In this blog, we are sharing the story of how we partnered with one of our clients to achieve a genuine turnaround in his business – and what we both needed to do to achieve it. If you are feeling stuck in a rut with your business, then this is a must-read.

Our client is a small mechanic business, servicing agricultural vehicles and machinery. They’d been in business for many years – but the business was struggling.

There were many challenges impacting the business, but the accountant they used wasn’t helping. In fact – they were making things worse.

The problems included:

• Late lodgements with the tax office for BAS, PAYG, and tax returns.
• Not knowing where anything was up to – books, reconciliations, reports, financial statements. They would just appear when the accountant got them done.
• No communication or questions. He would send in receipts and paperwork but never even be asked one question about his expenses.
• No compliance. The client was behind with all of his regulatory requirements, including super.

Basically, the accountant was doing the bare minimum to keep the financial records somewhat up to date without engaging with the client at all. They didn’t attempt to understand the business.

In the meantime, profits were going down, and the ATO was chasing the owner down for missing lodgements and late payments.

Profitability was decreasing, and costs were going up. It’s possible the business would have stopped making money and been in serious financial distress.

At some point, his staff would have asked for payslips to get a loan and realised they should be getting them every pay run. It is actually illegal not to provide a payslip for each payrun.

The team would have discovered they were not paid their super. The owner would have asked the old accountant why – and they would have shrugged their shoulders, leaving the business non-compliant and with a massive debt to pay.

The ATO would have eventually come knocking to seek the missing returns and to conduct an audit – and the resulting bill probably would have left the owner of the business bankrupt.

We have a plan in place that we are supporting the business to implement.

• They are up to date with all employer obligations – payslips are going out, super is being paid, PAYG and payroll tax are being lodged on time.
• The BAS and Tax Returns are up to date, and with our support, the business and owner have returned to a good relationship with the ATO.
• The business is financially tracking out of the red. The business owner now has a clear path as to where they want to take it and its possible they will achieve the best profitability the business will have seen.

There are three key things we put in place to help address the problems they were having:

Transparency – We have really clear communication so this client knows what’s going on. When he first reviewed his financial reports with us, he found a number of errors, such as donations coded as business expenses; business costs coded to personal expenses. Because the previous accountant didn’t ask him any questions, they had a standardised approach and made their own assumptions, never communicating those to the client.

Now the client gets a fortnightly report to check so he knows what’s going through his books and how it’s being coded. He can query things, and we can ask him questions without taking up much time.

Compliant and on time – we’re getting them up to date with super and tax, organising payment plans to ensure cashflow is still well managed and the business can thrive.

Business improvement – through our analysis of his financial performance, we began to uncover issues with profitability, which were a big red flag for productivity. We’re now working with the client and his team on improving productivity, using time-tracking software to see exactly how long things take – and ensure they’re being priced accordingly. Labour costs are fixed, and invoicing is assumed and estimated. Now they’re using software that allows the team to log on to a job, record the time they spend and link it straight to their payroll and invoices. It creates accountability for the team and clarity for the client.

This isn’t what every client needs. It’s a tailored solution to their unique problems.

This is the difference we make at JH & Co. We help solve the financial problems that consume your time and devastate your profit.

If you need a genuine partner to support you and your business, get in touch – we’d love to chat.

Call us on 5831 1466 or email admin@jhco.com.au and we’ll organise a time for a confidential chat.