ADVICE FOR NZ CREATIVES
What industries are covered?
We specialise in the following creative industries: film, TV, creative arts, digital, advertising agencies, exhibition design, branding agencies, website design
what financial information do I need to know?
Financial information comes in many forms. For compliance (legal) reasons, you need to produce a set of financial statements (usually the Profit & Loss Account, the Balance Sheet, the Cashflow statement and various notes to the accounts) at the year end, but there are many reports that you can create that will give you additional information for running your business.
should I work for free?
There are many benefits to working a job for free - building your reputation, being seen as someone who will help out, opportunities for further (paid) work - but always remember that you need to live and survive so make sure that the benefit you create outweighs the lack of income. This kind of decision is what accountants call a Cost/Benefit Analysis.
how do i calculate my charge-out rate?
Start with how much you would like to earn over a year (before deductions for tax). Then work out how many working hours you have available. You may decide to only work part-time, say 20 hours per week, or you may decide to work full-time.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
how do I work out an on-cost rate?
You may want to add an on-cost to external expenses if you have overheads to pay for in addition to your own wages when budgeting or quoting for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
How do I get clients to pay on time?
A client who does not pay on time can upset your entire cashflow. Here are two ways of addressing them.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
which is the best accounting software to use?
Choosing the right accounting software for you depends on your current circumstances and how you see your future.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
how do i do budgeting?
Like a lot of things in accounting, budgeting and how to budget can take many forms. Here are some examples:
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
what do I do if i'm going over budget?
The first thing to do is to be certain that you are going over-budget. Get your financial results up-to-date and run your reports.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
Send me your questions...
And I'll do my best to answer them.
In this insider's guide, we're looking at
obligations and jargon
what are my obligations?
We s
what jargon do I need to know?
Financial information comes in many forms. For compliance (legal) reasons, you need to produce a set of financial statements (usually the Profit & Loss Account, the Balance Sheet, the Cashflow statement and various notes to the accounts) at the year end, but there are many reports that you can create that will give you additional information for running your business.
shoul
There are many
things to think about
What industries are covered?
We specialise in the following creative industries: film, TV, creative arts, digital, advertising agencies, exhibition design, branding agencies, website design
what financial information do I need to know?
Financial information comes in many forms. For compliance (legal) reasons, you need to produce a set of financial statements (usually the Profit & Loss Account, the Balance Sheet, the Cashflow statement and various notes to the accounts) at the year end, but there are many reports that you can create that will give you additional information for running your business.
should I work for free?
There are many benefits to working a job for free - building your reputation, being seen as someone who will help out, opportunities for further (paid) work - but always remember that you need to live and survive so make sure that the benefit you create outweighs the lack of income. This kind of decision is what accountants call a Cost/Benefit Analysis.
how do i calculate my charge-out rate?
Start with how much you would like to earn over a year (before deductions for tax). Then work out how many working hours you have available. You may decide to only work part-time, say 20 hours per week, or you may decide to work full-time.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
how do I work out an on-cost rate?
You may want to add an on-cost to external expenses if you have overheads to pay for in addition to your own wages when budgeting or quoting for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
How do I get clients to pay on time?
A client who does not pay on time can upset your entire cashflow. Here are two ways of addressing them.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
which is the best accounting software to use?
Choosing the right accounting software for you depends on your current circumstances and how you see your future.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
how do i do budgeting?
Like a lot of things in accounting, budgeting and how to budget can take many forms. Here are some examples:
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
what do I do if i'm going over budget?
The first thing to do is to be certain that you are going over-budget. Get your financial results up-to-date and run your reports.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
Send me your questions...
And I'll do my best to answer them.
information and experiences
What industries are covered?
We specialise in the following creative industries: film, TV, creative arts, digital, advertising agencies, exhibition design, branding agencies, website design
what financial information do I need to know?
Financial information comes in many forms. For compliance (legal) reasons, you need to produce a set of financial statements (usually the Profit & Loss Account, the Balance Sheet, the Cashflow statement and various notes to the accounts) at the year end, but there are many reports that you can create that will give you additional information for running your business.
should I work for free?
There are many benefits to working a job for free - building your reputation, being seen as someone who will help out, opportunities for further (paid) work - but always remember that you need to live and survive so make sure that the benefit you create outweighs the lack of income. This kind of decision is what accountants call a Cost/Benefit Analysis.
how do i calculate my charge-out rate?
Start with how much you would like to earn over a year (before deductions for tax). Then work out how many working hours you have available. You may decide to only work part-time, say 20 hours per week, or you may decide to work full-time.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
If you decide on-full time, work out how many hours that equates to for a year, remembering to deduct public holiday hours, annual holiday hours and sick day hours.
Then deduct other hours that you won't be working on chargeable work (i.e. admin time, meetings, client meetings, development time, and time used for free jobs).
When you have your total number of working hours, divide your required annual pay by the number of hours and that will give you the hourly rate that you need to charge.
In reality, the industry may dictate a usual hourly rate - either more or less than your calculation. If it's more, great! But if it is less, you may need to adjust your working hours or your expected annual wage to fit.
how do I work out an on-cost rate?
You may want to add an on-cost to external expenses if you have overheads to pay for in addition to your own wages when budgeting or quoting for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
How do I get clients to pay on time?
A client who does not pay on time can upset your entire cashflow. Here are two ways of addressing them.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
which is the best accounting software to use?
Choosing the right accounting software for you depends on your current circumstances and how you see your future.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
how do i do budgeting?
Like a lot of things in accounting, budgeting and how to budget can take many forms. Here are some examples:
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
what do I do if i'm going over budget?
The first thing to do is to be certain that you are going over-budget. Get your financial results up-to-date and run your reports.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
Send me your questions...
And I'll do my best to answer them.
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how do I work out an on-cost rate?
You may want to add an on-cost to external expenses if you have overheads to pay for in addition to your own wages when budgeting or quoting for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
The simplest way to calculate an on-cost is to add up all your overhead expenses, work out your total expected external expenses, and then divide the overheads by the external expenses value. That will give you a percentage value (multiply by 100 to get the %) that you add to each external cost as you budget for a project or production.
How do I get clients to pay on time?
A client who does not pay on time can upset your entire cashflow. Here are two ways of addressing them.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
1 - The Legal Route
Ensure that you have contracts agreed and signed that clearly show the payment terms (e.g. 7 days after date of invoice). Then make sure that you include the same payment terms clearly on your invoice. If the payment deadline passes, follow up quickly, send reminders and get on the phone to them if necessary. The ultimate response is to refer the client to a debt collector or hand over the invoice to a debt factoring company (they buy the debt and give you a percentage of the value, they will then try to get the full value from your client for themselves.)
2 - The Income Forecasting route
Knowing how your client pays their bills, and planning your cashflow taking that into account, will save you a lot of stress. Ask the client before you do work with them what their policies are. You may need to reach certain milestones, or have work approved before it will be paid for. Money from public entities, especially, can come with specific requirements. So make sure you follow their rules.
For example, if they require a Purchase Order Number to be quoted on your invoice, then make sure you include the Purchase Order Number. If they require you to send it to a certain email address, then make sure you send it to that email address, and if it needs to be submitted before a certain cut-off date, then make sure you submit it before the cut-off date.
Many large organisations will pay on the 20th of the month following the date of your invoice regardless of the date you agree to in a contract with a departmental contact, or that you specify on your invoice.
Being prepared to receive payment when they will pay you, and budget accordingly.
which is the best accounting software to use?
Choosing the right accounting software for you depends on your current circumstances and how you see your future.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
If you are a freelancer or sole-trader, a simple spreadsheet may be enough to give you the information that you need to understand your financial position.
If you run a limited liability company, you may need something more sophisticated, but choose wisely.
The most popular option may not be best for you. It may contain too much functionality (in which case you are paying for more than you need), or it may not contain enough functionality (and you will end up paying for costly add-ons or use up valuable time using work-arounds).
Do you own research, or ask an independent finance person. Be aware that some bookkeepers and accountants are software resellers (i.e. they make money from signing you up) and that particular software may be best for them, rather than for you.
how do i do budgeting?
Like a lot of things in accounting, budgeting and how to budget can take many forms. Here are some examples:
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
1 - Zero-based budgeting from bottom up
Start with a completely blank budget and build it up from the bottom. Work out all the costs that will need to be covered. Add in overheads and add in wages. When you have a total, add an amount for profit. The grand total of expenses represents how much you need to earn, i.e. your sales value.
2 - Budgeting from the top down
Start with your known income and work backwards. Include the external costs first, then include your own time/rate, then work out what's left for overheads and an element of profit.
3 - Using a previous budget
Probably the most used budgeting process is to take a previous budget and adjust it for known differences. This can happen for annual company budgets or for individual project/production budgets.
4 - Using a previous budget and adding a fixed percentage increase
Similar to #3, take a previous budget and increase each budget line by a fixed percentage. This works for some individual project/production budgets but for a company budget there'll be specific changes that do not fit the fixed percentage and will skew results.
what do I do if i'm going over budget?
The first thing to do is to be certain that you are going over-budget. Get your financial results up-to-date and run your reports.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
The next step is to identify where and why you are heading over budget - is it additional expenses, less income, or unexpected expenditure? is it the result of poor budgetary management or is there a leak somewhere?
Once you have bought something or committed to buy something it's very difficult to reverse that, so don't dwell too much on what went wrong, rather focus on what can be done to fix it.
Can you complete the rest of the project/production/financial year with fewer resources or cheaper purchases?
Are there ways to stabilise your income? or to make more money?
For a project, is it the result of scope creep (where the client asks for more and more things outside of the original plan)? can you refer it back to the client and ask for more funds?
If it is the result of money leakage, put a stop to the leak as quickly as you can. If it is fraud, follow the correct processes for stopping and rectifying fraudulent practices.
Whichever circumstance you find yourself in, don't ignore the signs of going over budget, it can only get worse if you turn a blind eye.
Send me your questions...
And I'll do my best to answer them.
Business financial performance is more than just tax and compliance.
As your business grows, so does the need to produce good quality reporting and provide information that is important to you for strategic decision making.
I bring you my knowledge and experience to help you feel more confident with your business accounting, understand your business's financial performance, identify areas for improvement and make informed decisions to reach
your goals for your future.
As your business grows, so does the need to produce good quality reporting and provide information that is important to you for strategic decision making.
I bring you my knowledge and experience to help you feel more confident with your business accounting, understand your business's financial performance, identify areas for improvement and make informed decisions to reach
your goals for your future.
accounting set-up |
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Whether online software or manual processes, ensuring systems are efficient and effective from the beginning is key to business performance.
chart of accounts ensuring you have the most appropriate set up for your business
checking system settings missed settings can mean certain functions won't work
consistency of GST set up match your system gst settings with your ird settings
bank transaction rules streamline your bank transactions to take less time when processing
supplier and client rules streamline your contacts' settings to save time when processing
Basic reports identifying useful basic reports and setting them up for quick and easy reporting
set up review |
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Reviewing your existing system set up to check they are appropriate and whether efficiencies can be found.
chart of accounts ensuring you have the most appropriate set up for your business
helpful GST rules streamline your transactions to include the correct gst and save time
bank transaction rules streamline your bank transactions to take less time when processing
supplier and client rules streamline your contacts' settings to save time when processing
fixed assets checking and processing fixed assets correctly and easily
Basic reports identifying useful basic reports and setting them up for quick and easy reporting
understanding timing showing you simple tricks about timing of transactions and reporting
understanding key numbers explaining key numbers to watch and monitor
on-going service |
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Ongoing bookkeeping service* - as much or as little as you need - ensuring that key processes are done and GST returns are processed on time.
accounts payable recording your purchases accurately to the right codes and with correct gst
accounts receivable raising invoices and recording income received
gst returns timely, appropriate and accurate gst return filing
bank reconciliations ensuring bank transactions are appropriately reconciled to the accounts
fixed assets processing fixed assets and depreciation
*NB, does NOT include staff payroll, tax advice, income tax returns, investment advice or financial strategy.
MathildaRock can help you with:
- getting started with your accounts
- setting up processes, systems, software
- identifying and logging important due dates for payments and taxes
- demystifying the jargon
- putting you on the path to success
Selected areas where I can help your business:
accounting review |
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financial statements what the standard reports are telling you about what happened
MANAGEMENT ACCOUNTING WHAT ADDITIONAL ACCOUNTING IS TELLING YOU ABOUT WHY AND HOW IT HAPPENED
standard ratios reviewing the standard ratios for your business
business drivers what the key drivers are telling you about different areas of your business
PLANNING AND budgeting are they appropriate to your needs and focussed on the right areas?
red flags what are the areas that need your attention right now?
data analysis |
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performance analysis which other areas of your business are giving your performance information?
financial management analysis processes and procedures affecting your financial performance
TREND ANALYSIS HOW YOUR ACCOUNTS AND RATIOS ARE TRENDING AND WHAT THAT TELLS YOU
COSTING ANALYSIS analysing your whole business to review its financial jigsaw
Pricing analysis is your pricing correct?
quoting analysis are your quoting processes working to cover your costs?
margins ANALYSIS are you meeting your margins?
overhead recovery ANALYSIS IS YOUR income covering all your costs?
productivity ANALYSIS how time is spent and how it matches expectations
project management analysis are you monitoring projects to ensure financial balance?
budget variance ANALYSIS what are your variances telling you?
Cost control, debtors and cash analyses are there efficiencies that could be in place?
clarity and action |
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resolving feeling overwhelmed in business INNOVATIVE IDEAS TO RESOLVE CHALLENGES
seeing the wood for the trees identifying key areas to focus on
financial modeling looking at possible scenarios
forecasting converting the scenarios into financial forecasts
KPIs, goals and targets establishing suitable performance targets
improving cash flow IDENTIFYING CASH DRIVERS AND PATTERNS OF CASHFLOW
small changes that have a big effect what you can do now to improve your financial situation
Streamlining financial processes focusing on efficiency and effectiveness
identifying potential fraud opportunities IDENTIFYING GAPS THAT ALLOW FRAUD AND CLOSING THEM
Some legal stuff:
By the very nature of our profession, any advice or guidance given on this website or in open training resources are general and generic in nature. The majority of my focus is on better business practices and knowledge.
For detailed transactional or taxation advice relevant to your business, please ask your financial accountant or bookkeeper.
If you wish to replicate any advice, guidance or training for your own purposes, please have the good grace and manners to ask first.
I value politeness very highly.
By the very nature of our profession, any advice or guidance given on this website or in open training resources are general and generic in nature. The majority of my focus is on better business practices and knowledge.
For detailed transactional or taxation advice relevant to your business, please ask your financial accountant or bookkeeper.
If you wish to replicate any advice, guidance or training for your own purposes, please have the good grace and manners to ask first.
I value politeness very highly.
Ready to ROCK Your accounting?
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