Jul 13, 2015
At the ATSA conference in October 2014 in Melbourne, Geoff
Leeper, the Second Commissioner of the ATO made this infamous
statement:
“There’s a market for accountants to offer cashflow management
advice.”
What did Mr Leeper mean in this comment? After all, he made
this comment as part of his overview of the effect of the
introduction of Standard Business Reporting (SBR) by the ATO, which
he said would be phased in from July 2015. Mr Leeper
indicated that the ATO had guaranteed the Productivity Commission a
“red tape reduction” of at least $500M per annum from the SBR
process.
We’re talking about a substantial amount of money that Mr Leeper
believes accountants could replace in their fee mix with cashflow
management advice. What’s included?
Debtors are a huge problem for a large number of small businesses
in Australia. The current estimate of debtors’ days
outstanding exceed 51 days average. This means that many
small/medium enterprises have debtors which are outstanding for
more than 90 or 100 days.
There’s a potential opportunity for most accounting firms to
conduct debtors’ reviews for their small/medium enterprise clients,
to see what improvements can be made in the debtors’ days
outstanding figure. Items to be checked would be:
· Does
your client utilise credit application? Is it checked?
· Are
directors’ guarantees received from directors of private companies
that want a deal with your client?
· Is
consideration given to the Personal Property Securities Act (PPSA)
and the potential benefits from registering various transactions on
the Personal Property Securities Register (PPSR)?
· Is a
letter sent to a new customer confirming the Terms of Trade?
· Does
your client promptly issue invoices to their customers and
implement follow-up procedures?
· Is an
online debt management system being utilised, which will generate
reminder letters and SMS messages to encourage customers to pay
their debts promptly?
· Is
there a formal system to try to plan a debtors’ reduction strategy
from one month to the next, to try to ensure an overall improvement
in the debtors’ management system?
These are some of the key issues that I see accountants could
implement to fulfil Mr Leeper’s prediction that accountants could
indeed earn substantial fees from cashflow management advice to
replace the fees the ATO is very confident accountants are going to
lose from this year onwards.
If you would like details on the debtors’ management system,
incorporated within ESS BIZTOOLS’ products, please don’t hesitate
to contact me.
Peter Towers
MANAGING DIRECTOR
ESS BIZTOOLS PTY LTD
+61 7 4724 1118 | 1800 232 088
peter@essbiztools.com.au
www.essbiztools.com.au | www.essbizgrants.com.au