Business Financial Overview

What you will need to include

Availability of Finance

• What is your starting capital for the business?
• What working capital do you need to keep the business operating on a day-to-day basis?
• What sources of finance will you use to commence and run the business?
• Will you be using private or commercial loans as your source of finance?
• If you intend to borrow money, has the application been approved? How will you repay the loan?

Assets and Liabilities

• What are your assets? Which specific assets will you use for your business?
• What current liabilities do you have outside the business (e.g. home mortgage, credit cards, personal loans, tax owed etc)?

Costing, Pricing & Expenses

• What operating expenses will be incurred in your business?
• To cover these expenses and make a profit, what sources of income or type of sales will there be in the business?
• What is the price for producing a single unit of your product or the charge for one hour of service?
• How much sales do you need to make? Can the marketplace bear this amount? Can you earn a profit from the sales? Is it enough for your salary?
• List the suppliers who you will be dealing with regularly.

Break Even Analysis

• Develop a "Cash Flow Chart" for your business. Include all expenses, costs and sales you would expect to make or incur during the first 12 months of operations.
• Calculate the break-even point by graphing the expenses, costs and sales of the Cash Flow Chart and see where the maximum of expenses or costs meets sales.
• How many product units or hours of service must you sell to meet expenses and make a profit?

Budget, Plans and Results

• Produce a "Projected Cash Flow Chart" of your estimated costs, income/funds and expenses for the second year of operations.
• Summarise the financial status of the business in terms of a "Projected Profit & Loss Statement" (the figures are obtained from your cash flow chart) for the first and second financial years of operations.
• Produce a "Balance Sheet" (the figures are obtained from your assets) at day one of the business, and in one and two years time from the day of commencement.
• Mention in this section that you have developed these financial documents and explain briefly what they mean to you and others in plain English.

Record Keeping

• Identify the types of documents/information you will need to keep for the effective management of your business and for taxation purposes. For example, you might need cashbooks to record all incoming and outgoing cash flows, and a chequebook to record transaction details.
• How will you prepare a record keeping plan for your business?
• How will you store the information? Will it be electronically on a computer, or manually in a filing cabinet or safe?

Financial Indicators

• What three or four critical financial indicators will you use for the ongoing financial monitoring of your business?

Provision for Taxation

• Have you taken into account the provision for taxation in the Cash Flow Chart?
• Do you and your business have a Tax File Number (TFN)? NOTE: For a sole trader, the business TFN is the business operator's own individual TFN.
• Under the new GST system in Australia, each business must also have its own Australian Business Number (ABN) which is separate from the individual's TFN. (1)

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Income and assets

Income is defined as what the business receives in a monetary sense. This includes the money earned from the sale of products (i.e. sales, or the supply of products or services to someone else), or as extra funds put into the business (i.e. capital introduced from personal savings, interest earned from investments etc).

Income can be either locked away in tangible items known as assets, or as a more fluid form as when money 'flows' during a transaction when a product is sold.

To know how much income you have locked away as assets at a particular moment in time:

1. Write down a list of all items purchased for business use; and
2. Determine the market value of each item in the list.

In the first instance, divide the list into two parts: (i) List all assets under $300 such as textbooks, hand tools, stationery, and so on (you can even ask suppliers to split the cost of your assets into two or more tax invoices to bring the costs down below the $300 mark—useful when getting a tax deduction); (ii) List all assets over $300 such as a computer, a photocopier, a motor vehicle and everything else.

In the second instance, read the 'For Sale' section of trade magazines, visit second-hand goods shops, or go on the Internet to determine current market value of various assets.

Assets are important not just because you need them to run your business, but also for financial analysis in order to create what is called a Balance Sheet. In other words, all these business assets helps you give a value to your business should you need to sell something quickly. Furthermore, such information about assets comes in handy for insurance purposes too. (2)

The concept of working capital

Working capital is defined as current assets minus total liabilities in the business. Remember, you don't have to include your personal liabilities such as a credit card debt into the business. That's a separate issue.

Working capital is important in any financial planning because it shows whether you need to borrow money to run your business or not.

If the working capital is negative, it means you must borrow money and that would mean creating debt for the business which you may not be able to repay straight away if you need to by selling your current assets. If, however, the working capital is positive, you would be able to run your business easily with the safety that if anything should go wrong, you can pay off all your debts by selling your assets.

Remember, make sure the total assets you own when you must sell them will cover all your liabilities. That's important. Bank managers who are contemplating on giving you a business loan like to see a positive working capital figure in your financial planning section.

When to lease assets and when to own them

Cash flow is difficult to maintain. This is usually because of the expenses you may have to pay as well as the customers who may decide not to purchase what you have to offer.

It is in the area of expenses where your business can easily grind your cash flow to a halt. Because leasing equipment is an expense, it may pose a potential liability to your business.

If you are starting a business for the first time, try to keep your liabilities such as leasing to a minimum. It is better to own the asset outright to help minimise the liabilities.

On the other hand, if you are well-established and your cash flow is good, you can consider leasing options or pay per month instead of a lump sum at the start of the financial year.

Expenses and costs

There is a distinction made in the business world between costs and expenses. Expenses are the things you need to spend occasionally to run your business. Costs are the things you need to spend regularly to do a particular job (i.e., to produce a product or to implement a service). Examples of costs include paper and pens, envelopes and various raw materials to build the product. Examples of expenses include paying the electricity bill and buying a computer.

Although the Tax Office is particularly keen to know how much income and assets you acquire in your business, the Tax Office is also interested in your expenses and costs in so much as knowing whether you are really in business, to entice you to continue running a business, for their own statistical purposes, and generally just making sure the items you purchase are not from illegitimate or criminal sources.

To help the Tax Office learn more about your business, the government has provided an incentive to allow business operators to have many of their expenses and costs in the business to be tax deductible. This means you will get some (tax) money back for what you have paid to others in your business, but only if you keep receipts and invoices to help prove your claim of an expense or cost.

Examples of tax deductible expenses and costs usually includes electricity, rates, telephone, insurance, leasing of premises, training, training seminars and conferences, legal and accounting, business-related travel and accommodation, subscriptions to magazines, advertising, courier/freight, postage, business-related furniture, clothing, printing, petty cash, leasing of business equipment, vehicle costs, depreciation and so on.

If you intend to operate your business from home or use the family car for business use, you need to calculate the percentage of the total home area or distance travelled by your car for business use and apply this percentage to determine roughly how much you have paid for insurance, electricity, petrol and so on when running your business. This business percentage of total running costs is the only thing you can declare to the Tax Office in the hope of getting a tax deduction.

To measure the size of the main "office" in your home, calculate the area known as the foyer (or reception area) to your office at the front door and also the toilet. In fact, any area that will be used for business use, including storage areas under the house, in the attic and/or in the garage can be added to the total business-related area. A client's car parking area must be well defined, in your own property, and is reserved for business use only in order to have the area added on. But most importantly, clearly define what is the office area. Tax people generally do not like business people working anywhere other than the well-defined area known as the business office. Certainly nothing stops you from working in the dining room area or anywhere else if you so choose. But it is recommended that you do not include the dining room as part of the "office" or you will have a hard time proving this to the tax people (is it really for business or private use?). Now divide the home business area by the total area of the home premises. If the business totally resides inside the house, use the the total area of the house only to calculate the percentage area for business use only.

For car use, write a detailed travel log. The document should record at least date, time, business/personal (when writing "personal" or "private", don't write anything else; we don't need to know what you were doing in your private time), place of travel commencement and destination, the reason for the business travel, the start and end odometer clock reading for the entire trip, and the distance travelled. Then keep all costs and expenses by way of receipts for petrol and car maintenance in a handy place for the accountant to later calculate the percentage you are entitled to receive as a tax-deduction for you.

Travel as a legitimate business expense is a somewhat dubious area for the Tax Office. You will have to prove your travel is business-related by making sure you have the receipts and/or dockets and a personal entry in your diary. If you take a trip somewhere for several days, make sure you make business appointments for each of the days you are away and leave your business cards and other details with clients as well as pick up their business cards. Otherwise you will have a hell of a time proving to the Tax Office all those days away from the office are a legitimate business expense.

If you take a partner with you on travel, make sure the person is a business partner (whatever that means in the business world!).

Superannuation for the business operator

This is one of the good things about being a business operator. You don't have to calculate this superannuation thing. Let the accountant suggest an amount to throw into your superannuation fund. Just concentrate on creating sales, and paying off business costs (including GST).

The guts of managing business finance - what's it all about?

There are only four main parts to a full financial analysis in small business:

The Cash Flow Chart

This is a document for measuring the movement of money going in (as sales) and coming out (as costs and expenses). It essentially summarises the transaction results of your Sales/Income and Expenses/Costs Cashbooks, and tells a tax accountant how much you have earned for the financial year for the Tax Office to assess for income tax. When starting a business for the first time, use this cash flow chart to enter as accurately as possible your sales (i.e. income) and expenses forecasts for at least the next 12 months to help you work out things like how many products you need to sell to cover expenses and make a profit.

The Cash Book

This is a document to organise and record all monetary transactions recorded on invoices for sales made and receipts for expenses and costs paid in the business. Later, a Cash Flow Chart is thrown in with the Cash Books for good measure just to make you look like you're a professional business person. No seriously, the Cash Flow Chart is there to show you the total of all the transactions for the financial year from the Cash Books so you can work out your savings (i.e. sales minus expenses) and any tax you have to pay to the Tax Office.

The Chart of Accounts

This includes the Profit & Loss Statement and the Balance Sheet. These documents are used by the tax accountant to calculate how well the business has performed for the Tax Office to assess in terms of other taxation requirements.

The Profit & Loss Statement is a document for measuring the financial performance of a business, usually over a one month period. Such a document should also be generated over a three month period, four times a year.

The Balance Sheet is a snapshot of the net worth of a business at a particular time. This document is useful in determining how much the business can be converted into cold hard cash quickly should it be necessary to sell the business.

The Break-Even Point

When starting your business, it is a good idea to graph your projected expenses against projected income in your cash flow chart to help you determine at what point your income will exceed expenses. When doing this, make sure your projected figures are accurate. You are also hoping the break-even point will occur as soon as possible rather than later although this will depend on the type of business you are operating, what marketing techniques you employ to maximise income, and how much and the type of capital you own to help minimise your expenses.

More about budgeting and making financial forecasts

Forecasting is another term for budgeting. They both mean one thing: guessing. As hard as it may be for some people, you must be prepared to make guesses. To guess requires some forward-thinking and creativity.

To avoid having your creativity create outrageous answers, it should be balanced with some rational thinking based on solid data. Remember, good budgeting is about making good educated guesses for income and expenses. It is educated if you use solid market research data (i.e. actual cost of items, what people are prepared to pay for your product via surveys etc).

When making guesses, be conservative and realistic in your selection of financial figures for sales and expenses. Take the worse case scenario for all your figures in your budget just to be on the safe side.

How to make a cash flow forecast

Firstly, do some market research to make sure there are customers out there who would be interested in your products.

Secondly, do a costing and pricing analysis on your products. This means working out the cost to make the products, and then determining the price to sell the products based on what customers are willing to pay for them. Once you've settled on a price, you will know the number of products you can make per month and the estimated total sales for the year.

Thirdly, break up the yearly sales into monthly amounts for each product. Vary the amounts a little due to fluctuations in sales at different times of the year (e.g. at Christmas time and in the New Year period).

Fourthly, enter all your expenses, both fixed and variable expenses into the cash flow. You'll need this if you want to know your profit.

Finally, show the break-even graph—which is formed by graphing income versus expenses. You'll start making profit when you've passed the break-even point. If there is no break-even point, start reducing expenses and/or increasing sales. Again be realistic when you do this.

More about the break-even point

You should not include the startup costs for your business in the expenses section of your cash flow when determining the break-even point. Otherwise the big lump sum cost at beginning will make your break-even graph look a bit funny and would not be a true reflection of your business under normal conditions. Just standard figures of expenses and sales for the whole year as if operating the business normally is perfectly fine.

If you think you will not reach your break-even point, don't go into business until you can reach your break-even point. A true business must exceed the break-even point. So make reviews on the pricing of your products, and even reduce your overheads and product costs. For example, would increasing the price of one or more products solve the problem? If so, will customers still buy the products (refer back to market research data)?

If you are writing a business plan to convince a bank manager to give you a loan, try to show the break-even point will be reached within 12 months. Bank managers like to see this.

Understanding financial terms used by the experts

Here are some definitions for terms you may hear from experts in the financial sections of businesses. Try to get your head around these terms and you'll be speaking just like a pro too:

Costing

How much it costs to make your products or services. Financial experts may also use more specific terms for costs such as fixed costs, variable costs, direct costs, indirect costs, start-up costs and so on.

Fixed costs

Costs remain constant for a specified period of time (usually over the entire financial year) regardless of sales volume.

Variable costs

Costs fluctuate in price for any reason including the possibility that the costs are directly proportional with an increase or decrease in sales volume.

Direct costs

The cost of making your sale. In other words, all the raw materials needed to make your product or deliver your service has a direct cost to your business.

Indirect costs

Those overheads (or business expenses) that have some affect on the cost of making your sale.

Business expenses

Costs specifically to do with running your business (e.g. electricity, accountants, insurance etc).

Working capital

The funds you need to run a business on a daily basis. Working capital=current assets - current liabilities.

Start-up costs

The costs you need to spend to start your business. These costs shouldn't affect your break-even point.

Budget preparation

Budgeting means guessing. So you are making educated guesses in a budget preparation. You need a budget to help you see your target and make sensible business decisions. The three main benefits of a budget is to help you (i) to see when you're making a profit (i.e. find the break-even point); (ii) to see how to increase your sales and/or reduce your expenses; and (iii) to convince your bank manager to give you a loan for your business.

Pricing

How much are you willing to sell your products or services based on sound marketing advice from your customers? (3)

Break-even analysis

When we want to know when sales exceeds all fixed and business costs and you start making a profit.

Debt control

Business overheads, product costs and creditors can all create debts for the business. Controlling it is a strategy. Your strategy may be to create a debtors and creditors list, change banks to help reduce bank fees, asking your customers for an upfront deposit, or whatever.

The business operator's financial obligations

The minimum responsibility of a business operator when it comes to handling the financial affairs of his/her business is to prepare and organise:

• a Receipts and Expense Cash Books (two documents for summarising the financial income and expense transactions for each month of the financial year);
• a Cash Flow Chart (a document for summarising the Cash Books as monthly and quarterly amounts in columns and shows you how much profit you have made in the business at the end of the year); and
• a place to store evidence of all successful transactions contained in your bank statements, receipts, invoices and vouchers inside a box for seven years (afterwards you can bring over your friends for a major backyard bombfire to burn it all if you like).

You don't have to worry about doing your own accounting stuff as well if you don't want to (e.g. generating a Chart of Accounts, calculating tax etc). You can let your trusted accountant do it for you.

The basic financial activities performed by a business operator are as follows:

1. A Projected Cash Flow Chart is produced using estimated figures for expenses, costs and sales. Such a document can tell a lot about how profitable a business is going to be over a period of time.
2. All evidence of financial transactions conducted in the business should be gathered together, organised and entered into a Cash Book. This record keeping obligation of a business operator is required by law under Section 262A of the Income Tax Assessment Act.
3. The Cash Flow Chart is then updated on a monthly and quarterly basis to reflect the actual sales, expenses and costs during normal operations using the figures recorded in the Cash Book.
4. All receipts, bank statements and so on for each month are placed in a box for storage.
5. The Cash Book, the Cash Flow Chart, and all the original transaction details may be sent to a tax accountant so that he/she may produce a Profit & Loss Statement, a Balance Sheet and a tax return for assessment by the Tax Office.
6. Details of any transactions recorded on paper must carry certain types of information. Receipts, invoices or similar documentary evidence must at least mention (i) the date; (ii) the name of the person or business; (iii) the amount paid or received; (iv) the nature of the goods or services sold or acquired; and (v) be written in plain, simple language.

NOTE: Source documents are the critical pieces of evidence you must keep to prove your claim of any transaction. If your business makes electronic transactions, you must keep your bank statements from your business account as a source document. Where people give cash or cheques direct to the business, a receipts book should be used to record the transaction details. The amounts in the receipts book is then written into your Cash Books.

TIP 1: How to handle Petty Cash — First you may like to decide how much money to keep in your petty cash (usually about $50.00). Write a cheque for the amount and cash the cheque at your local bank. The cheque gives evidence of a business transaction in your cash book payments. Now put the cash in the box. At the end of the week, write a cheque for the remaining amount. This goes in the cash book receipts. Keep the money and use the cheque as income in your business.

TIP 2: As soon as you pay something, try to write the amounts in your cash payments book straight away. It avoids having to remember what the transaction was about. Or at least do it once a week.

TIP 3: If you have time, use an electronic Adobe Acrobat PDF filing system with paper capture facility for any other non-financial and least important business documents you have lying around. It will help you to keep everything compact and easily stored either on CD or on your computer. It is also easy to find things by using the Acrobat search facilities. Otherwise, go for the traditional method of filing the documents in a folder and store in a safe place.

TIP 4: Only the most important documents such as contracts and those required to be kept by law should be left in the paper format inside a folder and stored in a secure and safe place.

TIP 5: The tax invoice for amounts over $1000 must have the address and name of the person purchasing your product and the quantity. This helps the Tax Office know exactly who is doing what at time of auditing and the Tax Office can verify the amounts mentioned by the other person. The Tax Office is too busy to deal with amounts under $1000.

Do I need to keep these records?

Yes. In the past, you don't need to keep financial records when running a business. People have survived without them. But in today's business world, people need to see evidence of your business, how much it is really worth, and what you are doing in order to do things like:

1. Sell the business to someone else

   This is a world where people need to see written proof of your claim of how much the business is worth. Your financial records are the means of getting that proof especially if they were prepared by an independent and trusted accountant. or even to get bank loans and obtain the most appropriate level of insurance. You have to prove and for people to see what you claim. Only financial records (4) can do that for you.

2. Pay the correct amount of tax

   This is important for the Tax Office in order to determine how much tax you must pay.

How the tax system works

For the tax system to work properly and with reasonable fairness, it is expected that you have receipts and tax invoices prepared for recording all financial transactions within your business and for you to voluntarily disclose your income to the Tax Office. As an incentive for you to do so, you are entitled to get tax deductions for various expenses you make in your business.

As further incentive, should you ask for tax deductions to be approved from the Tax Office for any expenses you make, the Tax Office is obligated to send randomly a tax auditor to check that you have complied with tax requirements via your official tax invoices and receipts, GST registration and other basic compliance issues.

What happens if I don't keep my records?

Of course, it is possible to run a business without keeping a single receipt or tax invoice (the minimum records you must keep). Just bear in mind that you will not be eligible to receive a tax deduction.

Also no tax invoices and receipts is an easy way for some people to trade in what is known as the black economy so long as traders in this economy:

• know each other well and have developed adequate trust;
• don't leave behind electronic or non-electronic evidence of unusual transactions for undeclared cash (including receipts/tax invoices);
• at least match and preferably exceed the expenses declared to the Tax Office for tax credits with adequate declared income;
• don't show a personal or business lifestyle suggesting they are earning more income than is being declaring to the Tax Office; and
• are staunch supporters of the "refusing to answer questions about specific individuals in the black economy to the Tax Office" association.

Hence it is theoretically possible not to declare any money you earn to the Tax Office and thus pay no tax (and, in fact, some individuals and groups are doing this as we speak).

Unless the people of an entire society are prepared to go against the Government as a form of protest against certain Government decisions, we recommend you don't go that way as the Tax Office has tricky ways of finding out.

For example, the Tax Office can use video surveillance to observe your whereabouts and the type of expensive assets you purchase to help them make an educated guess of whether that simple cleaner's job you've said you were doing is earning more money than you have declared.

And also the Tax Office are no longer randomly selecting businesses for auditing but instead honing in on problem areas where the black economy are said to be rife known as the cash economy crackdown, such as taxi drivers and all kinds of personal service workers. So you may get an unexpected visit by a tax officer just to check your cashbooks for discrepancies (unless you are prepared to pay huge amounts of money for an accountant to do your cashbooks), GST registration (or lack of), and other basic compliance issues at any time.

Accountants

The purpose of sending your financial records to a tax accountant is to avoid paying unnecessary tax to the Federal Government. Tax avoidance is legal to save unnecessary tax from being withdrawn from your hard-earned income (also called minimisation). But tax evasion is, of course, illegal.

The cost of hiring the services of an accountant to deal with your financial affairs can range anywhere between A$90 and A$200 per hour.

Do I really need an accountant?

This may well depend on your business and whether you use one of those software packages that does everything except buy you the kitchen sink. Take for instance M.Y.O.B (the acronym for Mind Your Own Business—a particularly good marketing slogan for small business against all those global corporations hell bent at taking over the world market). This neat software package takes a little getting use to, but once you've mastered the techniques, you will realise this package can do just about everything an accountant does.

The only thing a real accountant might do afterwards is check the results from the software package, twiddle here and there a few numbers in your balance sheet to make them (hopefully) correct for your type of business. And for that, you only have to pay A$170 for the effort.

Not such a bad day's work if you're an accountant!

But since most people are not fully trained accountants, you must decide whether or not to pay for the services of an accountant for this kind of work in the type of business you are in.

Why do some people have to pay up to A$3000 for the services of an accountant?

Ouch! Some people must have some very deep pockets out there with money to splash around.

Unless these people have been drinking too much, we believe there are a number of reasons for this. One has to do with the size of the accountant's firm. Generally the larger the firm, the more you pay to support the firm full of accountants due to extra overheads and operating costs.

Secondly, some business operators can be really sloppy with their financial records. Whilst this may be understandable since these people are probably focussing more on their customers in keeping them happy than keeping financial records organised, they have to pay more to accountants to get those financial records up to a level the Tax Office is happy.

The moral of the story is simple: if you want to save money on accounting fees, (i) go for the smaller firms run by one or two accountants if you want to save money and still get a pretty good quality service; and (ii) keep your financial records up-to-date and organised.

A SPECIAL TIP IN WRITING YOUR BUSINESS PLAN: Just say in your business plan you have an accountant in mind irrespective of whether you can be your own accountant using your own software (e.g. SUNRISE Finance 2003, MYOB etc). It just looks good to anyone who may have to read your business plan (i.e. your bank manager). Actually, mention you have an accountant, and the name of a financial adviser and bank manager (even if you never have to use their services).

Be organised and neat when handling your financial affairs

Organising and presenting your financial records well to Tax auditors and accountants is the name of the game these days.

If you are plain forgetful, sloppy or untidy in your financial records, it can cost you heaps of money and can bring you lots of hassles with the Tax Office and tax accountant when it comes to auditing and preparing a tax return. For example, if you present your records accurately and neatly to a tax accountant, he/she can normally get it out to the Tax Office fairly quickly for as little as A$170.

Otherwise you could be paying A$2500 to A$3000 to the accountant just for sorting out your messy records, which means your records will have to be given to the accountant's secretary to sort out at a rate of $25-35 per hour then later slap on the standard accountant's fees. In the end, you would be paying mostly for the secretary to sort out your mess.

In summary, if you are neat and accurate in your financial details and all records of transactions are properly organised and stored, you will survive well in the business world. And remember, the purpose of an accountant is mainly to minimise your tax, so use them when you need to. Also, find the accountant that you like, because the wrong ones can cost you a lot of money.

Finding adequate finance to commence a small business

The primary sources of financial assistance when commencing a small business are from (i) personal savings; and (ii) borrowed funds.

Money can be borrowed from big businesses who have a keen interest in investing in small business. But the most common form of borrowings is from banks.

Getting finance from a bank is difficult for new entrepreneurs. When faced with the gloomy statistics on business failure rates in Australia, it is not surprising that bank managers tend not to be sympathetic to new entrepreneurs. Only big businesses do much better in getting the finance they need because of their size in the marketplace and extensive assets. But small business is more flexible to change than big businesses and can adapt to market and industry needs extremely quickly. And this factor should be addressed when developing a case for obtaining finance through a bank.

In fact, the key word is "planning". Without it, new entrepreneurs will not have much hope in the 21st century to obtain the collateral needed from a bank to start a small business, even for small amounts of money.

So it is really the idea of developing a good business plan that gets successful business operators the finance they need to run a business quickly and easily. And even if you have the finance, you would be wise to develop a plan before commencing any business whatsoever.

Do you have a debt control strategy?

Every good business plan should have a section discussing how you would minimise the risk of creating debt in your business. For some ideas, consider the follow options:

1. Allow customers the option to pay by credit card when customers can't pay by cash.
2. Be upfront when asking for things like how much it will cost for certain things and what protections are in place.
3. If a job for a client is more than $1000, ask the client for a 10 or 20% deposit upfront before doing the job. If the client cancels the job, there should be a cancellation fee.

4. Choose your bank account carefully to minimise bank fees. Consider setting up one of those online accounts earning 4.50% interest with no physical premises and therefore bank fees but still have access to the money at standard ATMs and online.

   TIP: Say in your business plan you will talk to different banks and negotiate the best deal to help minimise the costs to the business.

5. To reduce the processing costs of electronic credit card payments, join with someone who can take care of the transactions. But there will be a fee for this (as always!).
6. Or choose Electronic Funds Transfer method. There is no charge to the business for this facility. Money can only go in, never come out. Just ask the customer to fax the copy of the transaction and/or email the order form with transaction number details. You can confirm the customer's information by checking the transactions in your business bank account while online.
7. Don't accept cheques unless you can stipulate in your order form that cheques must be processed first before sending the products.
8. EFTPOS and Credit card are good debt control systems.
9. Prioritise your bills (pay slowly so you will have the income). Also spread your payments into monthly instalments (negotiate with suppliers). When you have enough income, it is cheaper to pay upfront.
10. Instead of paying magazines for the latest information, focus on free web sites and free conferences for information.
11. If you must punish people for being late in their payments, make sure the Tax Invoice states there will be interest charged on the amount remaining to be paid. The contract must stipulate this or it cannot be legally enforced.
12. Internet transactions — don't create the transaction processing facilities for yourself (costs too much). Work with someone who will have the payment facility available (much cheaper).