7 Ways Your Business Can End the Year the Right Way
As end of year approaches, now is the perfect time to review your business and get it ready for a successful 2020. Find out how here.
The end of year is a busy time for everyone, but no more so than business owners. There’s many things that you can do as a business owner to make sure you wrap everything up and get off to the best start possible in 2020. In this piece, we’ll provide some tips on how you can use the holiday period to get organised and in better shape than ever for the new year.
1. Collect and clear your debts
Late payments are a serious issue for businesses everywhere. Receiving payments late can have a significant effect on your cashflow, and whether you can pay your own invoices on time. When it comes to collecting payments from others, here’s some ways to ensure you get it before end of year:
Start your escalation process now
- Change your payment terms from 30 days to 14 days.
- Set aside a particular day to undertake debt recovery. This will involve tasks such as contacting customers who have overdue invoices, taking stock of what’s owed and by whom, and contacting a debt collector if necessary.
- Send reminder emails. Each reminder email should have a different title, depending on how overdue the payment is, such as:
- Reminder Notice – Outstanding Invoice
- Outstanding Invoice – Immediate Payment Required
- Final Payment Notice Prior to Debt Recovery
Taking things further
Sending a letter or email isn’t always the most effective way to recover overdue invoices. After 2 reminder notices are sent, it may be worth calling the debtor to seek an explanation. They may have simply forgotten and agree to pay, or they may offer to pay off the amount owing under a payment plan.
No matter what the outcomes of the conversations are, you should always send an email to the debtor confirming what was said (and agreed to) in the conversation. Try to get the debtor to agree in writing that they owe the money. If the invoice is outstanding for more than 21 days, have the debtor enter into a simple written payment plan and acknowledgement of debt.
If you’re concerned that the debtor still won’t pay off the debt, it may be worth referring the matter to a lawyer or debt recovery agent before 13 December. This is because many offices shut down not long after this date (including the Courts), so if you want to start the process of recovering your money before end of year, it should be done before this date.
Don’t make empty threats
It can be tempting to tell debtors that you’ll commence legal proceedings if they don’t pay. However, you should be weary of making threats you don’t intend to act on. Many debtors know that the legal process can be long – up to 18 months to be exact. In this sense, legal proceedings should be a last resort once all other avenues have been exhausted. Further, lawyers can be expensive. However, you can hire a lawyer to help you with certain tasks (such as drafting a statement of claim). The benefit of this is that you’ll be able to pay a fixed-fee.
If the debt owed to you is more than $2,000, then you can issue a statutory demand. This document demands the payment of the debt, with the Court winding up the company if the debt isn’t paid. The debtor subsequently had 21 days to dispute or pay the debt. This is a serious measure, as a liquidator will be appointed to sell the assets of the debtor with the intention of repaying creditors.
2. Contracts don’t stop for Christmas
End of Year Shutdown Period
As end of year approaches, pay careful attention to the deadlines stipulated in any contracts you enter into. You can account for this by inserting a special condition in your contract. This can state that the deadline is extended over the shutdown period, such as 21 December to 12 January.
3. Check your payment terms
The frantic atmosphere of the Christmas party doesn’t mean financial obligations should be forgotten. Here’s some things you can include in your terms and conditions to ensure you get paid on time:
- Implement 14-day payment terms
- Include indemnity costs for debt collection fees
- A clause stating that the debtor consents to being reported to a debt collection agency (if they fail to pay)
- A clause stating that the debtor consents to sharing their personal information for the purposes of debt recovery
- Default interest payment which is 8 – 12% per annum
- Notice clauses regarding defaults should specify your email address. Otherwise, notices will generally be sent to your registered office
4. Hiring over Christmas
Find out if a Modern Award applies
Christmas is a time where casual workers are often hired in the retail and hospitality industries. Although you may only be hiring employees temporarily, these employees are still entitled to minimum wage and employment rights. If you’re unsure which Award applies, you can also see a list of modern awards on the Fair Work Australia website.
Dismissing Christmas Hires
If you’re hiring employees on a temporary basis, it’s important to acknowledge this when you take on employees. You can do this by employing someone on a fixed-term, part-time or casual contract. When it comes to unfair dismissal, small businesses (less than 15 employees) are immune for the first 12 months of employment. Further, an employee needs to have been employed for at least 6 months at a larger business in order to lodge a claim for unfair dismissal.
5. Checking your business structure
The end of the year is a good time to think about your business structure, and if it’s still the best fit going into the new year. If your business has taken off over the past year, it may be time to consider changing to a company structure. Some of the benefits of having a company are:
- Minimised risk, as liabilities and debts will attach to the company (not you)
- Lower tax rates
- More clout when entering into contracts
- More appealing to investors
- You can distribute equity
Companies and trusts
Many companies are structured under a trust arrangement. This can be beneficial, especially when it comes to tax. Some ways you can restructure your company are:
- Create a holding company, which will hold shares in the company
- Create a company to hold the IP assets
- Establish a family trust
6. Staying compliant
Registered offices and notices
Your registered office is where your company receives all its important mail. One risk is if your business is issued a statutory declaration and you’re not notified (or given the chance to pay or dispute the debt) within 21 days. If this happens, your business will be presumed to be insolvent and further, it can be wound up by the Court.
It’s important to make sure that this office is attended over the holiday period, in case anything gets missed. Further, you can register for a virtual office to be notified when any mail arrives.
In making sure your company remains legally compliant over the holiday period, you should consider:
- Whether your Business Activity Statements (BAS) are up to date
- Whether you need to register for GST
- Creating an annual business plan
- Reviewing your terms and conditions, employment contracts, supplier agreements, and workplace policies such as your grievance policy, and social media policy. You can also take this time to review your commission structures.
Take a good look at your current insurance policies and whether they’re up to date. It’s also worth doing a review at this time to make sure you have insurance to cover everything you need, including public liability and professional indemnity.
7. Tis’ the season (for maintenance and upgrades)
For some businesses, things slow down over the Christmas period. This means that it’s the perfect time to undertake some maintenance work and upgrades. Here’s a few ways you can make the most of this time:
- Upgrade any software or other applications you use
- Do a stocktake (if you sell products)
- Repair any malfunctioning equipment or technology you use
Whether your business is busy or quiet over the Christmas period, it’s a great time to take stock of your business. Reflecting on what your business has achieved this year and where you want to go also means you can plan for an even better 2020.
Jackie is the Content Manager at Lawpath and manages the content team. She has a Law/Arts (Politics) degree from Macquarie University and is an admitted solicitor in the Supreme Court of NSW. She's interested in how technology can help shape the future legal landscape.