The Hardest Job in the Office
By Kylie Thomas
I was once told by a client that I had the hardest job in the office.
A bold statement - and when I tell you that my key role at Lincolns is to manage the debtors (clients with outstanding accounts), you may even agree. Yep, that’s right all outstanding accounts come across my desk and it is my job to chase them up.
Debtor management often appears daunting, intimidating and awkward. It becomes that piece of paper that you always move to the bottom of your tray hoping that it will miraculously resolve itself or someone will take it off your plate. But what if I was to tell you that debtors management does not have to be that difficult and that it can be a satisfying and rewarding task.
Let me share with you my top tips to collecting debts and see if we can make this task a little less daunting. More importantly let's see if these tips can make an improvement to your cashflow and reduce the number of "debtor days" for your business which should ideally be no greater than 43 days.
The Tax Invoice
Ensure that your tax invoice is accurate, easy to understand and includes the following:
- summary of the total amount
- the due date
- how to pay the invoice
- clear description of goods or services provided
- legal requirements, such as your ABN and the GST amount
- contact telephone number for any queries (these should be dealt with fairly and quickly).
Consider charging a late fee for overdue invoices and state clearly on your tax invoice that you reserve the right to do so.
Be consistent and chase up outstanding accounts promptly. If you offer payment terms of 30 days, begin following up accounts when payments are 7 days overdue, ie at day 37.
Send a statement
Send a statement requesting payment indicating that this is a reminder or final notice.
Call the debtor
I see you hesitate at this point but the phone call you are reluctant to make is easier than you think and can be very effective.
Begin with stating who you are and that you are calling regarding the account. From there answer any queries, address any problems and try to find a solution.
I have heard all the excuses and all the sob stories (some true, some not) and the one thing I have learnt over the years is that listening is crucial as this opens the lines of communication and this in turn helps to get your accounts paid.
Remember that bit of paper that you kept putting at the bottom of your tray? Well, your tax invoice is at the bottom of their tray and there it will remain until they are called upon to take action. So give them a call and get your tax invoice to the top of their to do list.
Unable to get the debtor on the phone? Send an email or try sending a text. Occasionally it can be difficult to get in contact with the debtor but as technology progresses so does the number of ways we are able to contact and communicate with people.
Snail mail is becoming slower and we are after quick results. So emailing overdue letters and payment demands is often more effective and a text to the debtor reminding them of an outstanding account can result in faster payment.
If your debtor has a cash flow problem, work with them and try to arrange a payment plan that suits both you and the customer. Be clear about the consequences should terms be breached and don't do more work for or supply more products to the debtor until they pay the outstanding invoice.
Implementing just a few of these suggestions can have big results.
Need help managing your debtors?
If you continue to have problems with debtors or in achieving your target number of debtor days, contact us. We can help you calculate your number of debtor days and offer further advice specific to your situation.
By Sheila Murray
The Transport Workers Union of WA (the TWU) has been urging members to write to their local MP to get the ATO to reverse its decision to reduce the overnight meal allowance from $97.40 to $55.30 for the year ended 30 June 2018.
Consultation is now taking place and the National Road Association (Nat Road) has recently reported that the ATO may be close to making a decision in response to the lobbying.
The ATO's determination
The ATO’s new determination meant that long distance truck drivers would have to provide receipts for claims for food expenses which are more than $55.30 for three meals a day for the year ended 30 June 2018. For the year ended 30 June 2017 the limit was $97.40.
For more information on reasonable travel and overtime meal allowance expense amounts for the 2017-18 income year see TD 2017/19.
The issue of allowances is quite complicated.
Any travel allowance which is paid in accordance with the ATO determination is not required to be shown on the PAYG Payment Summary and is not taxed. The ATO have raised questions over whether the travel allowance paid under the Road Transport (Long Distance Operations) Award 2010, can be treated as the daily meal component of a an overnight meal and accommodation allowance.
What employee truck drivers should do
Employees should check the nature of any allowance received with their employer before claiming meal expenses. We have come across cases where “travel allowances” which were thought to be for meals, were actually for car costs to get to work!
If you do not receive a bona fide reasonable allowance for meals for overnight trips, you can only claim a deduction for food and drink if you actually were required to sleep away from home, have kept a diary and have kept all the receipts showing the amount you are claiming.
If you are an employee truck driver who received an overnight allowance for food and drink from your employer for the year ended 30 June 2017, you still have three choices when preparing your 2017 tax return
Where the allowance you received is NOT shown on your 2017 PAYG Payment Summary, here are the three choices:
Do nothing, as the allowance you received has not been taxed; OR
Keep all of your receipts and a diary showing nights on the road, show the allowance received on your tax return and claim only the expenses shown on your receipts; OR
Show the allowance on your tax return and claim the $97.40 per day as an expense, provided you kept a diary showing nights on the road and you can show that you spent $97.40 or more by reference to diary entries, bank records and a sample of receipts.
If the lobbying is unsuccessful, you will be allowed to claim $55.30 for the year ended 30 June 2018, (not $97.40) - provided, of course, you received a bona fide allowance.
A Coffee With ...
By Brendan Taylor
Our "Coffee With ..." this month features Angie McHugh of Parry Beach Breaks. From radiography to tourism. Read Angie's story here.