When it comes to business management, your business’ financial aspect requires attention and while bookkeeping and accounting fees are quite high these days, ensuring quality is going to be the best practice to follow to avoid experiencing poor bookkeeping. Just imagine operating your business without paying attention to your financial activities. You had high hopes that your cashflow is still intact but when you received a letter from the ATO reminding you of your delayed or non-payment of GST and PAYG, everything will surely sink in that you need to recheck your bookkeeping task.
You worst fear has finally come true as the ATO forwarded the letter to your bank informing them of your non-payment. It was too much to take and you are well-aware of what is going to happen next. You panic at the thought of your bank receiving the letter from the ATO. You are restlessly waiting for the bank manager to call and demand of a good explanation for your non-payment.
Being in the business requires you to keep watch of your cashflow from a bird’s eye view. For the most part, business owners rely on bookkeepers when it comes to ensuring that their financial activity is kept in check. However, your business is doomed to fail if you do not take an active participation in the process of checking your financial statement. As a result of non-payment of GST and PAYG obligations, the ATO is left with no choice but to garnish the company’s bank account.
The sad truth about mismanaging a business is the failure to pay attention to their operating expenses and wages bill. It seems too easy to request the ATO to defer payments, but if this already becomes a habit, it is definitely difficult to catch up. Once a business is in financial distress, making a payment of debts is a challenge. If paying debts is not definite, insolvency is not far from happening and bankruptcy is inevitable.
Even the hardest working people are not immune to financial stress and there are things beyond a business owner’s control. If you have a business partner and he is not doing his part in managing the business, it can also take its toll on your business.
This scenario can still be avoided so long as essential questions are truthfully answered:
• Can you still meet the contractor’s bill and payroll?
• Are you making timely GST and superannuation payments?
Timely management reports should be prepared by your bookkeeper so you will be able to keep watch of your business. Bookkeepers should meet the following obligations for a cost effective way of handling your business:
• Create a system so invoices go out promptly and reminder notices are sent effectively to avoid falling behind payment schedule.
• Prepare a system that has the ability to highlight late payers once due dates are triggered.
• Terms on invoice should also be set up so it will be easy for you to find out about your collection costs.
As a business owner, it is also your responsibility to call the bank manager before he calls you, give the ATO a call, arrange payment plan that you can follow, prepare budget and reduce head-count if it is considered necessary.