and proficient in the day-to-day accounting functions of a small business. Visit her profile page and Request a Quote for Bookkeeping Services.

Our National Bookkeeping website has recently gone through a significant upgrade so keep a look out for more stories about featured bookkeepers in forthcoming blogs. If you’re a bookkeeper why not join and we can feature YOU in our articles too.

Is Credit Management Just About Getting on the Phone?

It’s Good Business to Set Out Your Credit Management Policy at the Outset

credit-management-bookkeeping-business
Spelling out your credit management procedure at the start with a client helps avoid payment-chasing phone calls later.

CRITICAL TO THE SUCCESS OF ANY BUSINESS is the ability to maintain a healthy cash flow. But doing so requires effective credit management processes.

Unfortunately, too many business owners feel uncomfortable talking about credit and debt management upfront with new clients, believing it begins if, and when, a customer doesn’t pay a bill. In fact, credit management starts much, much earlier than that — long before the two businesses even agree to work with each other, to be precise.  

The 3 Stages of Credit Management

Credit management falls, generally, into 3 broad stages, beginning with how new customers are assessed before you do business with them. If you extend a line of credit to your customers, payable on a 30-day account, then a credit check is an imperative first step. But even if you don’t offer credit, a credit check should be a routine part of the new customer set-up process.

If you provide services to customers that aren’t paid for in advance or upon receipt, and you allow that customer between 14 and 30 days to pay your invoice, you’ve essentially just extended them a line of credit. Indeed, it’s recommended that any business, whether they’re a sole trader, freelancer or independent contractor, carry out credit checks on any new, ongoing customer for jobs over the value of $1000.

Stage 1: Assessment

The assessment stage of good credit management involves taking the following steps:

  • Create credit application or work authorisation form
  • Establish terms of trade
  • Obtain a credit check.

As long as the credit check doesn’t raise any issues of concern in relation to the business’ previous track record with paying suppliers on time, you can then decide to take them on as a client. From here you move to the next stage of credit management.

Stage 2: Management

This is the most involved stage of the credit management process, as it requires diligence to ensure your processes don’t slip. Some aspects of the management stage may require a phone call to your client to find out why they haven’t paid, however, for the most part, cloud-accounting software has made it a lot easier to stay on top of your debtors. Ensure your process includes the following:

  • Prompt invoicing (as soon as goods / services have been provided)
  • Establish payment reminders, either by email or text
  • Send regular statements (if customer is on a 30-day credit account)
  • As soon as payment is overdue and in breach of terms of trade
  • Send to debt collection.

If you speak to your client twice about an overdue invoice / account, and they still don’t make payment within an agreed time, refer them to your debt collection agency, however harsh that may seem.

Stage 3: Enforcement

Although debt collection agencies can chase a debt that’s as much as 5 years old, the older the debt, the harder it is to collect payment. As soon as a client is in breach of your terms of trade, and your other attempts to collect payment have failed, refer the debt to your collection agency. If debt collection is unsuccessful, you should speak to your accountant or financial advisor about writing the debt off in your next tax return.

Good Credit Management Should Mean Few Phone Calls

credit management chasing payment
Avoid time-wasting and unpleasant phone calls by eliminating the chances of late payment through a professional credit management policy.

As you can probably tell, if you have a good credit management process, and you’ve properly vetted all new customers before doing business with them, you should infrequently have to pick up the phone to chase them for payment. In that sense, credit management is not about getting on the phone, it’s about implementing a range of procedures for managing your debtors, and it begins before you even do any work for them.

We Can Help You Set Up Your Credit Management and Much More

Has your business yet to set up proper credit management systems? Having the assistance of a reliable, experienced professional to help you do so may cost a lot less than you think. We have thoroughly-vetted, reliable bookkeepers across Australia, capable of setting up your systems so you can continue to do your bookkeeping yourself, or able to keep managing your daily or weekly bookkeeping and accounts.

In Your Office or In the Cloud

All of this can be done either remotely or in person, with most of our bookkeepers tertiary qualified and able to assist in basic bookkeeping to more complex accounting tasks, such as accounts receivable and payable and payroll, or financial strategising. We also have registered BAS agents in our national directory. See our newly upgraded website, National Bookkeeping for more information.

Based in WA? Experienced Bookkeeper Available

If you are located in Western Australia, Deb from Mandurah, WA, is a qualified bookkeeper with tertiary qualifications and the practical, hands-on experience of having operated her own business in the past. Deb has a great deal of experience in the day-to-day accounting functions of a small business and you can contact her directly as a fully licensed member of National Bookkeeping from her profile page.

Our National Bookkeeping website has recently undergone a significant upgrade so keep a look out for more stories about featured bookkeepers in forthcoming blogs. Join now and we can feature YOU in our articles too.