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Welcome to the November update for Alliott NZ.
In this edition we celebrate our clients' success, discuss ways to improve your debt collection rates, give our thoughts on the recent tax change and offer some wise words on dealing with the 90 day trial period for your employees.
We round off the update with 20 quick ways you can boost your business image, a couple of tax info items and a little bit of news from around the Alliott NZ office.
Simply click on the appropriate heading to go straight to the relevant article or click here to download the update as a PDF.
Celebrating Success
Collecting Money
The Tax Changes
The 90 Day Trial Period
Boosting Your Business Image
Tax Snippets
Alliott Extras
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OUR CLIENTS SUCCESSES
At Alliott NZ we have a diverse range of clients from a wide range of industries who are talented, creative and successful - we'd like to share some of their recent achievements with you....
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The Prenzel Shop in Botany who have just won the overall TOP SHOP Retail Excellence Award for Auckland in 2010.
They beat out 121 other finalists to win the highest award and also managed to win the Food and Beverage category in the Auckland TOP SHOP awards.
The Prenzel Shop retails New Zealand made foods and liqueurs and was described by the judges as “a store that compels you to buy things you never dreamed you needed”.
Prenzel's offers a wide range of infused oils (both rice bran and olive) and salts, vinaigrettes, wine vinegars and dessert toppings. The liqueurs and culinary products are complemented by a range of beautiful glassware, accessories and homeware.
Our sincere congratulations - as well as their gorgeous shop they also supply their products online - take a look at www.theprenzelshop.co.nz for some culinary treats!
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JULIETTE HOGAN
Juliette received rave reviews for her Winter 2011 showing at the recent New Zealand Fashion Week in Auckland.
Juliette's collection was titled "The Morning After the Night Before". Her trademark looks feature pleating and floaty fabrics but for next winter she toughened up her look with leather skirts and tees. The Winter 2011 colour palette is muted with lots of ivory and navy and splashes of floral print and khaki green.
Juliette has her own store at 170 Ponsonby Road but also has stockists throughout New Zealand and Australia www.juliettehogan.com.
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HOW TO IMPROVE YOUR CASH FLOW WITH DEBTOR MANAGEMENT
It’s going to be a long and slow road to economic recovery.
That’s the message as interest rate rises have been put on hold and economic data is generally steady. Businesses suffering from tight cash flow will continue to suffer unless action is taken.
Often the source of cash flow problems is slow paying debtors.
The job of debtor management normally falls to the lowest person in the command chain. Typically an administration or accounts employee who has never received any formal training in the art of debtor management. Chasing up debtors is not a task anyone enjoys. It’s an uncomfortable experience that requires a unique skill set to be effective.
Like an employer would invest in training their shop floor staff your debtor collector needs training to be effective in the role.
Courses are available and usually take only one-day to complete, meaning minimal disruption to everyday business. The benefits of these courses are real but won’t be fully realised unless the employer is prepared to implement change as some of the strategies start at the top.
Debtor collection in these tough times is a different task from what it was a number of years ago.
But how many businesses have adjusted their credit policy to take into account the different economic environment?
Do you have a policy to begin with? A clearly defined policy is a good way to set the boundaries of the relationship and assists collection strategies.
Follow up is essential for problem debtors. Don’t wait until your cash flow is problematic, be proactive. Don’t be afraid to follow up a few days prior to the due date to remind your debtor that payment is expected on the due date. If they don’t pay then follow up, problem debtors pay the people who make the most noise.
A pre-determined script can be a valuable tool. The key to a successful script is to give the debtor options that you want to give them. Don’t fall for the long-winded story they have as to why they can’t pay you. Be focussed on the result which is getting the money in your bank account. Don’t accept the cheque is in the post story. This is the 21st century. If your debtor wants to pay you they can find another way to make the payment.
There will still be some debtors who are unmanageable.
Debt collection agencies can be of assistance but can create more drama than the debtor. Agencies may require an upfront fee which places further pressure on cash flow. Debt collection agencies take over the duties of receiving payment from the debtor, giving rise to a further timing delay in receiving the funds.
Factoring is another technique that is being heavily advertised at the moment. Factoring requires you to take a discount, normally around 10% on you debtors in exchange for “immediate” receipt of outstanding debtor invoices. There has been plenty of debate on the merits of factoring and it is a rarely used tool in the fight against slow debtor payment.
A small investment and the application of a few simple techniques can have a big impact on your cash flow.
Make the investment by training your staff and reap the rewards.
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TAX SWITCH UNLIKELY TO IMPACT ECONOMY IN SHORT TERM
Much has been written on the recent changes to our tax system.
As you will be well aware GST is up from 12.5% to 15% and Income Tax is down across the board.
The change is a balancing act, taking from one hand and giving with the other whilst providing the taxpayer with a small gain.
It is not intended to and nor is it going to be a quick fix to the sluggish economic growth New Zealand is experiencing.
The tax switch is designed to address some of the issues that have plagued us for years.
That is the Kiwi tradition of living beyond our means through excessive borrowings and overinvestment in property.
Early signs suggest the tax switch has seen Kiwi’s focus a little more on repaying debt which although a positive (in terms of the intention of the tax switch) does not necessarily promote growth.
The tax switch is just one point of a six-point plan the National Party has for a stronger economy. The other points are as follows:
- Better, smarter public services
- Lifting education and skills
- Boosting infrastructure
- Business innovation and trade
- Cutting red tape and regulations
Whilst the policy is positive with respect to economic growth the policy takes a long-term approach.
There is little, if anything to get excited about in the short-term. The tax switch is no quick fix. It’s extremely doubtful the tax switch will have any short-term impact.
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THE 90 DAY TRIAL PERIOD FOR EMPLOYEES – EMPLOYERS BE CAREFUL!
Small and Medium Employers (SMEs) were enthusiastic to see the introduction of the 90 day trial employment law in March 2009.
This allowed SMEs who had less than 20 workers to employ staff on a 90 day trial period and then be able to dismiss them within 90 days (for poor performance etc) without fear of a grievance claim.
The first case in regard to this law has been before the Employment Court in Heather Smith v Stokes Valley Pharmacy (2009) Limited. The findings by the Court have shown that unless certain procedures are followed by the employer, you may not be able to apply this law.
Some key points have come out of this case which SMEs need to be aware of. These are
1. The employee must have signed the employment agreement (with the trial period detailed in the agreement) before they commence work. This is because trial periods can only be used for new employees.
In the Heather Smith case, the employee did not sign the agreement until 1 day after she started. The Court considered her to be an existing employee when she signed the agreement (albeit for only 1 day) and not a new employee.
2. The employer cannot simply tell the employee that the trial has not worked out and ask them to leave immediately. Notice periods in the employment agreement must be adhered to and either paid or worked out.
For example, if there is a 4 week notice period then the employee must be paid out for 4 weeks whether they leave straight away or work out the 4 weeks.
In the Heather Smith case the employer only paid out 2 weeks notice instead of 4 weeks as per her agreement. The Court ruled she had never been dismissed in the first place because the proper notice period of 4 weeks had not been given.
3. The employer must, if asked by the employee, give the reason for the dismissal.
The reason can’t be misleading or deceptive and there has to be justifiable reasons for the dismissal ie lack of progress, poor work performance, incompatibility. The dismissal does not need to be written.
The Heather Smith case demonstrates that if you are using the 90 day trial period for new employees to be careful to follow the correct steps or to obtain professional advice before doing so.
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20 WAYS TO BOOST YOUR BUSINESS IMAGE
1. Be prepared to take action and make the necessary changes to improve your business's image.
2. See your business through your customer’s eyes.
3. Pay attention to details and show your best all the time.
4. Be consistent with all marketing materials.
5. Improve your business card with a strong logo and quality card stock.
6. Improve all other marketing materials in a cohesive manner.
7. Add fax, e-mail, and web site details to your business card and stationery.
8. Use matching forms, envelopes, etc.
9. Create a unique brand identity with a catchphrase that is recognisable.
10. Have a separate phone line for your fax, credit card orders and internet.
11. Improve your telephone and listening skills.
12. Use professional signage - never use a sloppy handwritten sign.
13. Send four-colour postcards or direct mail pieces to potential customers.
14. Embrace the latest technology and get your company up to speed.
15. Build an effective website, keep it up to date and never stop improving it.
16. Don’t copy anyone – be unique and creative.
17. Display products professionally and make them visually exciting.
18. Hire consultants to improve your company and take it to the next level.
19.Network like a pro – join at least two professional organisations.
20.Help and support others, it comes back ten times over.
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TAX SNIPPETS
GST
October 1 has ticked over and we are now well into a month of 15% GST.
Just a reminder - to work out the GST portion of a GST inclusive amount you:
• Multiply by 3 and divide by 23
• Example: If an item is $500 including GST then the GST portion is calculated by taking $500 and multiplying by 3 and dividing by 23 = $65.22
And to add GST to an item:
• Mutiply by 1.15
• Example: If an item is $100 multiply by 1.15 to get $115 as the GST inclusive amount.
BUILDING DEPRECIATION
From April 1, 2011 you will no longer be able to depreciate buildings with a life of more than 50 years.
As you will not be able to claim a deduction for depreciation this will reduce the losses available or increase profits.
We can work out the effect of this for you to enable you to plan ahead.
Please contact us by email or phone (09) 520 9200 if you would like us to do this.
You will need to be aware of this when calculating tax in the 2012 tax year (1 April 2011 to 31 March 2012).
We have been asked by clients if they can prove that the building will last less than 50 years whether they can continue to depreciate.
The issue with this is proving it to the IRD. We understand this will be onerous and likely to be costly.
As yet the IRD has not produced any guidelines in regard to the proof required. General opinion is that they will make it as difficult as possible as once they allow one it sets a precedent for others.
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ALLIOTT EXTRAS
SCAM EMAIL ALERT
Be on the lookout for a scam email pretending to be from the IRD.
The email will advise that you are due a refund and to click a link to claim your refund. The link will then ask you to submit your online banking username and password so the “refund” can be direct credited to your bank account.
This email is designed to appear to come from a genuine IRD email address and the link appears to take you to the genuine IRD website.
Please don’t be fooled, you won’t be receiving any money by acting on this email.
Alliott’s will always deal with your income tax matters including refunds - if you are ever unsure of any correspondence regarding your income tax please check with the Alliott’s team.
Other scam emails doing the rounds are pretending to come from Trade Me and the NZ Transport Agency. Think carefully before clicking on any links you are not sure of.
FOOTBALL FEVER
The nation was gripped with football fever following the unbeaten run of the All Whites at the FIFA World Cup.
Visitors to the Alliott office during that period will have noted our efforts to support the All Whites.
Inspired by the All Whites, Alliott's is launching its own football team.
The “Alliott All Rights” will be battling weekly in the Auckland Domain over the summer period.
Team captain and Alliott staff member Daniel Sykes is resigned to the team being in the lowest division as a number of players in the squad have never kicked a football.
However Daniel confidently predicts a top 3 finish!!
WE'RE MOVING......
It's time for Alliott NZ to have a change of scenery so in March next year we're moving premises!!
But don't worry - we won't be moving far - we will still be in Newmarket.
More details will follow as March draws nearer.
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VISIT OUR WEBSITE | CONTACT US
109 CARLTON GORE ROAD P.O. BOX 99 841 NEWMARKET AUCKLAND 1149
Tel (09) 520 9200
Contact us by email
Directors Greg Millar CA (pp) Vanessa Williams B Com, CA (pp) |
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