Business owners are subject to many competing pressures in their decision making processes. While difficult, it is important to not succumb to this pressure and make quick or rash decisions but to ‘take a step back’ and consider any other impacts the decision may have on the broader business.
A common characteristic of successful people is the willingness to seek help from others, especially in areas where they are not an expert. Developing a team of trusted advisers is important in building a successful business. How and when you will use advisers varies dependant on circumstances, but broadly speaking this can be in a reactive state where a problem has arisen and needs to be dealt with quickly or a proactive state where you are looking to manage future events/risks. If you get the balance right you will be more proactive and have a more efficient and profitable business as a result.
Below are some examples of this process in action and show how you can use a trusted advisor to great benefit..
The right advice from the right person
When faced with a tax bill we are seeing an increasing number of businesses entering into an arrangement with the ATO to pay this off over time – however, there may be broader implications to this decision. Tax debt in any form is viewed as a ‘red flag’ by lenders and an indicator that a business is having difficulty paying their commitments when they come due. While reasoning can be offered and the situation explained, many lenders will automatically decline a loan application in these circumstances or at the very least treat it as a higher risk and increase the applicable interest rate. This can start to negate some of the benefits of entering into an arrangement.
Some will rationalise this approach saying “I will just pay the tax debt before I make a loan application and there will be no long term impacts” – unfortunately this may not be the case as many lenders now look at tax history when assessing a loan application and any late payments will have a negative effect on the outcome.
A proactive approach to tax planning with your Accountant and debt requirements with your Finance Broker will result in less ‘road blocks’ for your business..
Planning for the unforeseen
One area that you have less control over is bad debts. While you can build robust processes into your business to reduce the incidence of bad debts, the risk will always remain regardless of the state of the economy. A step to consider to offset any losses is to take out debtor insurance.
This type of cover is becoming increasingly popular and can cover you for up to 95% of the amount owed if a bad debt is incurred which provides you with certainty when faced with an unforeseen event. The insurance cover is highly flexible and can tailored to your individual business needs and can also incorporate options for credit reporting and collections services.
Your team of advisors
It’s a simple rule but easily forgotten in the rush to get things done – make sure you take that step back, get advice from your team of advisers and get the right solution for your business.
We have specialist Finance Brokers who understand the nuances of lenders and their various policies and how they can be used to maximum effect in your business.
We have access to a team of General Insurance Brokers who can provide you with solutions to protect your business from the big and small things that can go wrong.
We’ve even got Financial Advisers in our network who can assist with Personal Insurances such as life insurance and income protection to protect you, and the wealth you’ve generated.
If you’re keen to have a team of finance, insurance and financial planning professionals on your side, helping you work towards a bright future for your business, please contact us today.