Jul 13, 2015
At the ATSA conference in October 2014 in Melbourne, Geoff
Leeper, the Second Commissioner of the ATO made this infamous
“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.
ESS BIZTOOLS PTY LTD
+61 7 4724 1118 | 1800 232 088
www.essbiztools.com.au | www.essbizgrants.com.au