Account Tech Solutions

See what we can offer in 2010

Matt — Tue, 05 Jan 2010 00:42:25 +0000

2010 is here and so is Account Tech Finance Solutions

Take a few minutes to see how we can assist you

this year……

Your Requirements	My Solution

* Car Insurance due?	I have 2 major Australian Insurance companies on
	board which allows me to be super competitive

* Looking to upgrade your car	Talk to me to find the right Finance
	product to suit your business or personal needs

* Require new business equipment	Should you Lease or what is the alternative?
	Ask about our operating Lease products

* Are your Debtors getting out of hand?	I can arrange Debtor Finance

* Want to upgrade the kitchen?	Personal loans are back with minimal payout penalties

* Business Insurance due?	Have you heard about Insurance Premium Funding?

Remember it costs nothing to ask

Matt Walker

1300 858 152

matt@accounttech.com.au

The Finance Maze – Chattel Mortgages

Matt — Wed, 04 Nov 2009 03:04:56 +0000

The finance scene has changed over the last ten years for the small to medium business owner since the introduction of GST.

Prior to the year 2000 the majority of business people would go out to purchase a vehicle or equipment for their business and finance it on a lease or a commercial hire purchase depending on their accountant’s advice and the business’ setup.

This made it quite simple for their accountants as all they had to do was add up the lease/HP payments for the financial year and that was the tax deduction.

Chattel Mortgage Finance

In the current market over 90% of business finance is done on a product called Chattel Mortgage.

The reasoning behind this is that the items being purchased, whether motor vehicles or plant and equipment, all attract GST on the sale. The client can fund the total amount of the item including GST from the financier and are then able to claim the GST component (input credit) back it their next BAS. Businesses can claim the GST up front regardless of whether they are cash or accrual reporting.

This allows the business owner to make a capital purchase and offset the input credit against the GST payable.

The business will also be able to claim depreciation and interest on the viagra mortgage as under this facility the client owns the goods from day one and the financier takes a mortgage (security) over the chattel. This differs from a lease or hire purchase agreement where the financier actually owns the goods until the last payment is made.

Lease Finance

Some businesses do still lease their vehicles or plant and equipment depending on their individual circumstances and their accountant’s advice.

The benefit to businesses funding their capital purchases on lease are that the finance company owns the goods and claims the GST so the business purchases an item exclusive of GST and pays the GST on the lease repayment.

An example of this would be;

A motor vehicle is say $44,000 including GST before on road costs

The financier would fund $44,000 and pay the dealer and claim the $4,000 GST back.

The client would have a lease for $40,000 over 48 months with a residual value of 30%.

This would mean that the client pays a monthly lease rental of approx $860 (including $78 GST) for 4 years and at the end of the term the Residual value would be $12,000 plus GST.

The Finance Maze – Operating Leases

What Are Your Customers Saying About You?

Meredith — Wed, 28 Oct 2009 01:49:34 +0000

In my recent blog on Business Networking Web 2.0 Style I posted a video from YouTube which made some eye opening claims about the prevalence of Social Media. It raises many issues which are very relevant to the way we do business today, and small business owners would be well advised to consider them.

Many people still dismiss social media as a passing fad. According to ComScore, over 70% of Australians visited a social networking site in June this year, up 29% from the previous year. Facebook visits grew from 3 million to 6 million and Twitter grew from 13,000 to 800,000 in the same period in Australia alone.

This kind of growth and reach is hard to ignore.

And for those who regard social media as the domain of Generation Y, demographic data show that the largest age group on Facebook are 35 to 54 years old, and over 40% of Twitter users are 35 to 44 years old. The fastest growing segment on Facebook is 55-65 year old females!

“80% of Twitter usage is on mobile devices, what does that mean for bad customer experiences?”

The viral nature of networks means that our business reputations, good OR bad, can potentially travel around the world in minutes. It is also said that 25% of search results for the world’s largest brands are user generated content, and over a third of bloggers post opinions about products or brands. What are these people saying about you?

Consumers trust peer recommendations more than any other kind, including paid advertising in traditional media, so the implications here are enormous.

With the amount of news and other content being shared via social media, is it any wonder that almost all the major newspapers are experiencing decline in circulation?

Implications for Business

So what should businesses be doing to avoid being left behind? Some possibilities are:

Analyse and use consumer generated insights to drive sales and marketing related business decisions
Provide a means to engage with customers through company hosted blogs and online forums
Monitor what your customers are saying online, and view negative feedback as an opportunity for growth and improvement
Use multiple channels of social media to predict and monitor customer behaviour.

The Finance Maze – Operating Leases

Matt — Fri, 23 Oct 2009 06:36:58 +0000

Moving on from consumer finance to small business and corporate finance, we’ll look at the example of purchasing IT equipment. Rental or operating lease facilities are often ideal for these groups as they need to be up to date with technology to keep pace with their competitors.

Rental Products

The rental products available in the market allow the small business to lease (off balance sheet) IT equipment which will no doubt be out of date in 2 to 3 years time. This product allows the business “the use” of the current IT equipment and at the end of the finance term they just hand it back and upgrade to a more current product. A fixed monthly payment is calculated at the time of purchase.

The advantage of this type of lending is that the business can maintain cash reserves for normal trading cash flow rather than using their cash to purchase equipment outright which will be obsolete in a few years time.

Dollar Buy Back

Some financiers offer a $1 buyback at the end of the term which is ideal for items with a life span of more than 5 years; this allows the business to spread the cost over a period of time to ease cash flow.

Rental can be reasonably expensive due to the fact that the items are worth nothing at the end of the term. This is because technology evolves and the financier ends up with an obsolete piece of equipment which they then have to dispose of.

Some of the lenders in this industry are quite switched on and are able to package together say a container full of refurbished second hand photo copiers and send them to third world countries. This also helps the retailers who are trying to sell new product and do not have to compete against their own refurbished product in the market.

Other Options

The other thing to consider in the current market is that it may be more beneficial to purchase the larger dollar amount items on a Chattel Mortgage and claim the Australian Governments Investment Allowance (in place until December 31, 2009). Your accountant will be able to advise you if this is the best choice.

The Finance Maze – Cash vs Finance

Matt — Tue, 13 Oct 2009 02:36:23 +0000

Buying a motor vehicle whether it is new or used can be a time consuming and frustrating adventure. In this article I will look at the everyday person buying a family car and some of the things to consider.

The act of purchasing a vehicle and funding it are two very separate parts of the process. The negotiating of a price or change over figure is one transaction and the funding a totally different transaction.

Once you have completed the buying of the vehicle it then comes down to how is the most effective way to pay for it. Most from the old school would say that if you can’t pay cash then don’t buy it and to some this is still the way they buy things.

Now if you have the cash to pay for a vehicle outright then this may not be the best option as you end up with no cash and a depreciating item.

There is a way that you can retain your cash and purchase the vehicle under finance and at the end of the day you are better off.

How Does This Work?

The following assumption is based on the fact that you can afford a monthly payment from your income.

Let’s look at the scenario that you wish to buy a new vehicle for say $30,000 and that you were going to pay cash. You pay the dealer the money and you end up with an asset worth $30,000 day one and no cash.

What do you think your car will be worth in 12 months and again in 5 years?

Let’s be unrealistic and say that your vehicle is worth $25,000 in 12 months and say $20,000 in 5 years and you still have no cash reserves.

This is how it works:

If you invest your $30,000 in the bank on a term deposit over 5 years with compound interest at 5.1% and you finance the $30,000 car purchase over 5 years at 9%.

Year	Amount	Annual	Total	Car Value	Total Assets	Loan
1	30,000	1,530	31,530	25,000	56,530	7,417
2	31,530	1,608	33,138	24,000	57,138	7,417
3	33,138	1,690	34,828	22,000	56,828	7,417
4	34,828	1,776	36,604	21,000	57,604	7,417
5	36,604	1,867	38,471	20,000	58,471	7,417

At the end of 5 years:			38,471	20,000	58,471	37,085

At the end of the five years, your cash investments will be worth $38,471, and your outgoing repayments will have been $37,085. This means you have an extra $1,386 in your pocket at this time.

Why Does This Work?

When looking at the interest rates in the above example, it may seem counter-logical that you end up with a positive cash position, given that you are receiving 5.1% on your funds and paying out 9%.

The simple answer to this is the power of compound interest.

Business Networking Web 2.0 Style

Meredith — Sat, 10 Oct 2009 07:58:31 +0000

Nine years ago this month I launched my business on an unsuspecting public. Nobody had warned me at the time that in addition to being an accountant, I had to be social as well!

Much has been written recently on how to use [insert favourite social media application here] to win the hearts, minds and business of new and existing customers. Being a non-typical Generation Xer and an early adopter of computer / internet technologies, I’m loving the opportunities being opened up by Social Media.

When I first started my business I joined the local Chamber of Commerce, Rotary, breakfast referral groups and so on. Every so often I’d go to networking events which were not unlike what I imagine speed dating to be like. Get as many contacts and business cards as you can then move on to the next group.

I had far greater success with the regular meeting groups which weren’t JUST about speed networking. I’ve always preferred to establish some kind of rapport with someone, and this doesn’t happen during a 30 second conversation in a noisy room.

If I felt I knew a bit about the person, then I would be more likely to do business with them. And for me, this is where the strength and power of Social Media lies.

Why I’m Loving Social Media

Over the last few years, most of the friendships I’ve made with people have been online. As a result, I’ve come to know people all around the world and even had the pleasure of meeting some when travelling overseas. This non-confrontational method of communication suited my anti-social self down to the ground.

As a result, I’ve found it very easy to slip into a similar style with my social media interactions. Getting to know like minded people via Twitter, Facebook and so on has led to new connections which have already led to new business.

Face to face interaction obviously is still required, but breaking the ice online first has made it far easier for me personally to make new business contacts. And there is no doubt that social media will change the way we all need to do business.

[youtube]http://www.youtube.com/watch?v=sIFYPQjYhv8[/youtube]

This video is in a similar vein to one I posted previously (with the same backing track too) – and is deserving of a whole blog post discussing some points it raises!

The Finance Maze – Consumers

Matt — Tue, 06 Oct 2009 21:09:08 +0000

In today’s ever changing society the consumer, small business and corporate entities rely so heavily on finance as an everyday occurrence that many different products have become available. ‘The Finance Maze” series will lead you through a number of different options available in the market from the small through to the large lending products.

Consumer Finance

The consumer uses finance for anything from buying a TV, car or boat through to the home they live in and there are many different ways to procure these items, some more expensive than others. Let’s have a look at each market segment to see where the advantages are.

Example: purchase of a new Flat Screen TV for $3,000.

Mum and Dad go out to buy a new flat screen TV from a major retailer. The best way to purchase this item would be with cash as they can potentially get a reduced price with the power of cash. Most large retailers offer a “rental” facility or “no deposit, no interest” facility.

Each of these options can be very expensive as you do not have the ability to get a discounted price using these funding methods. The reason you don’t get a discount is that the interest content in the “no interest” facility is included in the price of the item you are buying.

Option 1 – No Deposit, No Interest

If the purchase price of the new Flat Screen TV was $3,000 you maybe able to negotiate this down to say $2,200 by paying cash. If however you wish to take it over a 2 year period “no deposit and no interest” the price would stay around the $3,000. So you borrow the $3,000 over 2 years with 24 monthly payments of $125 ($3,000 divided by 24) however the interest rate on the above example equates to 31.75% based on a “cash purchase” price.

Option 2 – Rental

The other alternative is the “rental” option and this is also fraught with cost as you pay for the item over a couple of years and then find out that you do not own it at the end of the period and either have to hand it back or pay an amount to own it.

Either of these two options have the advantage that you have a set monthly payment which can be more affordable to most families however the pitfall is that the interest component can be in excess of 30%pa. Even most credit cards are half this annual rate and the other cheaper alternative maybe an unsecured personal loan.

The best idea is to check out all available options in the market for these consumer purchases and if you consider the terms acceptable then use the facilities available to you.

Welcome to our new blog!

Meredith — Sat, 03 Oct 2009 07:03:29 +0000

I’ve been busy migrating my old blog to this website today…not a bad way to spend a wet and cold Saturday!

Over the next month or so I will be getting the rest of the site set up. There will be two sections to it:

Accounting services (under the banner of Account Tech Solutions)…

….and Finance services (Account Tech Finance Solutions).

I will also be putting together a regular newsletter for my subscribers, so take a minute to complete the signup on the top of this page!

See what we can offer in 2010

Factoring

Meredith — Tue, 01 Sep 2009 00:35:35 +0000

These days it can be difficult to source business financing, with stricter guidelines and lending criteria from traditional financiers. For many businesses experiencing cash flow, factoring may be an option to consider.

Just what is factoring? It is the process of selling your receivables to a factor at a discount, and receiving cash for them timely rather than waiting for the normal customer payment cycle to complete. The factor will then take over the collections and administration of these outstanding invoices. It is not a loan, but a sale of a financial asset.

Factoring is ideal for fast growing companies who are squeezed for cash, or for businesses who invoice goods and services on credit terms. It is not suitable for businesses who issue progress claims (such as building contractors), retailers or professional services.

There are three main differences between factoring as a source of finance, and bank loans. Firstly, the emphasis is on the value of your receivables on your balance sheet rather than the value or credit worthiness of your business. Secondly, it is a sale of a financial asset rather than a loan, and finally, there are three parties to the factoring arrangement (your business, your customer, the factor) rather than two (you and your bank).

Invoice discounting is a form of factoring for businesses who need to access the money tied up in their receivables, but still want to maintain and manage their own ledger. Your customers will not be aware that you have sold their invoices. For businesses who lack the expertise or resources to manage their debtors ledger, or are undergoing rapid growth, this is a suitable option.

Where’s My Money?

Business Coaches

Meredith — Wed, 19 Aug 2009 00:33:11 +0000

Over the last decade, business coaching has become more and more fashionable. There is a subtle distinction between a business coach and a business consultant. A consultant will come into your business, identify any problems, and fix them. On the other hand, a coach will come in and review your business, and then teach *you* how to do what needs to be done. Like a sporting coach, a business coach will bring in an outsider’s point of view and experiences, and often pinpoint weaknesses in your business which you or your staff may have overlooked.

Despite the number of business coaches out there now, it can be difficult to find one which suits your business style and personality, or who can recognize and respect your goals. Some business owners merely want to improve processes and systems in their business for lifestyle reasons, others want to significantly grow their business with a view to selling it. All the better if you can find a coach who has actually been in a similar business situation as you, and has successfully overcome the challenges.

Another difficulty in sourcing a good coach is that there are no barriers to someone setting themselves up as a business coach/consultant. As it is a significant financial investment for a small business, it pays to ask around – find someone with a proven track record and ask for evidence of results. Even then you may find that the approach they take isn’t such a good fit. My own experiences some years back fell into this category – I engaged a coach from a very reputable organization, but found that the structured program just didn’t suit me as a self employed accountant with 2 part time staff.

Undoubtedly, the biggest benefit of engaging a business coach is the motivation and accountability it provides, as well as the additional learning experience.

So, shop around, ask other business owners for recommendations, and decide whether business coaching is for you.

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