Welcome to the sixth edition of The Blueprint and the first of the new financial year.
As the economy begins to recover from the GFC and with more positive news starting to filter its way into the market, it is important that business managers are prepared for the more positive times ahead.
With any business though these opportunities will only bear fruit if best practice systems are in place and in this edition we look at risk management in all aspects on business.
Enjoy this edition of The Blueprint.
Regards,
David Carpenter
Partner
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Don't let business risk control you |
| Don't let business risk control you |
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The term "business risk" means different things to each of us. However, a recurrent theme of what business risk means is something that may impair your ability to provide a return on your investment. Business risk comes in many shapes and sizes. For example, strategic, operational, reporting and compliance risks, as well as all risks that fall into their subcategories (reputation, competitor, supply chain, financial, environmental, occupational health risks etc). |
- Asset protection
- Tax efficiencies
- Working capital management
Asset Protection
Protecting the wealth you have generated is not just about having insurance policies in place. Insurance policies such as public and product liability should not be your only line of defence.
Instead, careful consideration should be given to structuring your enterprise in the appropriate manner to minimise your wealth being at risk.
A basic premise is to have an entity which accumulates wealth (and not at risk) and an entity at risk. The entity at risk would be the trading entity which deals with the public at large.
Why place your hard earned wealth in the hands of insurance policies with "fine print" when you can take pro-active action now to minimise risk?
Tax efficiencies
Loss of profits via tax inefficiencies is another form of business risk.
Adopting best practice incorporates having an operating structure which encompasses not only asset protection, but also income tax efficiency.
Are you maximising your after tax return on investment? Do you know what your average rate of income tax is for your family group? Can it be lowered?
Working capital management
Big or small, all enterprises require adequate levels of net working capital to survive.
Working capital encompasses cash, work in progress, stock, trade debtors, trade creditors and short term debt.
A common comment from business owners is "my financial statements suggest I'm making a profit, but I have never seem to have any money." In these instances it's common that due to poor working capital management, your money is tied up in debtors, work in progress and stock.
Implementing best practice strategies for collection of outstanding debts, issuing of invoices and inventory control can be the difference between the success or failure of your business.
Do you know if or when your working capital will run out? Will additional short term financing be required?
It's often hard to get finance once working capital problems arise. Have you considered getting pre-approval for finance now while your financial position is strong?
Free one hour consultation to implement best practice
Just being aware of the risks that affect business is not enough. It is often cheaper to fix a potential problem than to fix an occurred one (if it can be fixed!), and if you only fix problems as they surface, the flow of future problems is sure to be costly.
Controlling business risk and implementing best practice is critical to your enterprises longevity and success. If you are concerned that you are not implementing best practice within your enterprise, click here to request a free one hour consultation to review your business risk. Offer applies to the first ten people who complete and submit the form.
| Have your accounts gone to the accountant? |
| At this time of year, accounts staff are feverishly running around, chasing late accounts, tidying up loose ends and generally ensuring the accounts are clean and ready to give to the accountant. It's a risky business to be complacent when getting your accounts ready for your accountant. The following are some key areas you should address now while it is fresh in your mind:
Now is also a great time to run some reports which in our experience are rarely looked at, such as:
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Given the amount of time you spend entering information into your accounting system, it is important you spent the time analysing the information within it to assist you in making the right financial decision.
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| It's all fine until you cop a fine |
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Employers Responsibilities In NSW employers & principal contractors are subject to the New South Wales Occupational Health & Safety Act 2000 (OH&S Act). The Act aims to protect the health, safety and wellbeing of all people at work. The Act sets out general requirements for all employers to ensure that, employees, contractors and other parties have a safe place at work. |
- Maintaining a safe work sites
- Ensuring safe use, handling, storage and transport of plant, materials and other substances
- Providing and maintaining safe systems of work
- Providing ongoing training and supervision necessary to ensure a safe working environment
- Providing adequate facilities for employees
Penalties & Offences
Where there is a failure in the duty to comply with the requirements under the Act, employers are exposed to potential civil fines and penalties. With respect to corporations such penalties can be as high as $550,000 per event and $55,000 for individuals.
Claims Scenario
In a real case scenario two companies were fined a total of $305,000 following the death of a Sydney warehouse worker. The warehouse worker died in hospital from head injuries suffered when hit by electrical goods which fell from a forklift on one of the company's premises.
Solution
Statutory Liability Insurance provides cover for the civil fine imposed and the legal defence costs incurred for unintentional and unintended breaches of prescribed legislation such as the OH&S Act 2000. The policy extends to protect the corporation and individuals including Directors. There are a number of alternative cover and premium solutions to satisfy the individual requirements of larger & smaller businesses. Statutory Liability is cost effective and provides businesses with peace of mind.
About Scott Slingo
Scott Slingo is a Partner of PSC Insurance Group Newcastle. Scott has had 13 years experience as a general insurance broker and specialises in many industry segments including construction, civil construction, transport, environment, manufacturing, professional services, medical services, tourism & hospitality. Scott is an Associate of the Australian & New Zealand Institute of Insurance & Finance and is a Certified Practicing Insurance Professional. For further information regarding any general insurance requirements please contact Scott on 0408 248 757 or email scott@psccoastwide.com.au
| Meet David Carpenter |
David Carpenter is a Partner with Cutcher & Neale and is part of our Business Services division. David's qualifications include Bachelor of Commerce from The University of Newcastle, a Fellow of the Institute of Chartered Accountants in Australia (ICAA), a Fellow of the Taxation Institute of Australia and Member of the Australian Institute of Management. He also has extensive experience assisting SME’s in the industrial sector in dealing with their accounting, taxation and business advisory needs.
David is a keen sportsman enjoying all forms of sport. He is a keen golfer. David is married with two children.
David’s expertise is in the following areas:
- Taxation Advice and Planning
- Business Structure Consultancy
- Business Planning, Reconstruction and Valuation
- Management Consultancy
- Franchise Consultancy
- Goods & Services Tax
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