Most business owners are aware that monitoring cash flow statements, and managing expenditure is key to keeping on top of their business. If the numbers are going in the right direction, then you should be making more than you’re spending. If the numbers are regularly going into the red, then all sorts of things can start to go wrong, quick!
Beyond diligent cash flow management, here is one strategy that can free up cash and help you start this financial year with the funds you need to plan for new growth or to build a more resilient business.
Replace, Cut Costs, Write-Off
Most people are aware that if you have equipment that is showing its age or not performing at the expected level, then the End Of the Financial Year is a good excuse to ditch the old and get an upgrade; but many people forget that purchasing replacement equipment can actually free up cash, make you more productive and also give you a tax write-off on the new equipment.
1. Monitor and Generate a Report On Your Cash Flow
First things first, reconcile your financial accounts to generate reports. If you need help doing this you should be able to get your bookkeeper or accountant to help you do this. Identify any equipment assets that make financial sense to dispose of, replace or upgrade.
2. Cut Costs and Refinance Loans
If you have existing equipment finance, don’t take a set and forget approach, but rather take a view to renegotiate or refinance with a better rate, terms and conditions. To do this, have a look at all your reoccurring fortnightly and monthly equipment expenses and try to identify these often overlooked items. Sometimes the biggest expenses with the largest savings to be had, can be the battle-worn trucks and heavy machinery that have been around so long that they starts to look as part of the furniture. Our staff are both Finance Brokers and Financial Planners, so they can help you to identify real savings by looking at the details.
3. Start the New Year by Replacing Old Equipment With New and Get the Instant Asset Tax Write-Off
With an equipment loan and the extra cash in reserve, you can afford to buy essential business equipment, tools & machinery, vehicles and take advantage of the instant asset tax write-off (up to $20,000 + GST or under) to invest in your business.
If you are a small business (aggregated turnover of less that $2 million) contemplating buying machinery or equipment, be aware that in the Budget 2017, the government announced an extension of the $20,000 instant asset write-off threshold to 30 June 2018. This extension still needs to be passed in parliament – the threshold currently reduces to $1,000 from 1 July 2017.
What you’ll need to have on hand
For loans of $30,000 or less, minimal documentation is required *conditions apply.
For loans over $50,000:
You will need some basic financial statements like a P&L, BAS and 3 months of business bank statements, so we can evaluate the health of your business and see what kind of repayments your business can manage without stress.
BHL provides the same reliable and customised service solutions for businesses as we do for individuals with personal finance and home loans. We ask the important questions and can provide you with qualified financial advice as well that can make a real difference.