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Bitcoin's marketing problem

8:55PM | Monday, 24 August

 Bitcoin has been declared the “end of money as we know it” and as a currency for our times; decentralised, and created specifically for seamless exchange on the Internet. That is, it would be, if everyone knew exactly what it was and was actually prepared to use it.   The problem is, for most of the general public, Bitcoin still remains a mystery. In a recent survey of consumers carried out by analyst firm PWC, only 6% said that they were very familiar or extremely familiar with currencies like Bitcoin. 83% of those surveyed said they had little to no idea what Bitcoin was.   Contradicting this is the fact that there has been a great deal of publicity around Bitcoin which is reflected by people searching for the term. Google Trends for example, shows that searches for Bitcoin exceeded those for two other payment systems, Apple Pay and Google Wallet.   Bitcoin search frequency Google Trends   Most of this attention has come from well publicised stories of Bitcoin and its association with drug crime on the Internet or hacks of Bitcoin exchanges like Mt Gox, where hundreds of millions dollars worth of the currency was stolen.   So what is it exactly? Bitcoin is first and foremost a currency like any other. One Bitcoin can be exchanged for almost every other type of currency, on any number of “exchanges”. At the moment, 1 Bitcoin is worth about US $230.   Once a Bitcoin is bought, it can be used to buy goods at a price in Bitcoins that is determined by the current exchange rate quoted on the various exchange markets. This is no different to using Australian dollars or Euros to buy things on the Internet priced in US dollars say.   Using Bitcoin to buy things is very much the same as using electronic payments from a bank. The merchant will have an account number that is used when sending the required number of Bitcoin.   Once sent, the merchant will confirm payment has been received and everything then proceeds just as if payment was made in any other currency.   If it is that simple, why does everyone get confused? The trouble Bitcoin has had from the start is that it was an invention of computer science. Many of its attributes are based on the intricacies of the technology that makes it work and of interest only to specialists.   For it to replace current payment systems, Bitcoin had to be marketed as having distinct advantages over using credit cards or services like PayPal. The difficulty with this is that the advantages are subjective. And merchants, and the public as a whole, have had a hard time in seeing them. The advantages of Bitcoin have certainly not been enough to warrant using it in preference to credit cards.   But what about the “block chain”? As the marketing around Bitcoin hasn’t fared too well in targeting it as a replacement for credit cards and electronic banking, people have instead started talking about the really confusing part of Bitcoin called the “block chain)”.   Needing to explain how the block chain works has also been a real weakness in the marketing of Bitcoin. Very few people care how banks agree that a transaction has taken place. They only care that they can look at their bank account and see a withdrawal of a specific amount at a specific time. What magic happens behind the scenes to make that work is really of no consequence.   People have focused on the technology because somehow it was put forward as being more clever than how banks do things at present. But they argued this without actually acknowledging that the current system operates incredibly well and is extremely efficient. The current banking system has been baked into society for thousands of years and despite some of its failings (high charges and service quality) has succeeded because, it just works.   It’s not that complicated Whilst the average member of the public is still puzzling over why they should care about Bitcoin, technologists and finance specialists will continue to argue about the relative merits, or otherwise, of the specific attributes of cryptocurrencies over our current payment systems. None of that is central however to understanding what Bitcoin is.   All that is really important to know is that Bitcoin is simply another form of money.   David Glance is Director of UWA Centre for Software Practice at University of Western Australia This article was originally published on The Conversation. Read the original article.

Four problems the revamped Google should tackle now it's free to innovate

8:15AM | Tuesday, 18 August

 Google is seen as a world leader in innovation, an important backer of tech start-ups and a pioneer in all our futures. The corporation, which is financially the size of a mid-range country, just reorganised its structure so that it can continue to invest in experimental technologies – such as drones, driverless cars and unusual medical devices – without worrying shareholders.   But many of Google’s current publicly reported innovations seem to be aimed at encouraging us to spend even more time connected to the internet. They are “technology-push” innovations, products that require the creation of a new market because there isn’t an obvious existing demand. Google Glass, the wearable optical computer that has now been discontinued is a good example. It didn’t appear to be rooted enough in a genuinely understood need.   On the other side there are “need-pull” innovations that respond to existing needs and are the result of humble enquiry. Developments by Google in security devices, and modular smart phones all appear, on the surface to meet needs. But are they the genuine result of humble enquiry?   The problem with Google’s moonshots is that they are fired at the Moon. And there’s no one on the Moon (not yet anyway). Many real needs are social, cultural and environmental, not rooted only in a hunger for the next wearable gizmo. Here are some real-need challenges that Google could put its mighty innovation machine to work tackling and improve the world in the process.     Digital dealmaker Shutterstock   1. Making money more secure In a world of identity theft and online fraud, there is a huge need for more secure ways to transfer money and carry out transactions. Various ways to simply move money around, for example between smartphones, are emerging but other innovations could vastly improve security. “Smart contract” programs could ensure both parties stick to their side of a deal. For example, if you buy something online then a smart contract could take the money from your bank account only when it receives notification from the delivery company the product has arrived.   Virtual or cryptocurrencies such as Bitcoin are starting to incorporate such technology but these systems still carry suspicion due to their use by black markets. Google has so far just hovered around the edges of Bitcoin but it has the opportunity to lead development and help make the technology mainstream.   To do so, however, it may also have to fundamentally rethink its approach to privacy, which is an inherent part of Bitcoin but largely absent from the way Google currently operates thanks to its widespread data-gathering operation.     Online jungle. Shutterstock   2. Creating a safer online world Google’s Project Vault will give us a digital safe in which to securely store our smartphone’s personal data and messages. Another useful gadget no doubt. But instead of developing security devices and making gadgets less stealable, I’d like to see Google support us in becoming more secure in ourselves.   Existing innovations came about as a reaction to the insecurities of a hacked world. But there are opportunities not only for creating new digital safes and padlocks, alarms and security guards but also to begin an exploration of how to create preventive and naturally safe virtual and physical environments. These environments would be less about protection and defence and more about assurance and trust.     The new windows Shutterstock   3. Making technology less intrusive Smartphones are constantly diverting our attention from the real world. Integrating technology more seamlessly into our lives could free us from their grip. Wearable technology and smart clothing could be one way of doing this, but better would be technologies that rely on and develop our tactile relationships with the world and each other.   This may well involve finally dispensing with the “screen” and the gadget as the required focus of our attention. A big question is how can Google create technology that doesn’t require us to “look”, instead of having us squint at screens of different sizes, flashing us into trance states and harming our eyesight.   Some experiments in less noticeable technology may involve an initial intrusion, for example, digital implants for communication, enhancing our senses or even curing physical conditions. But it is not guaranteed people will want to become cyborgs. A big opportunity is to create technologies that arise and pass away as needed, that are temporary, emergent and that enter our lives when we truly need them and leave when we don’t.     Flying turbines Makani/Google   4. Changing the way we produce energy Energy is one of the biggest challenges for the whole planet. What if Google turned its weighty innovation might towards generating truly clean energy? Others in Silicon Valley have already started making inroads into the energy sector – see this gadget that allows consumers to access solar energy through smart tech, without buying expensive panels. Electric vehicle and battery technology such as Tesla is making also continues to grow and innovate.   But country-sized corporations such as Google could do even more (perhaps they are behind closed doors). There are some crazy-sounding, alternative forms of energy emerging that might just work. Solar roads, sewage waste and even high altitude wind energy might benefit from some Google kickstart resource (the latter just has). Ok, Google! While you are up high in the sky, installing wifi balloons, why not harness some free energy for us all?   Paul Levy is Senior Researcher in Innovation Management at University of Brighton This article was originally published on The Conversation. Read the original article.

What you need to know about applying for an R&D Tax Incentive grant

2:32AM | Wednesday, 11 February

If you are just starting out in business you may not be familiar with the Research and Development (R&D) Tax Incentive scheme available from the Australian government. Or you may just need a refresher before submitting a new claim. It’s that time of year again where deadlines start to creep up on us, so I thought I’d update last year’s wrap up and share the latest on this subject.   The grants offer help to businesses by offsetting some of the costs of performing R&D. Many startups are not aware of what constitutes as research and development, therefore potentially missing out on a substantial cash injection for their business. If your startups runway is an issue this might be the time to act.   The R&D Tax Incentive currently has two core components:   ●      45% refundable tax offset for eligible entities with a turnover of less than $20 million per annum provided they are not controlled by income tax exempt entities. ●      non-refundable 40% tax offset for all other eligible entities. Unused non-refundable offset amounts may be able to be carried forward to future income years.   Is my startup eligible to submit an R&D grant application?   R&D projects usually comprise of a set of activities with start and finish dates, undertaken to generate a specific piece of new knowledge. Under the R&D Tax Incentive scheme, eligibility is determined on an activity basis rather than on a project basis. Eligible activities fall into two classes, core R&D activities and supporting R&D activities, both of which can be claimed.   The R&D program has five steps:   1. Access you if you have an eligible entity   You will need to have an Australian company to register and make a claim. There is more about the definition of eligible entities on the Business Australia website.   2. Conduct eligible R&D activities   You will need to write an R&D project plan to support your application. If you haven’t done this before there are various service providers that can help you put this together and ensure that you provide the correct information. Getting the base project plan together is tough for the first year’s claim but once you have this it will form a template for your business to use for subsequent applications.   3. Register with AusIndustry   Companies with an income year of July 1, 2013 to June 30, 2014 who wish to apply for the R&D Tax Incentive for the 2013-14 financial year income would need to have lodged their registration application with AusIndustry by Thursday, April 30, 2015.   4. Ensure your books are in order   I can’t recommend enough the importance of using an experienced bookkeeper who has specific skills in accounting for R&D tax incentives. Your bookkeeper should understand how to structure your company expenses efficiently to help maximise your eligible expenses. If they are coded to R&D linked accounts at the point of entry this should significantly reduce the reporting work at the end of the financial year.   NOTE: Make payments for all eligible expenses in the year of the claim – i.e. before June 30, 2015.   Don’t get caught out with employee super expenses. Although this isn’t due for payment until July 28, you will need to make the payment before June 30 in order to include these expenses in your claim amount.   Get your filing in order. Expense receipts, travel diaries and any other relevant documentation that may be required in the event of an audit to substantiate your claim will need to be kept safely.   5. Lodge your company tax return with the ATO   Talk to an accountant as soon as you make the decision to apply for R&D tax incentives. They will need to ensure your business is prepared to lodge its income tax return.   Timing and preparation can be crucial to your cash flow. If you have forecast an estimate grant payment hitting your bank account by a certain date, be realistic. Ensure everyone involved in the accounting and tech report writing process is aware of your cash flow deadlines.   You can read more by downloading the information pack from the AusIndustry website.   Additionally, you may use the online eligibility tool to assess if your startup qualifies.   NOTE: As part of the 2014-15 federal budget, the government reduced the rate of benefit to all companies under the R&D Tax Incentive, effective from July 1, 2014. The rates of the refundable and non-refundable offsets will be reduced by 1.5 percentage points to 43.5% and 38.5% respectively.   The change will apply for a company’s income years commencing on or after July 1, 2014.   Clare Hallam is a startup operations specialist. Follow Clare on Twitter.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Is your startup prepared to raise capital?

2:40AM | Monday, 9 February

As a startup founder about to raise capital, it’s likely that your focus is on your product (metrics, projections, etc). This may include how to pitch your story and your team in a way that will inspire investors to buy into your dream.   With an ever increasing number of new startups, investor pools are becoming smaller and smaller. The competition is getting fiercer. Founders need to get smarter in all areas of their business to win. However, raising capital may present more challenges than you think.   It can be a big distraction for you and your team – it may also take a lot longer than you imagine. Having an understanding of what investors might ask for could be crucial to closing the round. A small amount of preparation may help to get the money into your bank account before your current runway burns out.   Six key things to consider: 1. Legislation – the government has strict rulings related to fundraising. These vary depending on the type of incorporation you have and of course your location. In Australia, the Australian Securities & Investments Commission (ASIC) governs legislation. They provide a clear outline of what you need to be aware of as a director of an Australian company.   2. Cap table and valuations – understand the difference between pre- and post-money valuations. Consider scenarios of how an investment might impact yourself and any other current shareholders. If you’re in Australia, make sure that your cap table matches the shares issued on your companies ASIC records. Most savvy investors are likely to check this.   3. Due diligence – depending on the amount of money you plan to raise and from whom, it is likely that you may encounter some kind of due diligence. This might be as simple as providing historical financial statements. Yet it may be more complex and need in-depth legal and financial due diligence. Without preparation this could end up being very costly and time consuming. If you’re not able to provide what is needed an investor may choose to walk away.   4. Documentation for investors – an understanding of legislation that applies to your company should help to support the process. Having a core pack of documents prepared can help to provide confidence for potential investors. It may also assist them to make an investment in the timeframe needed.   5. Managing stress – preparing for and pitching your business to investors can lead to increased stress levels. You may find yourself working longer hours. To keep things under control you may also find you slip into micro-manager mode. Looking after yourself and your team through this time is something you might want to pay attention to. Remember stress has a tendency to spread like the plague if it’s not kept under control.   6. Timeline – plan your calendar. If you have reviewed your runway accurately, you know when you need the money to hit your bank account. This will tell you how long you have to prepare, pitch and close.   If you think you need to know more, consider taking the time to read up as much as you can in advance. The more prepared you are for what might lie ahead the better. Keep it simple. For example, there is no need to go deep into due diligence until someone asks for it. So long as you understand what due diligence is and know that your business records are in good shape that is fine for now.   Take the time now to understand what you might need help with. Then find out who can help you with what, when the time is right. The last thing you want is to have found an investor who is keen to review your shareholders agreement and you don’t have it in place.   Related Tips/Tools/Resources:   ●     Check out Pollenizer’s universal pitch deck for a simple template to base your pitch deck on. ●     Forecast your cap table for likely scenarios. Read this for a simple way to look at pre/post money scenarios. ●     Have a good understanding of your runway, read my previous article to find out more. ●     For Australian based startups, find out more about fundraising on the ASIC website. For anyone else around the globe check your local government websites. ●     Check out Lawpath for easy to use legal document and solutions.   Clare Hallam is a Startup Operations Specialist. Follow Clare on Twitter.

Stellar focused on making the financial system more inclusive

12:02AM | Thursday, 4 December

A new digital currency protocol called Stellar is taking the principle of “participatory democracy” and applying it to financial systems.   Its new digital currency, also called the stellar, launched just over four months ago, and sits atop all types of currencies, including both digital and fiat. Stellar is administered by, a non-profit organisation, which has made the software behind the currency open source.   It differs from other digital currencies in a number of ways. While bitcoin relies on the mining process for the development of new coins, stellars are produced by a fixed system, and unlike bitcoins, they will never run out. Stellar is giving away 95% of the currency for free from the outset, with 5% reserved for the organisation’s administrative costs. New coins will be added later at a rate of 1% per year.   While new bitcoins go to bitcoin miners, executive director Joyce Kim says one of the most exciting things about Stellar is the way in which new stellars will be allocated to users.   Kim spoke to Startup Smart ahead of her appearance at Above All Human in Melbourne next week. She explained that every week new stellars will be created, at a rate of 1% per year, and account holders will be able to vote for another account holder to receive new currency. Votes will be weighted by the amount of stellars an accountholder has.   Each week the network will identify the top 50 voted for accounts and the weeks allocation of stellars will be then be distributed. Kim says this could result in users banding together to split the profits themselves, creating new types of companies that offer free services to users in exchange for votes, and to the world being able to distribute money to charities in times of need.   “I have no idea what the division will be between those three models,” Kim says with a laugh.   “I’m really excited to see what happens. It’s a large social experiment.”   One of the advantages of digital currencies is the ability to transfer money quickly and cheaply across national borders. Bitcoin users do this by purchasing bitcoins in their local currency, transferring those bitcoins to another individual, who then sells that bitcoin for the currency they desire, or uses the bitcoins themselves to purchase goods and services. The Stellar protocol allows users to exchange any currency for another currency, in one transaction, as simple as sending an email.   “What Stellar does for the whole world is it takes what would be a four layoff flight and turns it into a single connection,” Kim says.   “You can literally do remittances on Stellar without touching digital currency.”   That’s so long as a fixed market exists for that currency. Kim says there may not be such a market for some currencies. She gives the example of converting between the Kenyan Shilling and the Thai Baht.   “That’s where digital currencies whether it be stellars or bitcoins or others sit in the middle and be that link between the two,” she says.   Stellar is also looking to make the financial system more inclusive. Currently women are 20% less likely than men to have a formal financial account. A 2013 study suggested women account for just 5% of bitcoin holders. The organisation is running a number of programs to distribute stellars. One is a direct access program which educates people about how digital currency works and rewards them with stellars.   “The fact that it’s that easy, you don’t have to be technical, you don’t have to be in finance, you can just somebody who has a bank account and comes and starts learning, I think that program will be hugely impactful,” she says.   “This is based off a lot of financial inclusion research that shows financial access tools alone, actually don’t do a good job of creating financial inclusion. You have to pair access very closely with education.”   It’s also running what it’s calling an Increased Access program, which will focus on emerging markets, and those which have “yet to cross the digital divide”.   “The idea behind it is, the direct access program we have now, there’s x amount of people that are online, and then the next five years we expect that number to double in time,” Kim says.   “So if we actually did all our digital programs today, then about half the world will be left behind. So we wanted to have a secondary access program that will take a little bit longer (to give away stellars), that will be directed to countries or into the communities that are not online today.”   Stellar will also be giving away 19% of initial stellars to existing bitcoin owners. The organisation will take a snapshot of the bitcoin blockchain at a particular date. Then a claim website will be set up that will allow bitcoin holders to receive their pro-rate share of stellars by verifying they control their address from that blockchain snapshot. A user owning .001% of the bitcoins in the snapshots, would receive .001% of the stellars set aside for bitcoin holders. Bitcoin users will be able to start claiming through that program from early next year.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Payments startup Pin Payments introduces programmable bank transfer API

9:21AM | Friday, 26 September

Perth and Melbourne-based payments startup Pin Payments has announced it is introducing a new API that will allow small businesses to automatically schedule their payments.   Co-founder Grant Bissett told Private Media he noticed the Australian e-commerce services market was failing to progress as fast as it should technologically while working in web design a few years ago.   “Pin Payments has been in the market for a year and a half. We built Australia’s first credit card payment system that doesn’t need a merchant account,” Bissett says.   “The first version was a multi-currency payment API. Now, while there’s a whole category of companies doing that, but we were the first to do it in Australia.”   Pin Payments is now adding to the service, announcing a beta trial of a programmable JSON API allowing business owners to transfer payments into any Australian bank account. Bissett says the API will be flexible enough to be implemented by a range of businesses.   “So the payouts are like the payments you do with online banking, except we add a developer API to them. We feel it’s a basic capability the banks should be offering by now,” Bissett says.   “We’re running a private beta where we’re allowing people to register their interest in a trial that will allow us to scale-up the service. We’ll be announcing general availability in the coming weeks.”   According to Bissett, the service is designed with online marketplaces in mind. He says it will allow them to automate the process of transferring payments to third parties and subtracting their percentage cut.   “The most common use case is with marketplace environment, where someone’s operating a website with many vendors. With the API, you can replace bookkeepers and manual processing of those payments with automation,” he says.   “We’ll reveal exact pricing when we announce general availability. However, it will be a small fixed fee per transaction, rather than a variable or percentage fee.”   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Bitcoin gets wave and pay treatment

5:39AM | Thursday, 22 May

Diamond Circle, a Brisbane-based startup that offers debit cards and cashless ATMs for bitcoin, is set to enter the UK and US, forgoing the local market which it claims is lagging.   Diamond Circle uses near-field communication technology, like that found in credit cards capable of wave and pay, to allow distributors and merchants to accept bitcoins, and earn commission by accepting bitcoins on purchases, providing cash-out facilities and by selling bitcoin debit cards.   Its ATMs are cashless, with users being able to purchase bitcoins using a credit card and sell bitcoins with the profits being placed into a user’s bank account through a direct deposit.   Chairman Mike Oswald says Diamond Circle has appointed distribution partners in the UK.   “We’re now negotiating bitcoin exchange banking arrangements with a confidential partner in North America,” Oswald says.   “We’re moving pay wave to bit wave.”   Oswald says not to expect an Australian rollout just yet.   “Australia’s taking a wait-and-see approach and I think that’s reflected in the investment community here,’’ he says.   Diamond Circle was founded a year ago and is in the process of raising its first round of funding.   Oswald says the banking payment system is ripe for disruption.   “I think it’s evolving very quickly,’’ he says.   “The banking payment system technology for global funds transfer hasn’t changed much for 50 years. Point-to-point transfer of funds in this domain is as revolutionary as the internet was to publishing.”   Recently, the company was named on Gartner’s Cool Vendors list for 2014.   “It’s certainly a badge of recognition that an Australian company can stand up and be counted amongst the best in technology globally,’’ Oswald says.   It’s an interesting time for Australian bitcoin startups with Melbourne-based bitcoin exchange system CoinJar recently launching CoinJar Stories, a series of interviews with ordinary Australians looking at how they’re using bitcoin in their everyday lives.   CoinJar has over 22,000 individual and business customers and has processed over $30 million worth of transactions in the last 12 months.   CoinJar growth strategist Sam Tate says the company wanted to get away from the complex discussion that often surrounds bitcoin.   “We wanted to shift the focus from the tech side of bitcoin to the human side of bitcoin,’’ he says.   “There was no resource for everyday people. We wanted to help overcome the uncertainty about what you hear about bitcoin in the news and in the media.   “It’s pretty cool. When I first found out about bitcoin it was a curiosity I would enjoy online. Now I can literally by a coffee, buy lunch, buy dinner, buy a beer with bitcoin, and not all from the same place.   “I think the idea will impact society, but the brand might not.   “I’m pretty optimistic about its potential, but there’s the potential for it to go the way of AOL or something like that.”   Australia’s first dedicated bitcoin fund the Future Capital Bitcoin Fund launched earlier this month, it will invest in companies that are leveraging services based on bitcoin and other crypto-currencies.

Six steps to avoid a post-Christmas cashflow hangover

2:28AM | Tuesday, 4 February

Many businesses shut over Christmas. But they still have to pay wages (plus leave loading) despite a lack of fresh customers, so it’s no wonder many businesses feel the squeeze in January.   The start of the year is a busy time for debtor finance company Scottish Pacific, head of product development Wayne Smith tells SmartCompany.   “Not every business suffers, but it is something we see a lot of,” he says.   “Most businesses wait 30 or 45 days to be paid, and because they’ve been shut, they have no invoices to collect over this period,” he says. “That means a smaller amount of cash flowing into the bank account. And given it coincides with their needing to make a BAS statement and pay taxes to the ATO at the end of February, it can be a challenging period   "It's not uncommon for successful businesses, experiencing high growth, to run up ATO debt because they didn’t have the real estate to help them secure traditional bank facilities and they simply weren’t aware of alternatives.”   Smith has six ways SMEs can survive the period.   1. Speed up your collections cycle   According to Dun & Bradstreet figures, SMEs are waiting more than 50 days to be paid.   Bringing this figure down, even a small amount, can have a dramatic impact on cash flow, Smith says. “For example, a business turning over $10 million, reducing debtor days from 60 to 55 days achieves a cash inflow in excess of $135,000.   “Often something as simple as improving paperwork (making sure invoices show all the relevant information required by the customer to make payment), sending timely reminders and putting in place a disciplined reminder call program) will help reduce debtor days.”   SmartCompany has some further tips on how to get customers to pay on time here.   2. Large order? Take a deposit   This limits your outlays on production costs, Smith says.   3. Look at working capital solutions   Smith says 4500 Australian SMEs use debtor finance, which involves borrowing against the value of invoices. Such financing is typically issued with 24 hours of an invoice being received, and so can help smooth over any cash-flow troubles when they occur.   “Debtor finance is for businesses that sell to other businesses on standard trade credit terms. It is particularly useful for labour intensive businesses where wages have to be met well ahead of payment receipts,” Smith says.   Another potential solution is trade finance. This provides lending to bridge the gap between when a business pays its suppliers and when it gets paid by its customers.   4. Check your stock levels   Careful stock management can be a good way to free up some cash.   “Having too much stock on the floor means you may have unnecessarily depleted your cash reserves,” Smith says. “If you have stock that is in danger of becoming obsolete don’t be afraid to sell it off cheaply to turn it in to cash.”   5. Negotiate with your suppliers for longer payment terms   Building good relationships with your suppliers makes this possible.   6. Consider offering discounts for early payment   This can mean less money to your business in the long term, but if you need to ease the cash-flow squeeze, it is always an option.

Cash flow and Christmas – top tips to get your business through with money in the bank

12:38AM | Tuesday, 17 December

Christmas can be a tough time for consumers when it comes to cash flow, but it can be equally difficult for businesses.   As company’s shut down for the holiday period, invoices can get left unpaid, leaving companies chasing debt in the new year.   As reported recently in SmartCompany, some businesses are taking nearly two months to pay their debts, putting SMEs into a troublesome cycle.   Bibby Financial managing director Australia and New Zealand Mark Cleaver said with so many business people going on holidays, it is important to put systems in place to protect cash flow over Christmas and New Year.   Here are his nine expert tips to get through this period with money still in the bank.   1. Get in line early at the fish market   As you complete work, you’re entitled to charge clients, so invoice clients when work is done rather than wait until the end of the month to send invoice: Time is money, so act now and get paid sooner. You should also make your payment terms clear. Payment terms are usually set at 30 days; however, it’s perfectly legitimate to set your own terms at 14 days. You’ve done the work or delivered the goods, so you are entitled to payment.   2. Don’t wait until after Christmas to stuff your stocking   Deal with late payers as soon as you become aware that an invoice is overdue. Any accounts receivables system should be structured so that late payers are identified as soon as possible. Remember, a sale isn’t a sale until the cash is in your bank account. So if there is a problem, pick up the phone and demand payment. An invoice is money due to you, not a donation.   3. Make sure your Christmas lights are working   Investing in software can help you streamline your invoicing and receivables management as well as protect your cash flows. There are several excellent solutions available on the market that can automate the invoicing and receivables management functions, so investigate your options. Automation means you can redirect your staff to other functions within your business, such as sales or operations, helping to make you more profitable.   4. Christmas is a time of giving   Over the holiday period, you might consider rewarding early or consistent payers with a small discount on their bill if it won’t harm your business. This is a great way to say thanks and show your appreciation to your loyal customers – and it might well bring in cash sooner than you expect.   5. Don’t hold on to old baubles   If you’re hoarding stock that isn’t likely to sell over Christmas or the New Year and it’s got a use-by date, consider selling it at a discounted price to get it out. The November Westpac-Melbourne Institute Consumer Sentiment reveals consumers are planning to restrain their Christmas spending this year, with 35% of Australians recently saying they intend to spend less than last year, while 51% are planning to spend the same. This is sobering data so the time might be right for a sale.   6. Close up shop and head to the beach   There’s no point keeping your business open and incurring costs if you aren’t busy over the Christmas period. Either maintaining a skeleton staff or shutting down over the holiday period can save running costs, as well as keep staff annual leave entitlements in check.   7. Cash in your invoices this Christmas   Debtor finance can help companies alleviate difficulties with cash flow by quickly converting unpaid invoices into cash. Typically, a debtor finance company advances you up to 85% of what you're owed from customers within 24 hours of request. The remaining 15% balance, less a small fee, is paid to you when your customers pay their invoices. This allows SMEs to leverage one of the biggest assets on their balance sheet, accounts receivables, to create immediate cash flows and avoid the Christmas squeeze.   8. Get social this season   Consider the Christmas period as an opportunity to review your business and marketing strategy. Consider dabbling in social media next year to increase engagement with your target audiences or listen to the conversations they are having about your business or sector on Twitter, Facebook or LinkedIn. Bibby’s recent Barometer, conducted in July, found that 75% of small businesses are using social media tools in their business operations.   9. Have a game of Christmas cricket   Running a business can lead you through countless hurdles and challenges. Ensure you and your staff schedule in time to relax, have fun and partake in the festivities. Why not enjoy a friendly game of backyard cricket.   This story first appeared on SmartCompany.

Three tips to get your finances straight in the new financial year

7:36AM | Wednesday, 10 July

Financial advisors and accountant experts are calling for businesses to seize the opportunity presented by the new financial year to set goals and sort out their finances.   Accounting software provider MYOB has released some steps for start-ups to take in the new financial year. Debra Anderson, the owner of leading MYOB consultancy company Legally BAS, spoke to StartupSmart about how to implement them.   “This is the ideal time of year to write down your goals, whether they’re financial in a budgetary sense or if they’re a marketing goal or even just getting to have a holiday this year. Writing it down is a commitment, and the whole process helps us think about it and organise our business plans to include them,” Anderson says.   Revisit your business plan with the market in mind   Start-ups and small business should focus on a few written goals and overhauling the budget in their business plans.   “The budget is your roadmap. You need to know where you want to get to, so your budget is the really important thing to show you what you’ve got to get there and where you’re going,” Anderson says. “You also need to take a look at what your competitors are doing now.”   “Things have changed a lot, even in six months. The Australian dollar has dived and the interest rates are down. The landscape has changed and it changes quite quickly in the global market.”   Anderson says many businesses make the mistake of believing the business plan should be set and stuck to for the year.   “Work out what you need to change or look at, once you’ve got that top goal, you can work down. It might not be that you do it all today. You don’t need to execute the whole plan and have it all sorted. It’s a dynamic document. You can change it every week if you need to revisit it,” Anderson says.   Work closely with an accountant or financial advisor throughout the year   Anderson says the new financial year is the best time to invite your accountant out to visit your business. She believes this is key to developing a productive and insightful relationship.   “It’s really important that your accountant actually comes out to your business so they can get a feel for the state of affairs,” Anderson says.   According to Anderson, too many small businesses and start-ups underestimate how much their accountant needs to know.   “Actually, make sure your accountant knows what you do, and how you do it. They’re not just there for tax returns, you should be able to use them as a trusted advisor. We don’t talk about money with friends, but that’s our job, the good bad and the ugly,” Anderson says.   Streamline productivity and processes for a more efficient team and business   The new financial year is the perfect time to re-evaluate your business relationships and suppliers, including your accountant and accounting system.   “Streamlining is really important and you should make sure you’ve got some kind of system that is right for your business. That can be really simple, it could just be Excel if you’re running a really basic business or it could be something with more features,” Anderson says, adding that you shouldn’t choose a system simply because your accountant prefers working with it.   According to Anderson, the most common financial management mistakes small business make are not separating their personal and business accounts, and not putting aside funds for upcoming regular payments.   “Too many small businesses have one credit card for business and personal. Combining their personal and business accounts is a huge error,” Anderson says. “Get a business one so you can link it to the financial software, keep it clean and know where your money is going. It’ll streamline the process and if you’ve done it properly, it’ll do all the dirty work like data entry for you.”   Given cashflow is a major issue for start-ups, Anderson says the easiest thing you can do to get on top of the issue today is separate your accounts or create a new one to start sorting funds appropriately.   “Set up that second bank account; put some money aside for taxes and superannuation aside as you go. Run your GST reports monthly or weekly and put that money aside so you don’t get caught out paying it quarterly,” Anderson says.

Five quick tips and mistakes to avoid with cloud accounting

7:35AM | Wednesday, 10 July

With a new book, XERO for Dummies, out on the market, Heather Smith is a big believer in cloud accounting, especially for business owners who aren’t comfortable with their financial literacy.   “Accounting is just like driving, you can’t do it without checking the dashboard. When you run your own business, you need to identify KPIs (key performance indicators) you should be monitoring, and cloud accounting helps you easily track your financial ones,” says Smith, who has 22 years’ experience as an accountant and certified advisor for Xero and MYOB, two of the major players in cloud accounting. She has been running her own business for eight years.   Smith spoke to StartupSmart about her top five tips for start-ups setting up cloud accounting, and how they could get the most out of it.   1. Use it to save time and boost growth   “I recommend start-ups, if you’re serious about going into business, get your financial side sorted out as quickly as possible so you have the time to know what’s going on financially, and be scalable,” Smith says. “If you’re doing cloud accounting right, it’ll free up your time to grow your business.”   Smith says cloud accounting, and the opportunity to see at a glance your entire bank feeds, sales data and invoices, will allow start-up operators to strategically grow their business by automating systems.   “There does seem to be a trend in business at the moment to move to subscription payment services and a cloud accounting system can do this without you even thinking about it. This creates a money funnel for your business,” she says.   2. Make the most of plug-ins and report features   Smith says some of the plug-ins, such as the Timely time management plug-in and the debt-tracking options, can boost your cashflow very quickly.   “Personally, I implemented a debtor tracking solution and I was able to improve my debtor days by 10 days, and that was massive,” Smith says, adding the executive reports with detailed KPIs create a goal system for start-ups who are working on their own.   “You can monitor how many and what value of invoices you’re doing a month, or a week. This will enable you to stay focused on constantly pushing up the average value of the total invoices, rather than aiming for more invoices, which means more work and may not be the best way to grow your business.”   3. Getting expert help to set it up properly will be easier and ultimately cheaper   “We have such an onerous tax system in Australia,” Smith says, noting that sitting down with your accountant or bookkeeper now to install a system will save you stress and time next financial year end.   Smith says start-ups who set up a cloud accounting system as early as possible will avoid complicated and costly fixing later on.   “This first stage is the hardest stage. But if you get help after a couple of months, to fix it up takes a lot longer and can be thousands of dollars.”   4. Overcoming data security concerns   Smith says the data security concerns around cloud accounting are minimal, and there are significant data security benefits too.   “Xero data is historical data not future data. Someone who gets in can’t access your bank account and extract money. So if you’re prepared to do online banking you should be set to do cloud accounting,” she says.   Smith says business owners should be more worried about losing their financial data through computer crashes, or natural disasters, adding that she’s based in Brisbane and has seen too many businesses lose their records from flood or fires.   “You need to have a secure back-up plan in place, so use a cloud-based option, backed up in real time in multiple services. I still suggest to people they make their own back-ups, but cloud will be far better.”   5. Take responsibility for the financial management of your business   Smith says many small business owners may want to avoid the financial details of their business and outsource that work to an accountant. While that can work for a few years, Smith says this approach holds businesses back from reaching their full potential.   “Don’t put on blinkers and say you don’t want to learn this stuff. If you are in business you need to know this stuff. But you can take the time you need to learn it slowly,” Smith says.   “Richard Branson doesn’t do his own tax but he does understand the numbers. Don’t abdicate that responsibility.”  

Six benefits of your business being in the cloud

3:06AM | Friday, 15 March

As promised in my previous blog, today I want to give you a bit of insight into barebones IT cloud infrastructure. Hopefully by the end of this article you’ll be able to decide whether or not the cloud is for you now, in 12 months’ time or never (at your own peril).

Don’t ignore tax obligations if you are a company director

3:06AM | Thursday, 14 March

February tends to be the worst cashflow month for many SMEs. Mix the extra costs coming out of the holiday season, some downtime and the wind up for the new year and cash can be tight.

Ingogo on the go after securing fresh funds

2:10AM | Wednesday, 13 February

Sydney-based taxi booking app Ingogo has secured a fresh round of funds from a host of new, high-profile investors, with founder Hamish Petrie flagging plans for a national rollout.

Five key things that fast-growth businesses do well

12:05AM | Thursday, 20 December

But it’s perhaps more useful to look at the common characteristics of fast-growth businesses, rather than the rate of growth itself.

Westpac launches Mobile PayWay as SME payment market heats up

7:28AM | Friday, 6 July

Westpac is the latest of the big four banks to launch a mobile payments app, Westpac Mobile PayWay, for small businesses. But how does it measure up to its rivals?

Retail start-up Shooii in administration just months after launch

7:44AM | Thursday, 5 July

Niche online shoe retailer Shooii has plunged into administration, despite only launching in March this year, with a lack of outside investment blamed for the company's woes.


6:05AM | Wednesday, 6 June

While working for footwear giant Footlocker, Dave Prince realised there was a gap in the market for an online venture that delivered shoes to eager young consumers.

Three key tax management rules to follow in the new financial year

5:51AM | Wednesday, 30 May

Tax represents a large cost for most SMEs and it undoubtedly contributes to the failure of many small businesses.

Taylor Ventures

4:33AM | Monday, 23 April

All it took was talk of a Melbourne bar to prompt Simon Walker and Damon Garrett to launch Taylor Ventures, which is “a radar for the events taking place around you”.