Business tips - making it easier to get paid

Making sure you get paid on time is crucial to your success. The process of making sales and generating revenue lies at the heart of any business model. But you can't manage your cash flow effectively, or raise any profits, if customers don't actually pay their invoices.

The easier you can make it for customers to pay you, the faster you'll see cash coming into the business. That’s good news for your financial position, your ability to cover your operational costs, and your capacity to fund the growth and expansion of your business.

So, how do you speed up those payments and make sure you get paid on time?

Set out clear payment terms

Your payment terms are the starting point for healthy payment times. These terms set out when you expect to be paid and form a legally binding contract with the customer. You may expect immediate payment on receipt of the invoice or on the 20th of the month following. You might set out a specific number of days that the customer has to pay the invoice (generally 30, 60, 90 or 120 days, depending on your industry). This allows your customers to pay for goods and services at a later, pre-agreed date – helping them to spread the cost.

Your payment terms should also include details of any late payment penalties. If the customer doesn’t meet your agreed payment times, most businesses will add a 1% to 1.5% monthly late payment fee to the outstanding bill. This acts as a great incentive for the customer to pay the bill, before the penalty fees start mounting up.

Invoice customers as soon as you can

In a business-to-consumer (B2C) environment, your customers will generally pay for their goods and services immediately. But when you’re working in the business-to-business (B2B) world, you’ll need to send your customer an invoice, asking for the money to be paid.

Customers can’t settle their bill until you send them an invoice. So, it’s vital to send out the invoice as quickly as possible, so you can minimise the gap between doing the work and being paid for the work. In some industries, the project will be broken down into multiple invoices, paid across a period of time. This makes it easier for the customer to pay and means you (as the supplier) don’t have to complete the project before receiving the money you’re owed.

Ideally, you want your invoices to go out as early as possible. This allows your payment terms to kick in and makes it easier to predict when cash will be coming into the business.

Be organised about your payment admin

Getting paid is a process – and the more organised you make the process, the quicker the payment will be received. When you send out the invoice, make sure you send it to all the relevant people in the payment chain. This will usually be:

Your main contact at the client – the person who you usually deal with.
The person who will approve the bill – the person who will green-light the payment.
The finance team – the person (or people) who will actually action the payment.

It’s also a good idea to quote any relevant purchase order (PO) numbers that the customer has raised, and to give a very clear description of the work done, or the goods purchased.

Embrace the available payment technology

Invoices used to be hard-copy printed bills, but in the digital age the vast majority of companies will send out e-invoices. Electronic invoices are easy to raise and can be emailed out instantly. Doing everything in the digital realm also makes it easier to keep records and keep track of payments.

Many e-invoice systems will also let you add a variety of different payment options for the customer. You could just include your bank details and wait for the customer to make a direct payment to your account, but you can also include payment buttons in the e-invoice that give customers the option to pay via digital payment gateways.

Offering more ways to pay makes the whole process more convenient for your customers – and will generally result in faster payment times as a result.

If you want to speed up your payment times and boost your cash flow, please do get in touch. We can help you streamline your payment processes and embrace the latest in payment technology.

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GST changes for online marketplaces and apps

25 Apr, 2024

From 1 April 2024 “Electronic Marketplace” transactions will be subject to GST in New Zealand, even if the person delivering the service, is not GST registered. This legislation was passed in 2023, and although National campaigned on repealing this law if they got into power, they confirmed in December 2023 that they will now leave the legislation in place. The new legislation covers more than just properties, it also covers Uber and Uber Eats, for example. But we are just focusing on the property implications and what it means if you own or rent out a room, bach, or an investment property. If you have booked a property for a work or family trip any time after 1 April 2024, you should also continue reading, as there are possibly implications for you too. So, what does the law say? That platforms like Airbnb, Booking.com, Expedia, Vrbo etc. are required to charge GST on all transactions and pay this GST over to Inland Revenue (IRD) where the owner of the property is: GST registered: Pay 15% to IRD. Report your income as zero-rated on your GST return. This ensures the income is declared and you do not pay the GST twice. It also means that you claim your GST on expenses, and will likely receive refunds each GST return. NOT GST registered: Pay 6.5% of the GST to IRD and pay the remaining 8.5% to the property owner. If you are not registered for GST there is nothing for you to do. You only qualify for an exemption if: your income from these activities is over $500,000 per year: or you had more than 2,000 nights booked in a year. This means that all these platforms are frantically updating their software to allow for the collection and payment of GST to IRD. Here’s what we do know: Expedia : They have NOT been able to update their software and will be removing ALL NZ listed properties from 1 April 2024, unless you qualify for the exemption above. If you have a property listed on Expedia, they possibly may remove it. There is no clear guidance as to what happens if you have bookings for the future but we suggest you contact your guests. Be careful how you do this though, as it’s against Expedia’s rules to make contact with guests outside of their system. If you are travelling and made a booking on Expedia, you may also have an issue - contact your host to work out what to do. Vrbo (ex Bookabach): While owned by Expedia, they have upgraded their software and will be able to cope with the new GST. But be aware, from 1 April they will automatically add 15% GST to all bookings. So, this will increase your nightly rate by 15% and make your property more expensive. You will have to manually update your rates to reflect this change. Airbnb: They, too, have decided they will add 15% GST to every booking from 1 April 2024. Their system says they are not yet set up to deal with NZ GST. Booking.com: They have not yet provided guidance on what they are planning to do. Will they be like Expedia and just stop supporting NZ properties or will they be like Airbnb and just add 15% to all bookings? So, a warning, if you are not GST registered, and you have not told your platform provider, it appears they will default to adding 15% GST to your property and pay this 15% to IRD. How you get your 8.5% back remains a mystery. If you are planning on booking accommodation, be wary of using Expedia or Booking.com, as a booking after 1 April 2024 could potentially cost you 15% more! In any event, landlords and holiday makers should revert to their booking platform for the latest information and policies. If you want to know more please reach out to us.

Five ways for better business efficiency

23 Apr, 2024

Everyone likes efficiency, the more efficient something is, the better - right? Especially with the economic climate still needing some work. If you’re wanting to save some time (and money), making your business processes more efficient is a good place to start. It also means that you can put more time into working ON your business, rather than in it. Here are five ways you can make your business a little more efficient. Better invoicing This sounds obvious, but the more efficient you are at invoicing, the less time you spend on it and the more time you save. And time is money. Develop a process that makes this more efficient – which is something that can vary by industry. Think about whether you can set up recurring invoices or have your staff invoice for the job on completion. Where can you reduce the headache of invoicing and make it more efficient? Streamline expense claims Develop a digital solution for your expense claims process. This way your team can submit their receipts and approve expenses online – which reduces mistakes, and not having everything you need to approve the expense. Utilise online/digital software Almost everything has a digital version, so it’s time to utilise it so you have business data wherever you are. No more going back to the office to check a number, getting back to clients with final details, or reworking quotes because the numbers were wrong. If it’s all available at your fingertips, this drives efficiency. Maintain lean(er) stock levels If your business sells inventory, lean inventory management could help you reduce unwanted costs, and become more efficient. The idea is you only produce or order in the stock you actually need. By optimising inventory levels, you can reduce carrying costs and align supply with customer demand, which means you won’t be falling over, or holding space for, excess stock. Review your overheads Another component of business efficiency is keeping costs down – like overheads. Have you checked if the costs from your suppliers, like rent, bills, and transport, are needed? Have you also looked for ways to reduce these costs?Consider whether you can achieve the same outcome for lower costs? Could alternative suppliers provide a quality service at lower cost? Are office supplies being stockpiled from habit rather than need? If you need tailored advice on how you can make your business model more efficient, get in touch with us.

How to write a recruitment advertisement that stands out

18 Apr, 2024

Finding the right staff for your business can be tough. Hiring can be challenging, but the right team can really support the growth of your business. Attracting the right staff starts with writing a recruitment ad that makes your role stand out in the crowd. Here are three ways you can make your job ad more appealing: Sell the role Rather than beginning the ad with the job description or a list of requirements, start with what makes the job most appealing. Is it the industry, location, pay, or perks? Be up front with the advantages so that it’ll grab people’s attention and encourage them to read further. Keep it short and sweet While it can be tempting to write a novel so that it paints your business in the best light, it’s better to keep your job ad short and sweet. Aim for a maximum of 700 words that are straightforward with readable language, and avoid adding unnecessary words or repetition. Avoid meaningless clichés Every job ad mentions their amazing team, or how the environment is fast paced. Everyone says they’re offering a ‘competitive salary’. All jobs are looking for self-starter’s or those who can hit the ground running. Rather than using the same phrases as everyone else, be different. What can you write that makes your business stand out from the crowd – you could provide the actual salary, for instance. Describe the job, the team, and the environment clearly and accurately. This helps the candidate get a genuine understanding of the role and that’s what piques their interest – not the same phrases that everyone else is using. Hiring Now that you’ve attracted the right person for your team, make sure you cover your bases when hiring (especially around trial periods). If you need help with employment contracts or other employment-related questions, let us know we’re here to help.