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Finding cash, fast 

This post is by Giles Ellis, an experienced business coach and Director at GECA Chartered Accountants. GECA offer Business Planning and other Business Advisory Services.

How to solve cash-flow problems 

No matter how well your business is doing, cash-flow problems can bring everything to a screeching halt. Without adequate cash flow, your business can’t pay staff, suppliers, or creditors – which could eventually shut you down. 

The good news is, there are ways to find cash both inside and outside your business. Whether you choose to cut costs or improve processes, seek funding from an outside source, or even look at crowdsourcing, there are options when it comes to boosting your cash flow. 

Here’s how to get started: 

Start inside the business 

Before you apply for loans or seek funding, look for ways to improve cash flow within your business. If you’re able to free up some cash without going to a lender or investor, you’ll avoid adding to your overall debt. 

Cut your overheads 

Take a hard look at your expenses and find ways to cut overheads. This might mean reducing staff numbers, moving to a smaller office or less popular area, or cutting back on extras like company cars.  

Clean up and cash out 

If you have excess stock, unused technology or equipment available, think about selling or renting it out to gain some ready cash. 

Talk to your vendors 

If you’re struggling to pay suppliers, it’s worth trying to renegotiate your payment terms. This might mean asking for an extra week to pay your bill or a reduced rate on certain products. If your suppliers won’t budge, it’s time to look at other options – you may be able to get better payment terms or lower prices if you switch to a new vendor. 

Chase your invoices 

Late payment can be a huge problem for businesses. Although you’ll always have some clients who are slow to pay, you can minimise issues by making your terms clear. Get all customers and clients to agree to a fixed payment period, issue invoices promptly, and chase late payments every time. Consider offering an incentive for early payment.

Finally, always get a deposit before you start a large project or take on a large order. That way, you’re not left out of pocket if clients cancel or fail to pay their balances. 

Finding outside funding 

If changes inside the business don’t boost your cash flow sufficiently, it’s time to look elsewhere. There’s a huge number of options out there, from traditional lenders to crowdfunding, so it’s a good idea to seek expert advice before you make a decision. 

Get an overdraft 

Applying for a bank overdraft is a quick, relatively simple way to access some cash. However, banks can call in the debt on demand, which makes them a risky proposition for some business owners. 

Take out a loan 

A loan from a traditional bank gives you a set lending-term, so the bank can’t call back the debt before you’re ready. On the other hand, you will usually need to provide security in the form of business or personal assets, which means you’re taking on risk. 

Asset financing 

If your business has high-value assets, you may be able to apply for a loan using these assets as collateral. 

Invoice discounting 

Invoice discounting means borrowing from a bank or specialist lender based on your upcoming receivables. This type of loan tends to have a very quick turnaround, and you’ll usually be able to borrow up to 80% of the invoice amount. 

On the downside, invoice discounting can be more expensive than other forms of loan. 

Peer-to-peer lending 

Peer-to-peer lending platforms match individual lenders with borrowers and let them set the terms for their loans. Although you will have to go through a credit check and often pay a fee, interest rates for P2P loans are often much lower than for traditional lenders. 

Crowdfunding 

Crowdfunding isn’t just for charity – it can be a way to boost your business as well. With equity-based crowdfunding, you offer an equity share in your business in return for funds. Several online platforms let you find people to invest in this way. 

However, unless you have a particularly interesting or unique business, it can be difficult to get enough people to invest. If you don’t get the numbers, many crowdfunding sites will require you to return the money to investors, leaving you with nothing. If you do find investors, you run the risk of ceding too much control.  

Finding the best solution for your cash-flow problems 

There’s no one magic bullet when it comes to cash flow. Some businesses will be able to find the cash they need by making changes. Some will need to take on loans, and others may do both. It’s about finding ways to bring in cash and achieve sustainable business growth.

If you’re not sure where to start, seek help from an expert. The team at GECA knows the ins and outs, the risks and the benefits of every cash-flow opportunity, and we can help you find the best option for your business. 

Get in touch today!

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2. Click Tracking categories.

3. Enter the desired name of your tracking category, say, Rentals or Properties. There is also an option to enter each property name under this category.

4. Click Save.

5. Now when you reconcile your transactions you can assign payments to a particular property. The category name will appear under Why on your bank reconciliation dashboard and you can scroll down to choose a property that the transaction relates to.

6. Sometimes you can have only one receipt for expenses that relates to different properties. Say, you went to a shop and grabbed a new lamp shade for your three-bedroom house rented for a long term. You also bought a new iron for your Airbnb apartment and a kettle for your holiday home.
There are a few ways to attribute the expenses to the properties in Xero. If you use Xero Bills you can create a new bill for these expenses and while reconciling you can match that bill against the bank payment. Another easy way is to enter the receipt details at the moment you reconcile transactions in Xero. For that:

– Go to your bank account in Xero. Find the transaction then click Add details.

– Then, you can allocate expenses to your rentals. Check whether the amounts in the receipt or invoice are GST exclusive or GST inclusive.

7. Now you can track your properties performance. Click Accounting, Reports and More Reports under Financial. There, you can see Tracking Summary.

If you want to have an easy access to Tracking Summary in future click star. This report will appear under the Accounting tab.

8. Click Tracking Summary. Choose the date range and the accounts groups you want to review. Say, you would like to know the amount of expenses incurred in relation to each property.

9. Click Update. Now you can see your Expenses Summary. Unassigned expenses are those that haven’t been assigned to any property probably by mistake or because these expenses are overhead.

10. You can also see financial statements relating to each property. Probably the most interesting report for you is Profit and Loss. For that go to Accounting, then click Reports, then Profit and Loss.

In Profit and Loss choose the Date Range and click Report Settings.

11. Under Report Settings you can choose the rental you would like to look at.

12. Your Profit and Loss for the selected date range is now displayed.

13. Please note that the reports generated are based on the transactions you have coded while reconciling. These reports are for your reference only and may be subject to year-end adjustments

The Author.
The article is written by Valiya Gafarova, Certified Xero Adviser and Accountant at GECA Chartered Accountants. If you want to know more on rental property accounting feel free to get in touch with us on 0800 758 766.

The post Xero Tips and Tricks: Keeping track of different rental properties appeared first on GECA Chartered Accountants.

Airbnb Hosting: Nine Tax Basic Rules You Need to Know.

There are a few things about New Zealand tax you should be aware of when you enter into Airbnb, BookaBach or other peer-to peer renting. The following may help you when speaking to your accountant or may provide you a general guidance if you are preparing your tax return on your own.

Here are the nine must-know tax rules for peer-to-peer hosts:

1. The money that you get from renting out your room, house or a bach is an income. You need to keep track of any income you receive in relation to your property short-term renting.
2. From your income, you can deduct expenses that relate directly to your rental income such as advertising and cleaning. To be able to deduct expenses you will need to be accurate in keeping all receipts.
3. If sometimes you or people associated with you privately use the property you will need to figure out how many days you used it and how many days your property was unused during a tax year. You will need this information when determining how much of your expenses you can deduct for income tax purposes. Depending on your circumstances you will use either mixed use proportion or standard income tax rules.
4. You are not allowed to claim depreciation on your property. However, you can still claim depreciation on assets used in your rental activity such as beds or bigger appliances. The threshold for fixed assets is over $500 for assets purchased prior to 17 March 2020.  The threshold is over $5,000 from 17 March 2020 till 16 March 2021 and then will be permanently over $1,000 from 17 March 2021 financial year.
5. If you manage your AirBnB property from your home you may be eligible to claim your home office expenses against your rental income.
6. If your AirBnB income before deductions is $60,000 or higher in the last 12 months (or you suggest that it will be $60,000 or more in the next 12 months) you will need to register for GST and file GST returns. You will be able to claim GST from your purchases. There is always an option to become GST registered voluntarily whatever your turnover is. Read more information on tax consequencesof becoming GST-registered.
7. From 1 April 2019 ring-fencing losses legislation was introduced. In practice, that means if you make an overall loss from renting your property you are not allowed to offset your loss against your other income. There are a few exceptions from this rule for example, if your property is a mixed-use asset. However, for the properties to be considered as a mixed used asset, the property needs to be also used by the property owners for their own private use instead of being rented out for short term rentals 100% of the time. You can read more on the ring-fencing losses here.
8. Also, you need to know that some properties cannot be sold tax-free. For determining your tax obligations, you need to take into consideration the date when the property title was transferred to you. From a legal point of view, this is when you became the owner of the property. If it happened before 1 October 2015, you will pay tax only if you bought the property with an initial intention to resell it. If the purchase took place from 1 October 2015 to 28 March 2018 inclusive you will be subject to tax if you sell the property within two years after the purchase date. From on or after 29 March 2018 the five-year period applies. These rules are called bright-line test.
9. In some New Zealand cities such as Auckland and Christchurch hosts are required to pay commercial rates instead of residential rates. A peer-to-peer host needs to do their own research on local rates applicable to their situation.

The Author.

The article is written by Valiya Gafarova, Certified Xero Adviser and Accountant at GECA Chartered Accountants. If you want to know more about tax consequences of having an Airbnb or other peer-to-peer rental feel free to get in touch with us on 0800 758 766.

Please note that this blog post should be considered as a general overview but not as a tax advice relevant to your situation.

The post Airbnb Hosting: Nine Tax Basic Rules You Need to Know appeared first on GECA Chartered Accountants.

You will never get a second chance to make a first impression. And yes, fortunately or unfortunately, a first impression is usually a long-lasting one and changing it can be a challenge. So when promoting your business, you want to make a good impression and be remembered in the right way. One of the ways to win over potential clients is through entertaining them in a social setting.

However, you need to remember that providing entertainment while promoting your business is subject to specific tax rules.

Promoting your business at events

The general rule is that promoting expenses that include entertainment are 100% deductible as long as the promotion addresses the general public, not particular people associated with the business.

For example, your company participates in a cultural festival and organises some entertainment for anybody who comes to the event. Say, people are offered some food, get involved in games and draw prizes. These expenses are fully deductible. However, if your existing business contacts, employees or somebody else has a greater opportunity to enjoy this entertainment than the general public these expenses will become only 50% deductible.

Let’s extend the example further. At this festival you distribute samples of your products or other freebies. You can deduct the 100% of the samples costs that have been given to the general public. However, if freebies are given to your employees or people associated with your business the expenses are just 50% deductible.

Promoting your business at conferences and educational courses

If the conference, educational course or other similar event is held for business purposes the deductibility of the expenses can be known using the following scheme.

Entertainment provided for the purposes of review to an external reviewer

If you are engaged in an entertainment business and you decide to render your services for free to a person who is going to review the entertainment, for income tax purposes you can deduct 100% of your actual expenses.

Say you run a tour around New Zealand. You invite a top blogger to enjoy the tour and write a review in his blog. The expenses associated with this tour including food and accommodation are 100% deductible.

Entertainment for charitable purposes

You can deduct 100% of your expenditures if your business provides entertainment for charitable purposes. The Charities Act 2005 says that ‘charitable purpose’ must fall under one or more categories:

• the relief of poverty;
• the advancement of education;
• the advancement of religion;
• other purposes beneficial to the community

For example, if you donate food to the Salvation Army the expenses are fully deductible.

Summary

When you do promotion and provide entertainment it is worth paying attention to who is going to enjoy the entertainment. If the entertainment is meant to be enjoyed by the general public more likely the expense is going to be 100% deductible.

The Author.

The article is written by Valiya Gafarova, Certified Xero Adviser and Accountant at GECA Chartered Accountants. If you want to know more about tax treatment of entertainment expenses feel free to get in touch with us on 0800 758 766.

Please note that this blog post should be considered as a general overview but not as a tax advice relevant to your situation.

The post Providing entertainment while promoting business appeared first on GECA Chartered Accountants.

New Zealand is a nation of small business owners – they are, quite literally, the reason why we have a ‘rock star’ economy.

But what’s far less publicised is that almost 50% of Kiwi businesses are family-owned – whether that’s a company that has been passed down to the next generation, a business idea sparked within a couple, or siblings working together.

If you’re running a family business, you’ll know it comes with immense benefits – your team care about the success of the company as much as you do, you understand each other far better than most colleagues and care about each other’s feelings and personal growth. But these positives also come with challenges. When things in a family business are good, they’re really, really good, but when they’re bad, all that emotional connectivity can make things very bad, very quickly. This can have huge implications not just for your business, but for your personal relationships too.

We work with a lot of family-owned businesses, and have picked up some tips along the way – here are our top five.

1. Clearly define your roles

Your family may run smoothly with people picking up the slack here and there when needed, but running your business like that is a sure way to disaster. By defining your roles, you’ll be clear on who’s in charge of what decisions. This helps with accountability when things go wrong and avoids the ‘death by committee’ phenomenon, which can slow down decision making. You’ll also reduce the risk of conflict caused by family co-workers giving unwanted opinions and ‘helpful hints’.

Start by looking at your team’s experience and expertise – who would be best to serve in which roles? Since it’s your business, you also have the luxury of considering what each of you would like to do, too. If one has more customer service experience, but the other enjoys it more, often it’s better in the long run to invest in upskilling, so everyone loves what they’re doing.

2. Set aside time to talk

You’re talking all day, every day, but it’s important to set aside times for formal discussions too. These are moments when problems can be raised and resolved, a chance for the whole team to focus on their shared goals and set some action points.

You can do this within your group, but it’s often extremely useful to have a third party to help guide your conversations, especially if your difficult conversations tend to descend into bickering. This could be a mediation session, or working with a business coach. You may find these formal discussions emotionally draining at the time, but the ongoing effects will be better communication, a team that’s working in unison, and a family who still love one another!

3. Create a shareholders’ or operating agreement

If you’re running as a limited liability company, you should create an operating or shareholders’ agreement. Family businesses often run on good faith – you trust each other to do the right thing. But as time moves on, ‘the right thing’ can mean different things to different people.

A shareholders’ agreement puts in writing decisions, such as what percentage of the company each person owns, and each owner’s rights and responsibilities. It should also make provisions for ‘the worst’ – what happens if someone dies or if the personal relationship breaks down?

4. Take a family-first approach

You can make any number of businesses, but you will only ever have one family. If things break down, try to err on the side of protecting your family and your relationships over the health of the business.

This rule applies on a day-to-day level too. It’s so easy to let work bleed into family time, to discuss a project over a romantic dinner, or to spend a weekend ‘family day’ at the office doing your accounts. Set times for business, and enforce hard cut-off for after hours. This can be harder than it sounds – especially when you’re feeling excited about work. Try simple techniques, such as leaving your phone and other devices out of your living areas, and make notes for later rather than raising issues immediately.

5. Work with family business specialists

You’ll know first-hand that family businesses are their own special breed. Introducing businesses into the family and the emotions that come with doing so, can make things incredibly complex. There are also risks that come with having all your family’s financial eggs in one basket.

Working with coaches, accountants, lawyers and other advisors who specialise in family business will help you turn your situation into a strength. At GECA we’ve been working with family businesses for years. Our approach helps clients achieve their goals, while preserving family relationships. We also work to help overcome the challenges that can prevent a family business from reaching its full potential. To read more about how we work with family businesses, click here.

Building your family business

Done well, a family business comes with benefits that can help it far outrun its competition. The key is to have expectations, planning and operational systems that protect feelings and relationships. Work within that structure and watch your family business thrive.

 At GECA we specialise in helping owners of family businesses grow revenues, increase profits and improve cashflow. Contact us for a confidential, no obligation discussion of your requirements

The post Ensure Family business success with these five tips appeared first on GECA Chartered Accountants.

So what are the advantages of outsourcing:

• Most importantly, by outsourcing your non-core activities such as bookkeeping or IT support, you can spend more time focusing on your core business processes to improve your business.
• Access to professional, expert and high-quality services that ensures business activities are completed accurately and efficiently to set timeframes.
• Outsourcing provides a scalable solution that grows as your business grows allowing you to streamline your business operations.
•  Save on internal employment costs and management time
• Free up the cash flow of your company with a resource that can be cut back when needed – no more paying for Christmas holidays.

To begin outsourcing, identify those non-core activities which could be moved to an outsource provider. Start with the obvious ones, such as IT, HR and Accounting. Then decide on a provider.

The key to making outsourcing work, and getting maximum benefit, is partnering with the right service provider. There are many ways to do this including local and offshore solutions which will be covered in next week’s blog.

If you need help implementing outsourcing in your business to save money and time, call Giles now on 0800 758 766.

by Giles Ellis, Director at GECA Chartered Accountants, providers of affordable expertise with personalised service.

The post 5 Reasons to Outsource appeared first on GECA Chartered Accountants.

Last week a colleague sent me a fascinating article on how the future may look, the full copy of which can be found here (it’s a short read and I thoroughly recommend it). One fact really stood out for me from a personal and professional point of view.

Artificial Intelligence: Computers are becoming become exponentially better in understanding the world. In the US, young lawyers can’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain.  Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses. In 2030, computers will become more intelligent than humans.

And while we accountants think we are already dealing with changes to our industry with recent developments like cloud based software, what lies ahead will completely disrupt the traditional professional advisory services model. The role of an expert adviser, providing costly advice and analysis based on knowledge and experience to a limited number of clients will more than likely be replaced by an app on your phone with the intuition to know what the questions are and the processing power and data storage capacity to provide better advice than a human adviser. While this will democratise business advice and provide a level playing field for small business to complete with large business, it means I need to reinvent my business model to stay relevant. And I need to start doing something about it now because the speed of change is getting faster every year.

However, I still need to maintain profits and pay the bills whilst changing my business model and achieving this will be a critical challenge for myself and many other businesses – even the world’s biggest company Apple is facing the very same issue (read the article).

To do this, I will follow the path adopted by businesses in other industries impacted by technological change, such as the postal service, by firstly understanding and acknowledging the impact on my industry. Croxley is a global wholesaler of stationery and related products with Kiwi origins. While they know their postal mail business faces an ever decreasing market, they are determined to be the market leader of this space and make money until the last letter is sent.

Having understood the impact on my industry, I then need to decide how to position my business to adapt to the change.  Typically the technology disruption begins with the adviser acting as an technological interpreter for the client, keeping up to date with changes and acting as an interface between the new technology and the client. However, in time the technology becomes so simple there is no need for an interpreter and my role as a business adviser will change again.

So whilst computers will eventually have the capability to replace me as a pure expert adviser, this will take a number of years and the interim step is for me to embrace the new technology as a tool in my business to improve our offering as business advisers.

There is no doubt the value of compliance work, that can increasingly be done by software, is diminishing and those traditional accountants who try to maintain high margins with intensive labour rates will see clients move to business advisers who provide real value with commercial advice that leverages the software tools at their disposal. A good example of this is the Xero Business Performance Dashboard. This powerful tool is free for all Xero ledgers and yet is rarely used, however, a good business adviser can set up a simple dashboard for your business and provide real time advice about those numbers that can help you grow your business and your cashflow. A much better way to spend your money than getting a pretty set of accounts done at great expense that are used by no one.

And as the computing power increases over the next five years, I will need to refocus our offering more intensively on the empathic side of being a business adviser, providing the coaching and mentoring services that rely more heavily on a human interaction (although this will no doubt be taken over by computers as well in due course – look at how good Facebook’s facial recognition software is). Which will require upskilling my team of advisers to ensure they have the skills and experience to remain relevant to our clients in this brave new world.

Wish me luck! And if you are in an industry facing significant disruption and need an adviser who understand these challenges and can help you with strategies to stay profitable, call me now on 0800 758 766.

Giles Ellis (Chartered Accountant & Business Adviser)

The post Prepare Yourself – Change is Here appeared first on GECA Chartered Accountants.

“In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.
Within just a few years, their business model disappeared and they went bankrupt. What happened to Kodak will happen in a lot of industries in the next 10 years – and most people don’t see it coming. Did you think in 1998 that 3 years later you would never take photographs on paper film again? Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So, as with all exponential technologies, it was a disappointment for a long time, before it became way superior and became mainstream in only a few short years. It will now happen with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs. Welcome to the 4th Industrial Revolution. Welcome to the Exponential Age.

Software will disrupt most traditional industries in the next 5-10 years. Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world. Airbnb is now the biggest hotel company in the world, although they don’t own any properties.

Artificial Intelligence: Computers become exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected. In the US, young lawyers can’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain. Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses. Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.

Autonomous cars: In 2018 the first self driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our grandkids will never get a driver’s license and will never own a car. It will change the cities, because we will need 90-95% less cars for that. We can transform former parking space into parks.1.2 million people die each year in car accidents worldwide. We now have one accident every 100,000km, with autonomous driving that will drop to one accident in 10 million km. That will save a million lives each year. Most car companies might become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels. I spoke to a lot of engineers from Volkswagen and Audi; they are completely terrified of Tesla.

Insurance companies will have massive trouble because without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear. Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighbourhood. Electric cars will become mainstream until 2020. Cities will be less noisy because all cars will run on electric. Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can only now see the impact. Last year, more solar energy was installed worldwide than fossil. The price for solar will drop so much that all coal companies will be out of business by 2025. With cheap electricity comes cheap and abundant water. Desalination now only needs 2kWh per cubic meter. We don’t have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.

Health: The Tricorder X price will be announced this year. There will be companies who will build a medical device (called the “Tricorder” from Star Trek) that works with your phone, which takes your retina scan, you blood sample and you breathe into it. It then analyses 54 biomarkers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medicine, nearly for free.

3D printing: The price of the cheapest 3D printer came down from 18,000$ to 400$ within 10 years. In the same time, it became 100 times faster. All major shoe companies started 3D printing shoes. Spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past. At the end of this year, new smartphones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home. In China, they already 3D printed a complete 6-storey office building. By 2027, 10% of everything that’s being produced will be 3D printed.

Business opportunities: If you think of a niche you want to go in, ask yourself: “in the future, do you think we will have that?” and if the answer is yes, how can you make that happen sooner? If it doesn’t work with your phone, forget the idea. And any idea designed for success in the 20th century is doomed in to failure in the 21st century.

Work: 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a small time.

Agriculture: There will be a 100$ agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all days on their fields. Aeroponics will need much less water. The first petri dish produced veal is now available and will be cheaper than cow produced veal in 2018. Right now, 30% of all agricultural surfaces are used for cows. Imagine if we don’t need that space anymore. There are several start-ups who will bring insect protein to the market shortly. It contains more protein than meat. It will be labelled as “alternative protein source” (because most people still reject the idea of eating insects).

There is an app called “moodies” which can already tell in which mood you are. Until 2020 there will be apps that can tell by your facial expressions if you are lying. Imagine a political debate where it’s being displayed when they are telling the truth and when not.

Bitcoin will become mainstream this year and might even become the default reserve currency.

Longevity: Right now, the average life span increases by 3 months per year. Four years ago, the life span used to be 79 years, now it’s 80 years. The increase itself is increasing and by 2036, there will be more than one year increase per year. So we all might live for a long long time, probably way more than 100 years.

James Smith“

The post The Changing Face of the Future appeared first on GECA Chartered Accountants.

Andy Smith is the CEO and founder of Construct Brands Limited, manufacturers of the Wolf Energy chocolate bar, a revolutionary new confectionary product that was launched into the New Zealand market in January this year.  Andy talks about his experience working with Giles Ellis and GECA Chartered Accountants.

When it came to choosing an accountant business adviser to help him set up his confectionery business, Andy knew what he wanted.

I had a great idea for a new chocolate bar called Wolf Energy which was unlike anything currently on the market and I needed an adviser to help me with all aspects of setting up a new business from raising capital to on-going support and advice to help the business grow. I saw my relationship with my accountant as a key business partnership and I wanted someone who was not just technically strong but someone with an extensive commercial background who could advise on all aspects of the business, not just the finances.

What did you need help with?

Initially it was capital. New products get a six week ranging window from major stockists to prove demand for their product and to capitalise on this opportunity I needed capital for the initial marketing and promotion of the Wolf Energy bar as well as funding the initial stock shipments.

To do this, Giles and I prepared a Wolf Energy bar business plan with financial projections. Giles then led a successful round of investment from the Icehouse Angels and the NZ Venture Fund which raised more than $450k of capital. To do this, Giles acted as Lead Investor and is a Director of Construct Brands.

What happened after that?

Like any start up, I was working a hundred hours a week and the one thing I knew I had to stay on top of was my tax obligation which is why I went with a GECA Plus One plan.  The great thing about a fixed fee plan that covers all my accounting and tax requirements is knowing it’s all getting done for a low monthly fee. Meanwhile, I can get on with what I do best, selling chocolate bars and let the GECA team take care of the numbers.

What systems are you using?

Our PlusOne fixed fee accounting plan includes a Xero subscription and an initial training session to ensure we were able to reconcile our numbers from day 1. And as it includes phone and email support, anytime we have a query we can quickly get an answer.  And as our stock management requirements become more complex, with GECA’s support, we can expand Xero by adding on an inventory management system like Unleashed. 

How is the business going?

Brilliantly! We’re getting great feedback from customers and we are tracking ahead of budget.  However, rapid growth creates its own issues and even though I formally meet with Giles monthly, I speak to him regularly to bounce ideas off him and talk through any problems.

How did you find out about GECA Chartered Accountants?

I met with several accounting firms but was unable to find anyone who I felt had the commercial experience to help me get the business where it needed to be. A friend recommended Giles from GECA to me and it was clear from our initial meeting that Giles and his team had the services and advice I needed to get the business going.

What would you say about using GECA Chartered Accountants as your business advisers?

It’s been great. Giles and his team have been there from day 1 supporting me. They are able to provide the right resource when it’s needed and nothing has been too hard or too difficult.  Very professional and smart as you would expect being chartered accountants, but they are also very friendly and we enjoy working with them all. We wouldn’t be enjoying the success we are having today if not for Giles and his team at GECA.

What’s next for Construct Brands?

New Zealand was always a test bed for Wolf Energy bar which we see as a product with global appeal and success of the product locally has already invited interest in further investment to fund offshore expansion.  Giles is preparing the business case for the second fundraising which we expect to complete in June this year.  Try yours now!

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