There are certain items of equipment, machinery and hardware that are essential to the operation of your business – whether it's the delivery van you use to run your home-delivery food service, or the high-end digital printer you use to run your print business.

But when a critical business asset is required, should you buy this item outright, or should you lease the item and pay for it in handy monthly instalments?

To buy or to lease? That is the question

Buying new pieces of business equipment, plant, machinery or vehicles can be an expensive investment. So, depending on your financial situation, it's important to weigh up the pros and cons of buying, or opting for a leasing option.

First of all, let's look at why you might decide to buy the item…

Buying: the pros and cons:

  • Pro: It's a tangible asset – when you buy an item, you own the item outright and it will appear on your balance sheet as one your business assets. As such, by owning these assets outright you increase the perceived capital and value of your business. You can also claim the cost of the asset against your capital allowance for tax purposes.
  • Pro: It's yours for the life of the asset – once you own the item, you have full use of the equipment for the duration of the life of the asset. Your use of the asset isn't reliant on you being able to keep up regular lease payments, and if your financial circumstances change then you can sell the asset to free up the capital.
  • Con: It's an expensive outlay – paying for the item up-front is a large outlay for the business and will require you having the cash to cover this cost. Spending a large lump sum in this way may take cash away from other areas of the business, so you need to be 100% sure that this purchase is the right decision and a sound investment.
  • Con: You may require extra funding – if you don't have the liquid cash available to buy the item outright, you may need to take out a loan. Asset finance is available from funding providers, but does tie you into a loan agreement that will add to your liabilities as a business – reducing your worth on the balance sheet.

Leasing: the pros and cons:

  • Pro: Leasing has a cheaper entry point – if the item you need to purchase has a large price tag, leasing allows you to make use of the asset without the cost of buying it in full. For startups and smaller businesses with minimal capital behind them, this can make leasing a very attractive option. You may not own the asset, but you can make use of it – and this may be the difference between the success or failure of your business.
  • Pro: You can spread the cost – there is still an associated cost of leasing, but you can spread the cost over a longer period, making it easier to find the necessary liquid cash to meet your lease payments. With this money saved, you can then invest in other areas of the business, helping you to expand, grow and bring in more customers and revenue.
  • Con: You don't own the asset – there are different types of leasing agreement. Under a capital lease, you do own the asset (once you've paid if off). But if you opt for an operating lease, this is a more short-term lease and you won't own the asset at the end of the contract. Ownership does have its advantages (including being able to sell off the asset if required) so it's important to consider what kind of leasing agreement you're entering into and what the advantages/disadvantages may be.
  • Con: You may pay more in the long run – most leasing agreements will attract additional costs and interest on your agreement, so you may well end up paying more than the market price for your asset in the long term. If you can cope with the higher cost, this is fine, but bear in mind that buying outright may have offered greater value.
  • Con: You may lose the use of the asset – if you can't keep up your lease payments (due to poor cashflow for example) then the owner of the lease agreement may recall the asset. If this item is crucial to your business model, losing this key asset can have a profound impact on your ability to operate. In this respect, leasing is a more risky prospect, but also an easier option for businesses with less cash to splash.

Talk to us about whether buying or leasing is the best way forward

Whether you opt to buy or lease your equipment isn't always a straightforward decision to make – so it's a good idea to consult with your accountant early on in the decision-making process.

We'll help you review your current financial position, assess your available cashflow and look at your regular cost base to decide whether buying or leasing is the right thing for the business.

Establishing your competitive advantage


Establishing your competitive advantage

Why do customers buy from you? Knowing what it is that makes someone choose your products and/or service over your closest competitor is critical business information.

Understanding this 'competitive advantage' is an important part of making your business stand out in the marketplace. Establishing your competitive advantage will help you create a compelling marketing message and will build value in your business – and this can all be wrapped up in your brand messaging, marketing and sales activity.

But how do you define what your key advantages are?

Key ways to understand your competitive advantage

Your competitive advantage could be something tangible, like a unique feature that your competitors simply don't have. But, equally, it doesn't have to be a feature at all – it might be your brand positioning or your customer service that sets you apart.

To drill down into the fundamental elements of your competitiveness, you need to ask some important questions about the nature of your products/services, so you know precisely why your brand appeals to your core customer base.

For example, ask yourself:

  • Were you first into the market? – If you've been a true innovator in your sector, you may have been the very first company into your current market. Whether that's a new kind of software app, or a unique piece of farming equipment, you need to protect this position and ensure you stay the dominant player in your new niche.
  • Could your product/service be copied? – If you hold a unique position in your market, it's crucial that your product/service can't be copied and rolled out to undermine your position. As such, you need to protect your intellectual property (IP) and file patents and copyrights for all the relevant IP that gives you your competitive advantage.
  • Are you niche specialists? – Your competitive advantage may be that you offer a truly niche specialism, where there aren't many competitors in this particular market. To protect this dominance, it's important to maintain your high-quality service, to work closely with your customers and to remain at the cutting edge of the specialism.
  • Can you differentiate your product/service? – Does your product stand out from other similar products offered by your competitors? The more unique you can make your offering, the more likely it is that your brand will be the one that people turn to. You can differentiate by features, price, customer service etc. to make sure you're the stand-out option for customers in this market.
  • Do you offer greater value? – Any transaction aims to bring value to your end customer. But are you able to deliver a better service or offer more value than your competitors? This may mean offering added value that can't be matched by other companies; for example, your brand being more local, more sustainably sourced, faster to be delivered, or coming with better customer support.
  • Do you offer a better price point? – Price can be a real differentiator, so you need to constantly be aware of how your prices compare to those of your competitors. Is your product cheaper than others? Or are you pitching your price at the top end of the market? The more competitive your price point is, and the more it's linked to your unique value, the easier it will be to carve out a competitive advantage.
  • Is there stable demand for your product/service? – do people need your specific product and what's the size of the demand? Do you have a strong network amongst your customer base, or is a competitor gradually winning market share and undermining your supremacy as the market leader? This needs to be regularly reviewed and assessed.
  • Is your product/service easy to buy? – The way you distribute your product or service can have a big impact on your market position. How quickly and efficiently can you deliver your offering to your customer? And do you have exclusive rights to a distribution channel that makes it easier for your customers to buy from you?
  • Does your brand have wider appeal? Do your customers identify with your brand in a profound way, and do you have 'fanboys/fangirls' who are advocates for your products? It could be that your company philosophy, your values and the way you interact with your customers all offer something unique that draws in customers and makes them stick with your brand – and, if so, there's a need to measure and retain this brand value.

Talk to us about defining your competitive advantage

The Pandemic Productivity Gap

A recent article published in the Harvard Business Review by Bain & Co suggests that the pandemic has widened the productivity gap between top performing companies and others stating, "Some have remained remarkably productive during the Covid-era, capitalizing on the latest technology to collaborate effectively and efficiently. Most, however, are less productive now than they were 12 months ago. The key difference between the best and the rest is how successful they were at managing the scarce time, talent, and energy of their workforces before Covid-19."

Atlassian data scientists also crunched the numbers on the intensity and length of work days of software users during the pandemic. The results found that workdays were longer with a general inability to separate work and home life, and workers were working longer hours (predominantly because during lockdowns, there is no set start and end of the workday routine). Interestingly, the average length of a day for Australian workers is shorter than our international peers by up to an hour pre pandemic. Australia's average working day is around 6.8 active hours whereas the US is close to 7.2.

However, working longer does not mean working more productively. Atlassian's research shows that while the length of the working day increased and the intensity of work increased earlier and later in the day, intensity during "normal" hours generally decreased.

So, how do we measure productivity? Bain & Co suggests:

The best companies have minimised wasted time and kept employees focused; the rest have not. Those that were able to collaborate effectively with team members and customers pre pandemic fared the best. Poor collaboration and inefficient work practices reduce productivity. The best have capitalised on changing work patterns to access difference-making talent (they acquire, develop, team, and lead scarce, difference-making talent). The best have found ways to engage and inspire their employees. Research shows an engaged employee is 45% more productive than one that is merely a satisfied worker.

The productivity gap was always there. The pandemic merely brought the gap into stark contrast.

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What is bookkeeping?

Bookkeeping involves recording and classifying all the financial transactions in your business. It's keeping track of what your business spends and what your business receives.

These tasks used to be managed using books and ledgers, hence the name 'bookkeeping'. Originally the transactions would be recorded in daybooks, cashbooks, or journals and then transferred to a ledger.

Bookkeeping software has now pretty much replaced the need for physical books.

Why do small businesses need bookkeeping?

An accurate, well-kept set of books is a great start to running a successful business. Here's why:

  • You can check that you're making more money than you're spending.
  • You'll have reliable financial information for planning and budgeting decisions.

  • You can see if a cash crunch is coming and take steps to avoid it, by watching when you need to pay suppliers, and when you can expect payment from customers.

  • You're more likely to find incorrect payments (or even fraud) that might cost you money.

  • You can complete accurate tax returns.   

  • Having your financial information organised makes it easier for you to work with other parties such as lenders, investors, and accountants.

How to do bookkeeping

The two most important tasks in accurate small business bookkeeping are recording and reconciliation. Let's break them down.

Recording every transaction
Record your sales. This was traditionally done by writing them into a cashbook or punching them into a spreadsheet. Business owners are now more likely to download sales data directly into their books from point-of-sale or invoicing software.

Record your transactions. Every business-related purchase needs to be noted. You should also hold onto the proof of purchase if you plan to claim that expense as a tax deduction. Again, you can write these details into a book or spreadsheet. Or you can automate the task so  all the debits from your business bank account stream into your bookkeeping software.

You can record income and expenses at different times depending on whether you do cash or accrual accounting.

Reconciling every transaction
Reconciliation involves regularly cross-referencing your business books against your bank statements to check that the transactions and balances match – and identifying the reasons if they don't. Often bank fees, interest payments, deposits, and payments that haven't yet hit your bank accounts will need to be accounted for.

You might do bank reconciliation daily, weekly, monthly, or less often, depending on the number of transactions going through your business. However, you will probably be required to reconcile your books before submitting tax returns at the very least.

The sooner you reconcile transactions, the sooner errors can be found and corrected. It's better to do it often – even daily – so the work doesn't pile up. You can learn more in our guide on how to do bank reconciliation.

Other small business bookkeeping duties
If you're acting as bookkeeper for a small business, you may also be responsible for:

  • accounts receivable (issuing invoices and making sure they're paid)

  • accounts payable (paying bills on time)

  • payroll (paying employees)

Professional bookkeepers also provide other services, like helping with financial reports (profit-and-loss, balance sheet, cash flow report), and measuring business performance. Bookkeepers are also often BAS agents and can help file your taxes.

How software can help

Many small businesses use online bookkeeping software to speed up these jobs, and cut down the chances for human data-entry errors. These tools can:

  • pull transaction data straight from point-of-sale (POS) system, invoicing software, and banks

  • dramatically speed up bank reconciliation

  • automatically pay bills

  • send automated invoice reminders to people who owe you money

  • tell you when sales invoices have been paid

  • allow you to check cash flow from your phone

Outsourcing small business bookkeeping

If you're too busy to do the bookkeeping for your small business, then you can find someone to do it for you. Bookkeepers often allow you to choose different service levels depending on your budget. That means you can start out with basic bookkeeping at a modest cost and ladder up to more advanced services as your business grows. You can find bookkeepers in the Xero advisor directory.

New Rules for Super Age Limits and Work Test

Changes to superannuation legislation in July 2020 have adjusted the rules around age limits and the work test, allowing older workers to continue making superannuation contributions.

Super Contributions

Superannuation guarantee contributions made by employers on behalf of employees can be paid into the employee's super fund, for workers of any age.

For other contributions, (after-tax, pre-tax, government and spouse contributions), individuals need to satisfy a work test before the super fund can accept the contributions.

For downsizer contributions, individuals must be aged 65 or older, but there is no requirement to meet the work test and no maximum age limit.

Age Limit and the Work Test

The work test now applies to people aged 67 up to age 75. Individuals need to have worked at least 40 hours during a consecutive 30-day period in each financial year that contributions are made, up to the non-concessional cap of $100,000.

The work test means people must be 'gainfully employed' for those 40 hours. This means the individual must have been paid wages, bonuses, commissions or any other form of taxable employment income. For self-employed people, they must have worked in their own business and received business income.

Volunteer work does not meet the work test, even if you have been paid for expenses incurred during volunteer work.

For workers over 75, the only allowable contributions are employer super guarantee contributions and downsizer contributions.

Further amendments are expected to extend the bring-forward rule for non-concessional contributions to the age of 67 from 65, providing more opportunity to contribute. This change has not passed through parliament yet.

Work Test Exemption

If you satisfied the work test last financial year, and you plan to make contributions this year, you may be exempt from meeting the work test this year. If your total superannuation balance is less than $300,000 at the end of last financial year, and you did not rely on the work test exemption in a previous year, then the work test exemption may apply to you, allowing you to contribute to super in this financial year. The work test exemption can only be used once, allowing people to make voluntary contributions for an additional year.

Non-concessional Contributions

Non-concessional contributions are made into your super fund after tax and are not taxed again within the fund, up to a limit of $100,000. If you exceed the non-concessional cap you may need to pay the top rate of tax on the excess amount.

There are some exclusions from the non-concessional cap – for example injury settlement and downsizer payments. Your super fund must be notified of exclusions.

Start Planning Now to Maximise Your Super Contributions This Financial Year

Managing super can be complex and there are many rules to understand. Even if you enjoy managing your own superannuation, we recommend an objective review of your superannuation and retirement plans to help you take advantage of contributing to your super for as long as you can.

Alternatively, it may be time to hand over the management of your superannuation – talk to us now to learn more about maximising your super contributions and making the administration of it easy.

How to thrive in a changed world

At Xero, we're doing all we can to help small businesses and their advisors to navigate these incredibly difficult business conditions. We're all facing uncertainty at the moment, and we know many small business owners are looking for accurate information, practical tips and advice. 

To find out more about the impact of the pandemic on small businesses and identify the strategies that have proven successful in mitigating some of the impacts of COVID-19, we commissioned Forrester Consulting to investigate. This week, we launched their findings in a study called The next chapter for small business: How to thrive in a changed world.

The study is the result of over 2,000 surveys with small business owners and consumers across six countries: Singapore, Australia, New Zealand, Canada, the U.S. and the UK. Ten in-depth interviews with SMBs were also conducted. It gets to the heart of what's hurting small businesses right now – and what's helping them.

Every small business can learn about business continuity management and business resilience from this study so we encourage you to read it in full.

In the meantime, here are some of the findings that resonated with me.

Small businesses deliver value that is distinct from large enterprises

The study shows that personal interactions with consumers are key to success. Small business owners and employees can form personal connections with their customers, show empathy, and change quickly to meet customer needs. 

One hospitality business owner in Singapore said, "The most powerful advantage a small business has over a larger one is the human story… That inspires confidence and creates a personal connection." 

Some consumer behaviours adopted during COVID-19 are here to stay

It's no surprise that during the pandemic, small business revenue from online channels has seen a 12 percent increase from 2019.

More importantly, this trend is here to stay. While consumers expect to return to their old ways of spending and will return to physical stores, they also expect to keep using online channels.

Thriving in a world impacted by COVID-19 requires agility and strategic thinking

We all know small business owners have been pivoting fast, planning ahead and working to excel across all areas of business. That's not an easy task at any time. 

Prior to COVID-19, a restaurant owner in North America was already very connected in the local community and put a lot of effort into marketing and branding. During the crisis, he leveraged network support and reduced operational costs. He focused on digital media spending and encouraged support from the local community with the message "support local".

Key Actions

Forrester Consulting made five key recommendations on what small business owners can do to help their businesses thrive. 

Each recommendation is paired with a practical step you can action: 

  • Make company and financial information easily accessible and digitised
  • Create emotional connections with your customers
  • Start from your accountant to seek out available help in the ecosystem
  • Increase efficiency with cloud-based tools
  • Leverage partner data sources to predict and plan for the future

Read the full study to learn more about its recommendations, top actions to take, and to dive into the details.

Who are your competitors? And what do you know about them?


Who are your competitors? And what do you know about them? 

Whatever your sector, niche or marketplace, there's almost certainly going to be other competitors in that space – but do you know who they are and what threat they pose?

Are you the only provider of your specialism, or are you one of many companies that are all vying for the same customers? Knowing who those companies are, how they compare and what their competitive advantages are may be a vital piece of business intelligence for you.

So, how do you start this process of identifying your competitors and benchmarking your offering against the nearest market competitors? The answer is to do your homework...

Researching your competitors

To begin with it's worth understanding the difference between your direct competitors and those companies which are indirect competitors. Knowing who your direct and indirect competitors are isn't always easy, but defining the differences is quite straightforward:

  1. Direct competitors – these companies sit in the same market, produce the same products or services, and aim themselves at the same core customer audience as you. For example, Coca Cola and Pepsi are direct competitors in the cola market because they both want to sell cans of cola to the same customers.
  2. Indirect competitors – these companies do not sit in the same market, may make related products or services and may be aimed at a slightly different core demographic. They're not directly competing with you, but they may offer a product that appeals to your audience. For example, Evian is an indirect competitor of Coca Cola, as they offer bottled water that could be an alternative to a sugary, unhealthy cola drink.

The key point here is to not limit your thinking purely to businesses that do exactly what you do. Think wider than the products that provide the same features and benefits. For example, a motorbike manufacturer competes not just against other makers of petrol motorbikes but against makers of electric bikes, pedal bikes and small car manufacturers – all of which offer a small, handy form of personal transportation.

To understand who your competitors are:

  • Research your market to understand your customers' needs – talk to customers in your specific market, chat to the contacts in your business network and do your online research, with the aim of finding out which direct and indirect competitors are a potential threat to your business. If you've got the budget, hire a market research company to do all this for you.
  • Know your competitive advantage – once you've identified your competitors, you can then get a much better idea of your own competitive advantage; i.e. the traits that make your product or service stand out in the market, or that give your brand a more dominant edge over your competitors.
  • Track your competitors – competition doesn't stand still, so you need to keep your eye on your competitors' activity, be aware of their new product releases and know how well they're performing in the market. The more closely you track your competitors, the easier it will be for you to revisit and evolve your competitive advantage.
  • Benchmark yourself against the market – by tracking variables like price, product range, customer satisfaction or brand awareness, you can benchmark these against the available public information for your competitors. If a direct competitor has a 50% sale, think of ways to react to this threat – for example, matching the discount, or offering additional bonus items or benefits with your products to add more value to your price.
  • Learn to differentiate your brand – features and price are not the only ways to differentiate your products in the marketplace. Think about areas like your brand personality, your company values or your reputation for great customer service. These are all excellent ways to make your brand stand out and to win loyal customers.

Tracking your marketing results – why it's important

When your company is spending money on marketing activity, you want to get a good return on this investment. But, more often than not, businesses spend too little time actually analysing and scrutinising the performance of their marketing campaigns and channels.

Once you've invested in an expensive promotional campaign, you'll want to know that the money is well spent. So, setting aside some time to analyse your results and establish your return on investment is not just a 'nice to have' – it's an essential part of the marketing process.

Measuring success in your marketing

Knowing your return on investment (ROI) is vital if you want to make sure your marketing is truly delivering on its promise. It's only by analysing the performance of each marketing campaign or customer event that you can get a realistic idea of whether it was a success, or a flop.

The key problem with measuring your marketing return is that the impact of good marketing goes way beyond the purely financial impact. But, as we'll see, to gauge any specific impact on your profitability, you're going to need to start with the financial basics.

Let's look at key ways to analyse the impact of your marketing:

  • Financial return – one way to look at your ROI is sales income minus your investment (the cost of sales and marketing). Use your accounting platform to get an idea of the income (return) generated from sales of the product/service you're marketing. Then use this number to work out your marketing return with the following formula: ((Return - Investment) / Investment) x 100. For example, if you made 8k from sales of your new app, but spent 2k on marketing the app, this would work out as follows:

    ((8,000 - 2,000) / 2,000) = 300% ROI.

  • Engagement and conversion return – knowing your financial ROI is vital, but it's also important to measure the effectiveness of your marketing. In the age of digital and online marketing, this has never been easier to do. Using web analytics tools, like Google Analytics, you can measure areas such as engagement (people viewing or clicking through to your content) and conversion (people following your marketing calls-to-action). High engagement and conversion scores mean your digital marketing is being seen by the right people, and is delivering a return on your digital investment.

  • Lead generation return – if your marketing is doing its job, you should see an increase in lead generation and new enquiries. Tracking and nurturing new leads and enquiries through your client relationship management (CRM) platform allows you to follow the progress of these leads. Once set up in the right way, you also see where there's a direct correlation between your marketing and the conversion of leads into sales (and, by extension, into more revenue for the business).

  • Brand reputation return – your brand is an integral part of your marketing as a business. One desired outcome of your marketing should be to raise awareness of your brand in the marketplace, and to reinforce your brand reputation with customers. Measuring the changes in brand awareness pre and post-marketing helps you to see where your investment is having an impact. Using customer feedback and trust apps, like TrustPilot, will allow you to measure how satisfied your customers are with your service levels, products and the promises you've made in your marketing.

No marketing strategy should ever stand still. It's important to review your activity, look at the performance, measure your ROI and see where you can do better.

Find out which channels are delivering the best return, which target audiences are responding well to your campaigns, and which content is knocking it out of the park. Armed with this knowledge, you can refine, rethink and improve your marketing – ensuring that you improve your overall ROI over time.

Have you got a plan for growth in your business?

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Have you got a plan for growth in your business?

Growth doesn't need to mean more risk, more hours and more headaches.


It may be as simple as identifying where the opportunities for growth are in your business and industry. Once you've done this you can establish what you and your team are going to have to do in order to maximise these opportunities, and how you will navigate the likely obstacles.


Here are a couple of tips to get you thinking about growth:


  1. Do an audit to document your growth over time. Analyse all the information you have to understand how you got to where you are right now. This will help you to plan for future growth.


  2. Next, put a one page plan together with the big objectives and what you'll realistically need to do in order to achieve them. (identify the tasks and people)


  3. Establish some key performance indicators to keep the momentum up and visit these regularly to ensure you're on track.



As a business owner, you can get bogged down in the demands of day-to-day business. Taking time out of the business can give you some much needed perspective. We can help build your business plan and identify the steps you'll need to achieve it.


Business growth can be perceived as something scary, but when you have a plan and it's done right, it can be very motivating and rewarding.


With a bit of planning, the right systems, people and resources, there is tremendous opportunity to grow and scale your business to the next level to hit your growth targets.


We can help you get started.


To arrange a meeting to discuss please contact our office

Reducing your lock up days to free up cash


Reducing your lock up days to free up cash

It's vital for businesses to free up as much cash as possible, particularly in these tough economic times. Your 'lock up days' is the number of days it takes to convert your debtors, stock and work in progress into cash.

A high number of lock up days means your business needs to have more cash injected, either from you or the bank. You also have a higher risk of losing that cash, particularly if a lot of it is locked up in your debtors. Worse still, you're likely to be paying tax on that lock up figure before you've received the cash from your customers.

To calculate your lock up days:

(Debtors + stock + work in progress) / annual sales * 365

For example, if debtors are $120,000, stock is $45,000, work in progress is $55,000 and annual sales is $1,200,000, your lock up days would be 67 days (($120,000 + $45,000 + $55,000) / $1,200,000 * 365).

Reducing lock up days means you'll have more cash available in your business,so how can you reduce your lock up days?

1. Increase your sales.
Do you know the five ways to increase your sales?

2. Invoice more often.
Consider sending progress invoices as well as invoices on completion or requesting a deposit before work has started.

3. Ensure customers agree to your Terms of Trade.
Don't start work until your customer has signed off the Terms of Trade and make sure you stick to them by following up customers as soon as payments become overdue.

4. Reduce stock holdings.
Review stock on hand and reduce where possible. Consider getting rid of obsolete or slow moving stock.

5. Use an independent debt collector.
This should be a term in your Terms of Trade, including a clause specifying that the customer will be liable to pay associated costs.

6. Change your payment terms.
Request payment within 7 days of invoice rather than on the 20th of the month following the invoice.

7. Reduce errors and re-work.
Review your processes and provide additional training.

8. Set targets for stock levels / invoicing levels.
Reward your team for achieving the targets.

9. Improve your reporting of lock up.
You can manage what you don't measure.

10. Ask us for 10 more ideas.
We can help you identify the best strategies to reduce your lock up days.

"You must gain control over your money or the lack of it will forever control you." - Dave Ramsey