3 Ways to manage payroll and HR risk
Here are three things you can do inside your business to make sure you keep up to date.
- Send the budget setter to the front line
The first is, whoever sets budgets in your business has to be out in the front line meeting with the managers responsible for meeting those budgets.
It's old world accounting to just sit in an ivory tower and set a budget hoping that the business is going to be able to make those goals. Your financial mentor should be out in the field with you talking to your team, understanding what's realistically achievable.
- Use cloud HR systems
And with so many business applications moving to the cloud, HR compliance is one of them. We recommend a tool called Employment Hero. Employment Hero covers compliance, payroll integration, and an HR help desk all in one. It provides a great experience for your employees and helps you make sure that you're doing everything right.
- Have a culture around managing HR risk
Our third tip goes back to culture. Prioritize HR risk in your business because the risk of getting it wrong is huge. Not only can your business be up for fines and penalties, you can suffer an inability to attract new talent because of bad press, and the bad press itself can impact your brand damage, ultimately impacting your business value. For more tips on managing your workforce, head to sequelcfo.com.
3 types of office space to keep rent down
Global tech giant, Google has opened an office in Melbourne. It's head office still remains in Sydney, but the hundred desks site is only going to remain 50% full for the moment, Google obviously planning some significant growth.
Rent is an overhead of your business and if your forecast growth doesn't come in, you can be left with this really expensive cost that's not creating value to your business. Here's three ways to help manage the potential rental costs as your business grows.
Your first option is co-tenancy. Finding three or four businesses that compliment your services or that you're going on in really well and take out a lease agreement together. This can be great because it diversifies the risk, creates really nice work environment for your team and gives you flexibility to grow at your own pace.
It's kind of like creating your own mini coworking environment.
Coworking exists for teams of one to 10, and sometimes 20 or 30 if you're a larger business. Coworking agreements can range from one month to 12 months, giving you that flexibility to grow your team as you need. They also give you the ability to change spaces and change environments.
- Distributed teams
Distributed teams are a modern trend that allows workers to work from home, the library, the cafe, or a local coworking space. To support this type of team, first of all, you need the culture that's going to, let you do it, but you also need the technology that helps your team communicate. You'll need a workflow management tool, we either used Asana, Carbon and Trello boards and found success with all of them.
You also need a great cloud based communication platform. Facebook business is an option for growing businesses as well as Google hangouts, Zoom, and even Skype.
Otherwise you run the risk of people working inefficiently and potentially working on the wrong items.
2 financial goals to help your get a business loan
One of the key reasons your business will struggle to grow, is access to capital in an affordable way like the bigger businesses are able to do.
This is because banks view your business as being more risky than the bigger ones. Most banks charging a hefty interest rate and requiring your family home as security. Fintech lenders are filling some of the space, but it is very expensive debt.
One of the report's recommendations is to have your business ready to take on debt.
Here are two things that bankers look for in your financials that you can start planning for today.
- Debt Service Coverage Ratio
The debt service coverage ratio is your profit divided by debt, plus the interest. There's two ways to influence it. One, keep your profit up. Don't put expenses through your business if you know that it's a more important priority. This sort of midterm planning is a sign of a really well-run business.2.2. Debt to Equity Ratio
To get this ratio in line with what the banks will lend to, know exactly how much debt you want to take on. Going to a bank and saying, I'll have as much as you can give me is a good sign that you're not really in control of your business.
The ratio is calculated by the total debt in your business divided by the amount of equity. The lower the debt and higher the equity, the better the ratio. The cash flow budget will guide this.
To keep the equity number up, maybe this is the year that you don't take dividends out of your business, where you choose to keep your profit inside your business so that it becomes more attractive for banks to lend to moving forward.