All forecasts are for a stormy 2023 for New Zealand businesses. At Oxford Edge, our experts are ready to help you dance between the raindrops to avoid the worst of it.
Belinda Canton
Forensic accounting specialist
Fraud is front of mind for Belinda as household finances get tighter and people become more desperate. Small businesses are not more or less prone to fraud but they suffer a greater effect due to the scale of their reserves, even if the fraud is at a larger company they do business with.
The answer is increased vigilance. That includes of your own staff. This bit is often really hard because we are talking about people you trust but if you can catch a fraudster early and stop them digging an even bigger hole, you are actually helping them.
In Belinda’s experience, the most common forms of business fraud are issuing false invoices and changing the bank account that a payment is going to. In both cases, the fraudsters are relying on busy people not checking before approving payments.
Invoicing a business for a service they didn’t provide is an old game. That is why each invoice your business receives should be checked before payment. Is it expected? For businesses that have a lot of invoices each month, such as construction, it is easy for smaller bills to be overlooked and simply paid.
Technology has made it so much easier to pay accounts but it has also brought with it a new means of stealing your money, which is to change the account that a payment is going to. When paying invoices electronically, check that the acount number matches the supplier. The name of the payee may be correct but the bank account may have been fraudulently altered.
Sadly, both these forms of fraud work better if they are an inside job. Staff know the invoicing process and have the access needed to change payee account numbers.
That’s why separation of duties is essential to avoiding fraud. One person should not be able to accept and authorise an invoice for payment. You need at least two pairs of eyes on it.
Paul Rickerby
Governance and strategy specialist
Paul is a firm believer that in chaos lies opportunity. The trick is to be able to stand back and get a clear view of how to mitigate the downside of that chaos while at the same time keeping your eyes open to potential.
Once everyone has recovered from a busy year, Paul sees FY24 as the necessary focus. A recession is looking increasingly likely for the first quarter of that year so businesses have to work out how they will respond.
Some navel-gazing in January about your business will throw up examples of how in different times you can’t keep doing the same thing. Rising interest rates mean people will stop spending. Technology will continue to disrupt sectors and business models.
Again, Oxford Edge is here to help. From that January contemplation will come the bones of a plan. Engaging with our team in a strategy planning session will put meat on those bones. That strategy can then be tested against various scenarios and with different sets of numbers.
For Paul, a big part of Oxford Edge’s role is to challenge clients to think in different ways about their business and its potential. A SWOT analysis (strengths, weaknesses, opportunities, threats) is still a good place to start. Another point to consider is that scaleability of a business or a new acquisition is not linear but rather a series of steps. The challenge then is to ascertain where those steps kick in.
Not all businesses will go backwards in FY24. Some will prosper and be well placed to pick up other assets or otherwise expand. A planning session with Oxford Edge in the new year will give you a strategy for success as well as survival.
Graeme Rhodes
Building and services specialist
Right-sizing your business for the looming economic challenges is Graeme’s focus for 2023. The building sector in particular is exposed to the double whammy of scarce labour and ballooning materials costs. Over-promising and under-delivering, or being stuck with the costs of delivering, are a real risk to business survival.
Time to run a dispassionate eye over your budgets and tenders. What does your profit look like if contracts perform to quoted margins using existing labour resources? Do your tenders reflect current and expected material and labour costs?
Chasing business expansion is problematic in these times. There is no point growing your top line if you do not have the resources to complete contracts. Don’t kid yourself that the people are out there. And if you do find them you will have to pay a premium to get them, which will erode margins.
Keeping the employees you already have and using them as efficiently as possible is increasingly important. As is making sure that tender and contract pricing reflects the real costs of doing business.
No matter how efficient your team, you won’t make a profit if you don’t price a job at the right level. Your human resource is finite so make sure you are achieving as much as you can with it.
The pitfalls of growing turnover for the sake of it or above resource levels are made worse in the current environment. The bigger your team, the more requirements there are for monitoring and managing, which will add cost without necessarily increasing productivity.
Increasing your weekly outgoings on staff, stock and capital will also make you more vulnerable to the 60-day payment cycle from clients. Higher turnover usually means higher risk for getting paid and achieving the margins you have budgeted for.
For help, Graeme and the Oxford Edge team are just a phone call away. Reach out – they have the tools to help you find the right size for your business and to develop a plan for 2023.
Anna Riley
Systems specialist, Xero and apps
For Anna, the way to navigate uncertain times is to work smarter rather than harder. That means making sure you are getting the most from your existing business systems and constantly looking for improvements.
Anna is Oxford Edge’s Xero hero. She’s a big fan of the cloud-based accounting software and feels that many users are not getting the most from it. With the Xero environment improving every day as new and improved apps become available, she accepts it is hard to keep up.
That’s where Oxford Edge’s specialists can help. In a couple of hours they can come visit and review how you use Xero and what apps would help you use it better.
She has many examples of businesses Oxford Edge has helped in this way. One was using an app to generate about 600 invoices that were then manually entered into Xero each month. Anna and her team investigated and found the app and Xero could be made to talk to each other. Now those invoices are entered in Xero at the push of a button.
In other cases, Xero had added functionality but a client firm was unaware of the improvement and how it could help streamline their processes. They might even be paying for the increased functionality and not using it. Again, Anna and her team were able to help.
Anna’s advice is to reach out to Oxford Edge in the countdown to 31 March to review how you are using Xero and how you can use it better. This will then deliver regular, reliable reporting through 2023.
Once you are making the most of the software as it is, the next step is to start asking what else you want it to do. Maybe you want to cut down on the number of spreadsheets you need. Is there an app for that? If so, Anna and her team will find it.
Matt Eaden
Finance and banking specialist
No surprise that the dark cloud on Matt’s horizon is interest rates. They will keep climbing until the Reserve Bank gets the lower inflation that it wants. Wishing otherwise won’t help so it’s about managing the risk.
The speed of the increases means borrowers will come off low fixed rates to something substantially higher. Business owners who have borrowed against the family home might find they are in negative equity, meaning they can’t borrow any more money should the business need it.
For Matt, the important thing is to talk to your bank earlier rather than later. Rising interest rates are a new environment for those who have gone into business during the low and stable rates of the previous decade. If you don’t already have one, you need a plan.
The answer to the inevitable question of whether to fix or float depends on the nature of your business’s income stream. If income is fixed then you want to fix your expenses as well, including interest. If income is variable then fixing your interest costs may not help.
Oxford Edge can help develop a policy for borrowing that matches the special nature of your business. How much fixed? How much floating? What are the triggers for change?
Leaving this important work to when you are deep in a credit crunch is leaving it too late. Matt and the rest of the OE team are ready to assist you develop a sound strategy to cope with the uncertainty.
