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How are cryptocurrencies taxed?

 

Cryptocurrencies, like Bitcoin, are independent and not regulated by any central authority. Until recently, these digital currencies were not treated in the same way as cash for tax purposes in Australia. New legislation passed by Parliament last month seeks to change all of that by removing GST from currency exchanges.  Let's take a look at the tax implications of cryptocurrencies.

How are cryptocurrencies taxed?

Under GST law, a 10% GST applies to supplies of goods and services. Money receives special treatment because it's a medium of exchange and not something for final private consumption. Up until recently, the Australian Taxation Office (ATO) took the view that cryptocurrencies did not meet the definition of 'money' because they have an independent value rather than being a debt, credit or promise to make a payment, and they don't meet the definition of money under GST law. The impact was that when people used digital currencies as payment, this could trigger GST twice; once on the goods or services being purchased, and also on the supply of the digital currency to the other party. So, the Government has changed the definition of money for GST purposes from 1 July 2017. Now, trades of cryptocurrency are disregarded for GST purposes, unless the trade is for a payment of money or digital currency (for example you are in the business of trading cryptocurrencies). Cryptocurrencies are now taxed in a similar way for GST purposes to foreign currency.

But it's not just GST to consider. Income tax and capital gains tax (CGT) issues might also arise in transactions involving cryptocurrency depending on how and why you are using it.

 

Individuals trading in cryptocurrencies

If you hold cryptocurrency for your own personal use and you paid $10,000 or less to acquire the digital currency, then there is generally no tax impact when you dispose of the currency. However, if the cryptocurrency is not held for your personal use and enjoyment then there are some tax issues that can arise. 

 

 

If the cryptocurrency is held as an investment (i.e., not for personal use and enjoyment) or the cost is more than $10,000 then CGT might apply when you sell or exchange the currency. At the time of writing the price of Bitcoin was just under US$6,000 – up from just under US$1,000 at the beginning of 2017 (and just over $13 at the start of 2013). The taxing point for CGT purposes is normally when a contract is entered into. If there is no contact (which is often the case with digital currencies) the taxing point is when ownership changes.

 

The line between personal use and investment can be very thin. It will be difficult to argue that you hold cryptocurrency for personal use if you use it irregularly to purchase goods and services and you made a large gain from holding and trading it.

 

Businesses trading in cryptocurrencies

If your business accepts cryptocurrency as payment for goods or services, these payments are treated in the same way as any other. That is, if your business is registered for GST, the price paid by the person paying in the digital currency should include GST. Likewise, if you purchase goods or services for use in your business then you should generally be able to claim GST credits on the transaction in your activity statement, even if you used digital currency to make the purchase.

If you are in the business of trading cryptocurrencies and your business is registered for GST, you charge GST on the exchange of the currency and claim the GST credits in your activity statement. The new legislation does not prevent GST from applying to the supply of cryptocurrencies in exchange for a payment of money or digital currency. 

It is also possible that someone could hold cryptocurrency as trading stock if it is held for the purpose of sale or exchange in the ordinary course of a business.  Any gains from the trades are then taxed in the business's income tax

return (or individual tax return for sole traders).

 

CGT concessions and exemptions are not generally available in this case. If you are in the business of trading cryptocurrencies, that is, you approach the trading in a business-like manner, then you can generally claim losses and other business expenses.

 

The tax laws can be complex in this area and it's important to ensure that you get the right advice. Contact us.

 

Interested in the impact on SMSFs?  See our article Can your SMSF invest in Cryptocurrencies?

 

CPA Australia interviewed more than 2900 small business owners in eight markets in its annual survey of small businesses in the Asia-Pacific and the findings provide some quick reference points for the DOs and DONT's in growing a small business.

The factors that had the most positive impact on businesses over the past 12 months were strongly   "people-focused" with the categories of  'customer loyalty', 'good staff' and 'improved customer satisfaction' showing a rating of 38% or higher, whether or not the business grew.

However, the businesses that grew strongly were significantly more likely to say that 'improved customer satisfaction', 'improved business strategy' and 'improved business management' had a major positive impact on their business.

Among those small businesses showing significant growth, the focus tended to be on innovation, e-commerce, social media, training and exporting and were more likely to reach out to existing and potential clients through social media and e-newsletters and thereby make it easier for consumers to buy online.

Those businesses were also prepared to invest in staff and increased training as their firms expand.

Following on from the survey, we've prepared a quick list of the DOs and DON'Ts for growing your business:

DO

Innovate - offer new technology and products or services

Ask for outside advice - Consult your financial adviser a couple of times a year

Plan and measure your progress - Map out the future

Hire the best and keep them engaged - Offer stimulating work and a positive culture

Build strong relationships - Work out where yours are and nurture them

 

DON'T

Don't rely on too few customers - reach out through social media

Don't underestimate the importance of effective financial management - Use your accountant and adviser to best advantage

Don't leave contingency planning too late - Plan for the slow times during the good times

Don't ignore what is happening in your market - keep up with technology and production advances

Don't wait too long to get help - Seek assistance from accountants, planners and bankers

 

In short, confident businesses are significantly more likely to undertake the activities that will help them grow over the long term.

 

For a confidential discussion about how your business might benefit from advice, contact us or book a consultation.

The Australian Taxation Office (ATO) is warning self-managed superannuation fund (SMSF) trustees and retirees about the risks of some emerging retirement planning arrangements that they may consider, or be approached about.

ATO Deputy Commissioner James O'Halloran said the ATO knows most people do the right thing and work hard to save for their retirement.

"If a taxpayer becomes involved in any illegal arrangement, even by accident, they may incur severe penalties, jeopardise their retirement savings and risk losing their rights as a trustee to manage their own fund.  For this reason, today we are releasing further information on these arrangements through our Super Scheme Smart program."

Super Scheme Smart is designed to give taxpayers access to relevant case studies and information packs to ensure they are well-informed about illegal arrangements, explain the significant risks associated with those arrangements, what warning signs to look for and where to go for help.

Mr O'Halloran said, "We are working hard to shut down illegal arrangements quickly, but the best defence for taxpayers and their advisers is to be aware. Promoters of the arrangements may overtly target SMSF trustees and self-funded retirees, including small business owners and those involved in property development with significant assets."

"The arrangements may be cleverly disguised to look legitimate, involve a lot of paper shuffling and framed as being designed to give a taxpayer a minimal or zero amount of tax or even a tax refund or concession" Mr O'Halloran said.

"Just because an arrangement is structured in a way which appears to satisfy certain regulatory rules does not mean it is legal. Such arrangements can put SMSFs at significant risk of breaching the superannuation regulatory rules as well as the taxation law."

The ATO has previously raised concerns about dividend stripping arrangements and contrived arrangements involving diversion of personal services income to an SMSF.

There are some emerging arrangements the ATO also wants to bring to people's attention, including:

- Artificial arrangements involving SMSFs and related-party property development ventures.

- Arrangements where an individual or related entity grants a legal life interest over a commercial property to an SMSF. This results in the rental income from the property being diverted to the SMSF and taxed at lower rates whilst the individual or related entity retains legal ownership of the property.

- Arrangements where individuals (including SMSF members) deliberately exceed their non-concessional contributions cap to manipulate the taxable component and non-taxable component of their fund balance upon refund of the excess.

Mr O'Halloran said "Remember, if it looks too good to be true, it usually is."

If you are concerned about the legality of an arrangement do not hesitate to contact us before entering into a venture. 

#dividendstripping   #SMSFbeware   #clarkemcewan   #SMSFatrisk

How to Get More Done in Less Time

Have you ever spent all day working, but at the end, after at least eight hours of straight desk time, you have nothing to show for it? How is that even possible? And how can you fix it?

By doing something unexpected: working for less time. It sounds backwards, but working less can up your productivity. As more demands are placed on you and your life gets busier, you often compensate by working harder and for longer periods of time. Instead, you need a smarter system that allows you to get more work done per hour. And to do that, you need to remove the activity that clouds your mind and slows you down: multitasking.

The human brain is not built to multitask. Ask someone to walk fast in a straight line and solve a difficult math problem; their walking speed will slow down while they try to calculate the answer.

When you do two things at once, your brain is "context switching." When you stop doing task #1 to start task #2, you have to mentally bookmark what you were doing and where you were to then come back after you finish task #2 to start task #1 again. This confusing chain of events is called a context switch-and just like a computer, your brain slows down when you give it multiple commands at once.

Many people live in a "mixed mode"-they're not fully focused on work, but they're not completely switched off, either.

It slows them down, burns them out and drains them of all their energy.

Signs You're Stuck in Mixed Mode:

1. You work until you're distracted. You work on one task until you get side-tracked, then you start a new task until your attention is diverted again. You have trouble focusing.

2. You are always multitasking and never fully disconnecting. You're at a social dinner but you talk about work, or you're at home with your family but you check emails constantly. You never completely relax and recover, so you feel tired all the time.

3. You don't tend to work on tasks until they are 100 percent complete. By ignoring the mental cues that you need to take a break, you run down your mental energy faster. When your concentration evaporates, you don't have the energy to reboot, so you get stuck in mixed mode.

Our bodies have natural "work and rest" cycles built into them. A runner who runs without rest will damage their body, but a runner who over rests will become weak. The solution? To run and cause a little stress to the body, then have a period of rest where the body recuperates and makes itself stronger.

The secret to personal performance is to work in a similar way. If you work without breaks, you will burn out-mentally and physically. But if you unplug too often, your performance will weaken. So to maximize your output, you need to focus your working time in 90-minute chunks ("focus mode") and follow up with 30-minute breaks ("stop mode").

You should try to get your first "focus mode" completed as early in the day as you can-logging 90 minutes of focused, uninterrupted work first thing will give you something substantial to show with just one session.

Next up will be your first "stop mode"-that 30-minute period where you're completely disconnected from work. The idea is to switch gears, to switch modes. So get away from your desk. Don't even think about work. Unplug and unwind. When you come back to your work, you should feel recharged.

If you run the "focus mode" session four times a day, you'll get six solid hours of work done, which is much better for you than working eight straight hours. And it's definitely better than eight straight hours of being in the "mixed mode."

Your thoughts will feel clearer because you're focused. You'll feel more energetic because you're not wasting your energy in the mixed mode any more. And you'll get more work done in less time.

Getting out in front with your business

Remember when you were excited about running your own business because you got to do the type of work you always wanted to do?  

Have you turned into the night owl who stays up until all hours balancing the books and spreadsheets?  If you want to escape, read on...

 

It's a scenario we often see when a business owner first comes to see us for advice.  They tell us that they absorb some of the expenses of running their own business by handling the accounts themselves, but there is a big cost in taking this approach because the very person who should be out there "front and central" as the face of the business is stuck in the back room with the spreadsheets.  

According to a report based on research from the International Federation of Accountants, using accountants is linked to better performance and higher profits for business. Those business owners who are doing their own accounting are not only adding frustration (and sleepless nights) to their lives but compromising their bottom line profitability as well.

Too often people associate accountants only with tax returns. However, Clarke McEwan prides itself on its business advisory role.  With regular financial "check-ups" about business performance we can analyze your accounts and see trends that might identify opportunities that would otherwise be missed, or prevent risks before they lead to disasters.

 

We have also found our clients can benefit from accounting and tax advice that has proven to work for similar businesses. 

 

Then there is the benefit of another point of view:  once you come on board we know your objectives and we can quickly see when your business practices are getting off track or are no longer aligned with your goals.

 

We also communicate with your staff and managers about how to improve business performance by developing inherent and sustainable values.

Expert analysis of your business leads to better decision-making and helps you to apply your vision more effectively. Global trends in every field have shown that businesses of all sizes, and even in all places, have better performance when using an accountant.    Accountants are experts in financial management, not just taxes, and this expert knowledge can be used to help your business thrive. 

If you are looking for ways to apply your goals and values to your business's financial decisions, we are here to help. Our Business advisory service gives you the advantage of having an expert on-board, while allowing you to focus on your vision for your business.

Talk to Clarke McEwan about how we can increase your performance and help you get out from underneath your spreadsheets.

Given the state of the property market in Australia these days, a not-uncommon situation can arise where a residential property owner seeks to demolish and subdivide the block containing the family home and build residential units.T implications of subdividing and building on the family property.

If a taxpayer has the available land of course, this can be a solid strategy. However it can cause headaches from a tax perspective - and in some cases the ability to access the main residence exemption and even the CGT discount can be lost.

Divvying up the backyard
A question that arises every now and then concerns the effects on the CGT main residence exemption where the owner decides to subdivide the land containing their principal place of residence, in some cases demolishing the existing home, and build residential units.

The scenarios that are typically raised involve one of the following choices:

  • demolish the main residence, subdivide the land, build two home units, sell one and live in the other
  • subdivide the land, build a home unit on the newly created previously vacant portion, and sell the new unit (with the original residence staying intact)
  • subdivide the land and sell the non-main residence block (with original dwelling staying intact on the remaining block).
  • When dealing with these situations, the following pertinent tax questions may need consideration:

    1. Whether demolition of the original main residence would trigger a capital gain or loss (if any)?
    2. What are the CGT implications of subdividing the property?
    3. Is the sale of the home unit or vacant land a "mere realisation" or is there is a profit-making activity conducted?
    4. How would the original dwelling/unit, retained and lived in by the taxpayer, be treated for CGT purposes?

    Note that there may be some GST implications that are not dealt with in detail here. Suffice to say that any venture undertaken by home owners in building units for the purposes of sale would, from the ATO's viewpoint, most likely constitute an "enterprise" and in some cases, depending on the circumstances, may necessitate an ABN and registration for GST.

    For a consultation about building on the family property and the possible tax implications contact us or  Book an Appointment.

     

    Three significant factors are shaping the profession of the future, Cathy Engelbert, CEO of Deloitte, told a gathering of accountants recently: the impact of new technologies, new demographics, and new client demands.

    "We're living in a time of unprecedented change and innovation," the Big Four firm CEO told the 110th annual meeting of the National Association of State Boards of Accountancy. "The future will evolve in ways we can't even imagine."

    Driving that evolution will be three particular shifts: the way in which technology is reshaping how we work, the way in which demographics and innovation are reshaping the workforce of the future, and the ways in which the needs of investors and shareholders are changing.

    The technology trend

    "Accountants have been around for just about every technology change that's ever happened -- starting with clay tokens thousands of years ago," Engelbert said, but the coming changes are unlike any in recent memory, comprising what she described as "the fusion revolution -- the fusion of work and technology and biology."

    "The proliferation of advanced technology can fundamentally change how we do audits, conduct accounting and serve the capital markets," she continued. "Now we have predictive analytics, automated workflow technologies. Last year was 'The Year of Cognitive Tech' at Deloitte," with the firm exploring and innovating new ways to apply the technology to its work. "We're doing better risk analysis. That is driving more real-time and forward-looking insight."

    "Imagine the day when technology allows us to audit 100 percent of a company," she urged. "Imagine the day when robotics is used to automate manual tasks like invoice processing. That day is coming. It's not totally here yet, but it's not science fiction, either."

    And while some in the profession may be concerned about technology automating accountants out of work, she pointed out that the field has already undergone intense automation over the past 30 years -- and has only grown.

    "Only one job out of the 200 listed in the 1950 census has been automated away. But the nature of jobs will change -- and new jobs will be created," she explained, citing a study that says 65 percent of current grammar school students will have a job that doesn't exist yet."

    What's more, no matter how much work computers and software may be created to do, "Humans will still be necessary for empathy, curiosity, creativity, intelligence and more. These are the hardest things to automate and replicate," she said.

    Demographics and innovation

    "The how, where and what of work is changing, and we need to adapt quickly," Engelbert said, citing the rise of the "open talent" economy exemplified by Uber drivers and Airbnb owners.

    Millennials are much more willing to change jobs and to create their own pathways to success. "Younger, digitally connected workers are managing their careers much more intensively," she explained, and the profession needs to support them. "How are we empowering our younger accountants? How are setting them up for success?"

    Almost as important is the need to make accounting attractive. "We need to tell our story to younger and younger people -- and we're not doing that very well," she warned. "We need to get on the radar of college freshmen before they decide on their majors -- when they're juniors and seniors in high school."

    "We have a dynamic, exciting profession -- we just don't talk about it that way," she continued, advising, "Whatever you find energizing about the profession -- talk to young people about that."

    Changing clients needs

    Just as new technologies are reshaping how accountants work, the firehose of data that's now available is changing what clients, investors and other stakeholders are looking for from accountants.

    "The volume, velocity and veracity of information that's coming out now makes for difficulties," Engelbert said. "We need broader insights that go outside the bounds of the traditional financial reports."

    "We need to fuse talent and technology," she said. "We can evolve this profession to much, much greater heights."

    In the end, she concluded, accounting faces sweeping, unprecedented changes -- but they come with tremendous opportunities.

     

    Know the CEO before you make an investment

    Some good advice worth sharing from Barrie Dunstan of Switzers... 

     

    Investors may perhaps be excused for feeling annoyed. Even if they are holding a portfolio of Australian stocks, they've been suffering similar movements in price to a portfolio of leading overseas stocks. Recent market chatter is all about Ukraine and China and nervous traders are reacting to possible adverse developments.

    Focus on the companies

    But investors shouldn't fall into the trap of following the short-term fluctuation, which only profits traders in uncertain times. If investors are to maintain some equilibrium in their investments, they need to rely on the diversification provided by the stocks they have selected, regardless of the day-to-day mood or the temporary effects of major world events.

    In the end, the performance of share portfolios ultimately depends on the earnings and profits of the underlying companies, shaped by key economic factors, mainly interest rates. Fascinating though macro economic analysis is for the hordes of economists around the market, it serves mainly to provide talking points for those trying to sell shares. Investors shouldn't let this chatter obscure the fact that picking the right stocks, at the right price, is the way to improve their equity market returns.

    For instance, anyone still holding CBA or CSL shares bought in the initial IPOs in the 1990s has achieved strong gains from their original investment over more than 20 years. It might seem like cherry picking to cite these two examples, but investors in the 1990s had more opportunity to participate in IPOs and many had the good luck and the good sense to seize these opportunities.

    A blast from the past

    In the case of CBA, the bank was the largest of the Big Four – but it suffered from a perception that it was bureaucratic and less nimble than the others. What made the shares such a good buy was that the Hawke government could not afford to see the IPO falter and so the shares were offered at bargain prices (in the several issues).

    CSL spent about 80 years owned by the Commonwealth government without attracting much interest from investors before being floated. While many investors would not have been equipped to assess its potential, anyone who met its young, articulate managing director, Brian McNamee, would have been in no doubt that CSL was a company going places. As a finance journalist, I met hundreds of CEOs of budding companies but, of them all, two stood out – McNamee and the founder and first CEO of Computershare, Chris Morris.

    Both companies, co-incidentally, were floated in 1994 – a year that foundation investors still holding shares won't forget. CSL investors are holding shares, now selling at around $70 each, with an entry price of less than $1 after adjusting for issues (see our recent update on the health sector here). Computershare investors, after adjustments for share splits and issues, paid only 11.25c a share for their original shares, which are now selling at around $12.

    The jockey or the horse

    Clearly, both companies owe their success to their unique positioning in growth industries and, perhaps, to some good timing. But it's doubtful if either group would have achieved their current success without the drive and vision of their founding CEOs. Just occasionally, it pays to back a brilliant jockey!

    A good jockey also can make all the difference in a company's early growth period. Think of the early pioneers and visionaries like Ian McLennan at BHP, Maurice Mawby at CRA (now Rio Tinto) and Frank Lowy at Westfield. But as we have seen in recent times, CEOs also can be a mixed blessing, especially if they stay on too long, like, say Leighton's Wal King, or dominate a company like Rupert Murdoch and News Corporation.

    Perhaps the trick is to know when to back the jockey and when to concentrate on the horse. Warren Buffett says that you should invest in a company which any fool can run because, eventually, one will.

    Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

     

    Self Preparers Deadline 31 October

    With the Self Preparers deadline of 31 October fast approaching many of us will spend the coming weekend sorting out our taxes.  And it is not just getting the figures right that we have to worry about.

    Every year the Tax Office warns the community to be aware of fraudsters as they target people lodging their income tax returns by the 31 October deadline.

    Statistics reveal that in past years, the number of scams reported to the ATO more than doubled in just one month from 2,465 in September to 6,593 in October, which means that now is the time to beware.

    The ATO's Chief Technology Officer stated that: "Scammers are out to get taxpayers hurrying to lodge their return by the deadline." People should be on the look-out for tax scams and report them to us directly."

    The  Tax Office is also seeing more targeted scams sent to taxpayers where the perpetrators make the email more convincing by using the latest ATO website imagery and the names and signatures of real ATO staff.

    "People should also be aware of a nasty phone scam where taxpayers are threatened with arrest if they do not pay a fake tax debt over the phone."

    If people believe they have received a telephone, email or SMS scam they should contact the ATO on 1800 060 062 (8.00am–6.00pm, Monday to Friday).

    "When the public reports a scam to the ATO we work with our local and international partner agencies to shut down the scam website and pursue the scammers directly," said Mr Heather.

    From time-to-time the ATO will send emails, SMS messages or official social media updates advising of new services. The ATO's messages will never request personal or financial information by SMS or email.

    To increase community awareness of scams the ATO launched a video campaign on www.ato.gov.au/identitycrime with helpful tips for taxpayer to protect their personal information.

    If you think you may have been the target of a scam get in touch with the Tax Office as soon as possible. And, if you would like to free your time up this year you can always contact us by next Tuesday for a lodgement extension past October 31.

    #clarkemcewan #selfpreparers #lodgement deadline #taxreturns

     

    Spring Cleaning the Finances for a healthier Christmas

    While spring is usually associated with a clean-up at home, the co-founder of a payment collection agency believes it is an important time for businesses to do the same and get their finances in shape ahead of the busy Christmas period.

    Smell that? It's the seasonal bouquet of spring time, bringing with it the perfume of blooming flowers, the earthy fragrance after rain, and the heady odour of freshly cut grass. It also brings with it the smell of opportunity.

    Spring heralds the fact that Christmas is around the corner, and it's the time of year when you need to have capital available to buy more stock, pay seasonal workers' wages, and build up cash reserves before companies shut down for the holidays and recovering debts becomes much harder.

    With one in two Australian businesses owed more than $20,000 on overdue invoices, putting effort into this area can make a material difference to your business' bottom line.

    Unclogging cash flow entails taking stock of all of the overdue invoices, organising them by due date, and then tackling them one by one – with the oldest invoices receiving your immediate attention.

    Remember: as an invoice ages, the cash becomes harder to recover, and the probability of making a collection decreases

    As part of this debt spring clean, you'll need to prepare a log of all previous communications undertaken with each client in relation to the debt. This includes the date they received the first bill, who it was addressed to, and any subsequent interactions.

    An audit trail of communications will help you counter the top two debtor excuses: "I never got your invoice" and "You should have reminded me to pay."

    Each debt needs to be dealt with on a case by case basis. Generally, using different forms of communication as the debt ages is the recommended course of action.

    Start with an email reminder two weeks after the invoice due date, with copies of the overdue invoices attached, and give your customer a reasonable time to respond. At this stage, you might agree on a payment plan if your customer is experiencing cash flow problems.

    If that doesn't bear any fruit, follow up with a text message one to two weeks later (SMSes have a very high read rate). Otherwise, email a second payment reminder. Even better if debtors can click on a 'Pay Now' button from your invoice or reminder, as it removes friction from the process and enables them to settle the bill instantly.

    Two reminders should be plenty in terms of flushing out payment, but if the money still hasn't landed in your bank account, it's time to work the phones.

    If you've been dealing with a generic accounts receivable email address rather than a specific person, you'll need to identify the best person to chase at the business.

    But what if you've done all of the above, and still haven't had any luck?

    The next step is sending a debt collection letter, also known as a letter of demand. This is considered a more formal follow-up, and is typically sent with your business' letterhead.

    Recently, the acceptable time frame for sending a debt collection letter has reduced from 90 days to 60 days from when the invoice is due.

    You may also want to consider outsourcing collection of the debt to a debt collection agency. This agency works as an agent of your business to collect overdue debts, and is typically paid a fee or percentage of the total amount collected.

    Whether to go down this route depends on a number of factors. If it's come to the point that your business is running out of cash, then calling in the professionals may well be a worthwhile investment, despite the fees involved. The beauty of a debt collection agency is that it has the resources to keep the ball rolling when your own in-house collections have stalled.

    Another good reason to hire a debt collection agency is that they're one step removed from your business. While personal relationships with suppliers and customers can sometimes make it difficult to have that hard conversation regarding money, external agencies don't have that issue.

    Finally, if your debtors have gone into hiding, and aren't returning phone calls or responding to letters and emails, debt collection agencies have a number of means at their disposal for tracking people down.

    Ultimately, prevention is better than the cure

    Once you've gone through your cash flow spring clean, it's worth ensuring that you have an effective debt collection strategy in place to stop overdue invoices spiraling out of control.

    A pre-planned strategy will include your process for following up overdue debts, your time frame to escalate to management, and the third-party agencies (like legal and debt collection agencies) that you will call on as needed.

    If this is applied consistently with every customer, it sends the message that your accounts receivable house is in order, and reduces the likelihood that debtors will drag their feet when it comes to future invoices.


    Contact Clarke McEwan