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Author Archive Michael Pendred

Standalone business software vs ERP

Single Integrated Business Management Solution vs Dedicated Standalone Software

There are hundreds of different types of business management software applications on the market, and it can be difficult to determine which is right for your particular business. These software programs can be divided into two main categories: 1) dedicated standalone software (software with a single purpose like accounting or CRM etc.); and 2) single integrated business management software (aka ERP software, which integrates all of, or the majority of, the functions covered by various standalone software solutions).

Here we will discuss the benefits and drawbacks of each option and how they can be applied to your business.

Standalone business software vs ERP

The struggle of multiple standalone software packages. Image Credit

Dedicated Standalone Software

Dedicated standalone software applications are those that are designed to address a specific single aspect of business operations, such as accounting, human resources, customer relationship management (CRM) etc. Each application is dedicated to just one area of your business, so it delivers focused, highly detailed reports about that segment. A variety of specific functions allow you to manipulate the data as needed to obtain the information you are looking for. Because these programs focus on a specific department, it is easy to find the data you need without having to sift through information from other areas or struggle with reports that don’t tell you exactly what you need to know. Standalone software often offers more in depth reporting capabilities and advanced functions than you would find in an integrated ERP solution.

However, standalone software programs do have their drawbacks. They are designed to be used on their own and often do not integrate well with other standalone software products. This can make it difficult to compare and correlate data across different departments (for example comparing invoicing to accounts paid, or checking the status of orders against client communication in the CRM), as you may need to export data to another software program or to Excel to manipulate and align data from various sources yourself. Not only is this time consuming but it also leaves a wide-open gap for human error.

Single Business Management Solutions

With a single business management solution, the data for all of the departments within your business is all stored in one program. The different integrated aspects, add-ons and plugins of the program are all designed to work together seamlessly, so it is easy to generate reports and comparisons that encompass the entire workings of your organisation. The data in the reports is automatically generated in a way that is easy to understand and gives a full overview of the state of the business at a particular point in time or over a specified time period. Employees from various departments can access information from other departments without the need for complicated conversions and data manipulation.

The main drawback of using a single business management solution is that the reporting and functionality in each area of the software does not go into as much detail as with a standalone software program. However, it’s equally important to note that the functions and reporting features offered in integrated software generally tend to be satisfactory to meet the day-to-day needs of the majority of businesses, and those advanced functions found in standalone software would likely go unused for most if not all of the year.

Which is better? The verdict is…

For a business with a heavy focus on a specific area, like sales or finance, a dedicated standalone software application will provide the detail necessary for that specific department. On the other hand, a business with a more general outlook will appreciate the simplicity and ease of use that a single business management solution provides. The majority of businesses fall into this second category, so single business management solutions offer them the functions and reports they need without weighing them down with too many extraneous functions.

At Horizon Business Systems we offer MYOB Exo and MYOB Advanced software, which is one of the leading integrated business management solutions used by Australian companies. MYOB can incorporate many functions, including finance, payroll, customer relationship management, point of sale, job costing and many others. We can also custom develop additional add-ons for MYOB Exo to integrate any other departments or functions required by your business that are not covered in the current software range. Get in touch with us today to find out more.

Payroll 101: Paying Staff and Australian Payroll Compliance Basics

Australian Dollars

As your business grows and you find the need to take on more employees to help you keep up, one of the most important skills you need to learn is ensuring you are making the correct payroll payments and remaining in compliance with the requirements of Australian Revenue Offices. One of the best ways to do this is to get a good accounting software program (like MYOB EXO with the EXO Payroll module). With the help of your accounting system, and these tips below you’ll be able to keep your employees and the ATO happy!

Paying Payroll Taxes

Payroll tax is a state based tax that is calculated on the wages you pay to your employees. If you expect your payroll to be higher than $550,000 annually, you will need to check registration requirements for your state. Your company should be familiar with Australian payroll requirements.

Pay Periods

Pay can be done weekly, fortnightly or monthly. You will calculate your employee wages and deductions. Once that is completed you can issue payroll checks.

Australia’s Tax System

Payroll uses a pay-as-you-go income tax system, which allows you to withhold taxes from your employees. Australia has a progressive tax rate that is based on income and hours worked. Different states and territories have different rates.

Payroll Tax

When your employee payments exceed the threshold for your state or territory your business is required to pay payroll taxes for salaries, wages, commissions, bonuses and allowances. Each state and territory have their own thresholds and tax rates.

Industrial Relations System

A variety of industrial regulations are established by the Australian Fair Work Act, which address the maximum number of hours an employee can work, working conditions, flexible working arrangements, vacation time, parental leave and more.

Workers Compensation Insurance

As an employer in Australia, all states and territories require you to carry workers compensation insurance for your employees. The premiums paid are based on a number of factors such as remuneration, industry type and claims history.

Superannuation

This is Australia’s retirement and pension program, and as an employer you are required to contribute a fixed 9 percent of your employee wages.

Fringe Benefits Tax

The provision of certain non-cash benefits, such as private health insurance or a company car, require your company to pay fringe benefit taxes. You must report on your PAYG payment summary any benefit that has a value of $2,000 or more.

Christmas tax and accounting

Christmas Accounting Considerations to Keep in Mind

Christmas tax and accounting

As we approach the end of 2015 our attention turns to rewarding our staff to show them that their hard work and dedication has been noticed and appreciated.

There are a variety of ways that employers can reward staff Christmas parties, bonuses, gifts and leave. These are great ways of boosting the morale of staff but they can be a headache when it comes to entering them into your accounting software system as you try to work out what is tax deductible and what isn’t.

Christmas Bonuses

A Christmas bonus is morale boosting for employees – especially if it is linked to their work performance over the year.

Of course you’ll need to check the books to make sure the bonus structure doesn’t break the bank, as it is important that the yearly bonus system you choose to adopt is fair to your employees and covers you and your business if you go through a challenging period. Choosing a fair system that rewards the most hardworking members of your workforce will help you to keep your best members of staff motivated and encourage them to stay at your company.

Christmas Party

When your staff have been working hard for you all year it can be nice to reward them with an office Christmas party. It allows staff to socialise, let their hair down and can be very morale boosting.

An important consideration, however, is that in the past the office Christmas party was tax deductible, but it no longer covers food, drink and entertainment.

You will find yourself having to pay Entertainment Fringe Benefits Tax if the cost per person is greater than $300 for the office Christmas party, so keep this in mind when setting the bar tab or choosing the venue/restaurant.

Christmas Gifts

Tax deductable Christmas gifts for staff

While employee entertainment in no longer tax-deducible, non-entertainment gifts up to the value of $300 per employee are still fully tax deductible and won’t incur Fringe Benefit Tax, so gifts are becoming an increasingly popular way to treat staff at Christmas.

Popular non-entertainment gift options include multi-store gift cards and Christmas food hampers. Staff love these kinds of useful gifts and the bonus for you is they fall under the $300 exemption from Entertainment Fringe Benefits tax.

Annual Leave

As the New Year approaches it’s important to keep track of your employees’ annual leave accrual and keep on top of each situation. You must allow employees to carry over their accrued annual leave to the next year, but there are two situations in which you can direct employees to take annual leave:

  1. If your business shuts down over Christmas you can direct all staff to take necessary annual leave to cover non-public holidays
  2. If they have accrued excess annual leave. ‘Excess’ annual leave differs from industry to industry and you can check out the excess in your industry here.

Keeping on top of excess leave is important in order to mitigate the risk that employees with excess leave will resign, leaving you having to pay out a large sum of accrued leave pay.

A good business management and accounting system like MYOB Exo allows you to integrate accounting and payroll functions to make this task much simpler.

Transitioning Smoothly from a Small to Medium Business

Transitioning from a small to a medium business is a process that leads many start-ups to failure. As businesses grow organically, they begin to outgrow certain elements of their business, such as staff numbers, premises, business processes, software/storage, accounting practices, stock management and more. There are many important aspects that a business owner needs to consider when making this transition, and the process will inevitably include many challenges along the way.

But the transition is possible when you make sure to apply the following easy steps:

1. Start Using an ERP

Horizon Pic

Of course we would put this one first on the list, but the power of business management software to track your business processes can’t be understated when it comes to smoothly and effectively growing your business without compromising service or product quality or profitability.

Business management software, also known as an ERP system, integrates all business management functions into one convenient platform that gives you ultimate flexibility and more control. ERP software includes essential functions like financial planning, inventory/materials management, payroll, order processing, invoicing, human resources, and so much more.

One of the biggest benefits of an ERP system is the ability to see what is going on with your business during the transitioning process in real time. Since transitioning often involves a higher volume of business processes, an ERP can be very handy, as it provides solid operational backbone for your company.

To list just a few of the benefits of using an ERP:

  • Streamlined business processes with a single integrated system
  • Improved customer satisfaction
  • Improved workflow and productivity
  • Reduced redundant data entry

2. Think about the Wilson EOQ Model for Better Inventory Management

Managing stock levels

When it comes to inventory management, many growing companies find themselves unable to determine the right stock level. Since the demand is higher now, it can be difficult to decide how much extra stock you need. While too much stock can lead to bigger expenses, too little stock may greatly impact customer satisfaction and cash flow.

Devised by Ford W. Harrison and applied by R. H. Wilson, the Wilson EOQ formula can help you effectively determine the optimal order size for a given unit of inventory. This formula represents the number of units that your company should add to inventory with each order to minimise the total costs of inventory (order costs, shortage costs, etc). Usually, the EOQ formula is part of a continuous review system that includes consistent monitoring of the inventory level. When inventory level reaches a specific reorder point, fixed quantity is ordered.

In essence, EOQ allows for accurate calculation of the appropriate reorder point and the optimal reorder quantity in order to ensure replenishment of inventory with no shortages. Variables in this formula are:

EOQ FormulaC = Carrying cost per unit per year

F = Fixed cost per order

D = Demand in units per year

3. Consider Financial Implications

Australian Dollars

As your business is growing from small to large, you need to take into account a number of financial implications and higher costs for staff, production and facilities. To overcome these issues, growing companies need to collect all outstanding debts quickly, negotiate to decrease supplier costs since you will be buying larger quantities and reduce costs by eliminating unnecessary inventory overhead.

Also, make sure to keep an eye on key performance indicators such as the costs of acquiring a customer as well as the lifetime value of a customer. When you transition from a small to a mid-sized or even large company, you quickly add customers, so if you’re spending a lot to acquire a customer while operating at a loss, you’re in trouble.

Lease a Larger Space

Lease Agreement

It’s not uncommon to see small businesses outgrowing their existing space. If your company is growing very fast, consider a short-term lease, or an executive suite, which may cost more per square foot, but may also offer flexibility for upsizing and downsizing. Both options will help you determine just how much space your business really needs after you go through the growing period.

If your business is growing and you’re finding it increasingly difficult to keep track of all elements of the business and how they interconnect we can help you. Contact us today for a consultation to find out if MYOB EXO has the power to help you manage your business growth without compromising your service or profitability.

 

The “Goldilocks” principle: Which ERP size is right for your business?

goldilocks

We know that growing companies need business management software that can be adapted to the way you do business, rather than the other way around.   So keep in mind Goldilocks and the three bears product offerings as ERP’s can simply be viewed as too hot (big), too cold (small)… and look for one that’s “just right” for you!

Don’t always think that the biggest (and most expensive) will always be the best for you.  As a growing business, you need to make every dollar in the investment in your ERP system count.  Often the large-scale ERP’s are an over-investment in the time, money and needs of your business and an under-investment in the system’s flexibility to actually fit your business.

Many large-scale ERP software solutions discourage or refuse to alter programming to allow customisation to fit your business, so you could find that your very expensive solution does not work with how your company actually does business.  It’s also worth noting that large scale ERP’s are not as quick to adapt to new technologies (think mobile/social trends) as mid sized versions.  This is simply because large corporations/government entities that use the “big system ERPs” are rarely the type to be at the forefront of changing technologies as their own internal processes are more regimented.

However it IS well worth obtaining your ERP product from an established organisation so that you can be assured that the product will continue to be developed and supported, or that the company won’t just one day ‘disappear’ into a puff of smoke (or cloud!).

So are we back to basic software then?  Well, no – you are most likely reading this as you’ve reached the end of the capabilities of a smaller ‘off the shelf’ version which have not been designed to fit the needs of a growing company or provide for the complexities of mid to large sized enterprises.  You would also be aware that customisation of smaller products is not worth the investment as there will still be gaps in the product’s capabilities and reporting.

Therefore, what is the solution if:

  • You want to work with a trusted and established ERP system provider
  • Out-of-the-box systems don’t fit in with your business processes
  • Customisation is too expensive

Your solution:  MYOB EXO addresses all of these issues

As an ERP software solution, MYOB EXO offers the security of a well known software provider that is a world leader with continued product development and an established network of implementation and support through it’s partners.  However, as a mid to large sized product offering, MYOB EXO is still flexible enough to adapt to new market trends (mobile / social etc) and is customisable to suit individual business processes and needs.

MYOB EXO the perfect solution.

  • MYOB EXO has the been developed by MYOB – a long established world leader player in the ERP market
  • MYOB EXO has an established network of highly accredited, locally based partners for implementation, training and ongoing support.  A must if you would prefer your staff to be working rather than constantly searching for ‘help desk’ answers to system issues in online forums!
  • EXO is highly customisable and integrates to almost any business set up or processes.  From manufacturing to retail, mining to service-based; EXO is a proven management tool across every industry.
  • Customisation is possible and can be deployed in weeks.  Partners, such as Western Australia’s Horizon Business Systems, have an inhouse Development Division for development and customisation to individual business processes or existing systems – so if you can imagine it (and they have yet to build it), it can be developed for you!
  • It costs a fraction of other big name ERP systems like SAP / Oracle but offers high level management functionality with a higher degree of flexibility.

One of the best parts about MYOB EXO is that you can add functionality with plug-ins as your business changes and grows. Each module within the software has a different task – whether it’s payroll, invoicing, tracking customer relationships, managing stock levels, etc.  The software is modulative so you only pay for what you need.

For more information and to see MYOB EXO in action, contact Horizon Business Systems today.