Paintback's 5th Anniversary Collection Records SMASHED!
FINDING MONEY within your business
Top Tips from a Commercial Lawyer
5 mistakes business owners make that can derail their business
Terminate or Performance Manage
Set clear expectations and timeframes.
www.aussiepaintersnetwork.com.au
From the
Editor
CONTRIBUTORS
Hey Everyone,
• Anthony Igra
Welcome to the 104th Edition of the Aussie Painting Contractor Magazine.
• Helen Kay
Its great to see the Members of APN taking up the offer with Bunnings and the available discounts. Due to the large uptake of Membership, we are behind on getting the Membership packs out to you. Please be patient as we have not forgotten you. Remember it is only $150 per annum inc. GST, and its Tax deductable. This month I would like to welcome Branko , David and Sabrina to the team. Branko came from a Manufacturers State Managers Position of 8 years. He is the go-to for Membership and Marketing. He has already started talking with Members and working with them one on one to help them understand their business better. Reach out if you need some assistance.
• Jinjing Li • Jim Baker • John Hawkins • Leo Babauta • Michael James Walsh • Monroe Porter • Riyana (Mira) Miranti
David has come onboard as a Trainer to look after the Employers and Apprentices. He has been involved in the industry since leaving school. Reach out and say hi and welcome him when he catches up with you.
• Robert Bauman
Sabrina has joined us and is working hard in the office learning our systems. If you call, she will likely be the one on the other end of the phone. Please make her feel welcome.
• Vanessa Petch
The 2nd CSQ Trade Ready Program has already started with the participants all turning up early for work and going hard all day. If you are interested in talking to someone about the program, call us and Jo will be able to assist you.
Till the next issue, Happy Painting!! Nigel Gorman
nigel@aussiepaintersnetwork.com.au
07 3555 8010
• Sandra Price
• Yogi Vidyattama EDITOR Nigel Gorman GRAPHIC DESIGNER J. Anne Delgado
Advertise with us... 1800 355 344 07 3555 8010 info@aussiepaintersnetwork.com.au www.aussiepaintingcontractor.com
Contents 06
A WELL LIVED LIFE OF PURPOSE
09
Subcontractor Insurance REQUIREMENTS
12
MY TIPS FOR Business Owners
14
Are Your Beliefs Hurting Your Business?
18 22
S erve others, make their lives better in some small way...
AUSTRALIANS HELP PAINT DISPOSAL SCHEME SMASH COLLECTION RECORDS Top Tips from a Commercial Lawyer The 5 mistakes business owners make that canderail their business and what to do to prevent it.
29
Why networking is like mortar for
Building Women’s Construction Careers
34
Your Keys to the 2021/22 FEDERAL BUDGET
38
FINDING MONEY within your business
42
Personality
44
Terminate or Performance Manage
46
Due Dates For Payment Which one will work best for you?
48
The Low and Middle Income Tax Offset has been extended yet again
52 53
Tip for running a successful business
It delivers help neither when nor where it’s needed
Industry Idiots Important Contacts
Opinions and viewpoints expressed in the Aussie Painting Contractor Magazine do not necessarily represent those of the editor, staff or publisher or any Aussie Painters Network’s staff or related parties. The publisher, Aussie Painters Network and Aussie Painting Contractor Magazine personnel are not liable for any mistake, misprint or omission. Information contained in the Aussie Painting Contractor Magazine is intended to inform and illustrate and should not be taken as financial, legal or accounting advice. You should seek professional advice before making business related decisions. We are not liable for any losses you may incur directly or indirectly as a result of reading Aussie Painting Contractor Magazine. Reproduction of any material or contents of the magazine without written permission from the publisher is strictly prohibited.
A WELL LIVED LIFE OF PURPOSE Most of the people I know and work with want a life of meaning and purpose, not a life where we just get by … A well lived life, that feels meaningful. But this isn’t taught in schools, and most of us feel completely unsure of how to move towards this. I’m not going to fully answer how to live a life of purpose in this article … but I’d love to talk about how to move in that direction.
Commitment
The first thing you might consider is committing yourself to finding a life of purpose. How important is that to you? Are you willing to move into uncertainty for this, or is comfort and safety more important to you at the moment? To commit, you have to commit in the gut. To tell yourself that this is important enough to devote yourself to, to dedicate time, to practice with the uncdertainty. Commit to yourself, on paper. Then to others.
Exploration
The second thing to consder is embarking on an adventure of exploring your purpose, if you don’t already have a good sense of it. It’s not as simple as asking, “What would I like to do?” or doing a web search for the answer. You have to explore it, and bringing a sense of adventure might be just the right approach. Here’s how I usually recommend exploring purpose: Make a list of things that you think might be meaningful to you — helping children in need, helping people reduce stress, traveling to help communities in need, etc. Put anything on the list that’s even
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remotely possible or interesting, don’t limit yourself here. Hint: I’ve found that the most meaningful things are when you’re helping other people with something you care about. Ask yourself which 3-5 of these would be most meaningful. If one really stands out — maybe it’s the thing you’ve been wanting to do for years — then that’s where to start. But maybe you’re not sure, so pick 3-5. This is your short list. Of those, let your gut choose the top one. If you absolutely don’t know, either choose randomly, or ask a friend. This isn’t your final answer, but just the one you’re going to start with. Choose a 2-week version of this top possibility. For example, if you want to help people with stress, could you help 1 person over video calls and email for 2 weeks? This is the mini-version of your possible purpose. Explore this for 2 weeks, really pouring yourself into it. If this really resonates, make a one-month version of it and continue to explore. If it doesn’t, pick the next thing on your short list. Do a 2-week version of that. Repeat until you find something to explore for a month or longer. This is the iterative method of purpose exploration. You try a mini-version of something for a couple weeks. Maybe longer. And keep doing this until you hit on something. Notice if you feel like avoiding this process, or a part of the process. This is your uncertainty showing up as fear. That’s completely OK, but you might ask whether you’d like to get support with that uncertainty, so you don’t have to be stopped.
A Well Lived Life
There are an infinite number of possibilities for living a well lived life. You might meditate on a mountain for years, or enjoy the simple things. You might enjoy time with loved ones, or explore culinary pleasures. You might read all day, or listen to music. You might get your work done, and come home satisfied from a job well done. For me, one of the biggest components of a well lived life — other than loved ones and a profound appreciation of life — is doing something that feels meaningful. And that has usually been helping others with something that’s meaningful to them. If you can serve others, make their lives better in some small way (or a big way) … it feels incredibly meaningful. Much more than simply traveling or building up wealth or enjoying good food or having fun. Those are all great, but they don’t feel as meaningful to me.
If you can hit on something like that, that feels meaningful … then a well lived life becomes simple: Spend quality time with loved ones. Take care of yourself. Find profound appreciation for the joy of life. And serve others in a meaningful way. It’s simple, but not always easy. And that makes it even richer. --------------------------------------------------------------------
Leo Babauta
a successful ‘simplicity’ blogger and author from California, the creator of top 25 Blog
ZEN HABITS
2021 June Issue | 7
Subcontractor Insurance
REQUIREMENTS In the construction industry it’s very common for workers to operate as subcontractors, and it’s important to know your insurance requirements. In this guide we’ll be looking at a range of common questions relating to subcontractor insurance requirements within the Australian building industry: • Do I need insurance as a subcontractor? • What insurance do you need as a subcontractor? • Do subcontractor insurance requirements vary by state? • Does it matter if I’m a sole trader or company? • How much does subcontractor’s insurance cost? • How much public liability do subcontractors require? • Are subcontractors covered by my insurance? If you have any questions which are not covered by this guide, please contact us. We’ve helped thousands of subcontractors with their insurance requirements and would love to help you too. Do I need insurance as a subcontractor? As a subcontractor you are running your own business, even if it’s just you as a sole trader. This means you are largely responsible for your own actions, and if something goes wrong, you could be financially exposed. For this reason there are a number of different insurance types required by subcontractors in Australia. What insurance do you need as a subcontractor? There are two main forms of insurance required by
subcontractors. These are public liability insurance and income protection insurance. Depending on your business activities you may also require professional indemnity insurance, but this is less common for most typical building trades.
Public Liability Insurance The most commonly required form of subcontractor insurance is public liability. Public liability insurance will respond in the event that you cause property damage or personal injury to a third party. A third party could be your client or a member of the general public. Minor claims for public liability generally relate to property damage. For example you might be working in a roof and put your foot through the ceiling. As a subbie you’d be responsible for the cost of repairing and repainting the ceiling. Larger claims typically relate to personal injury, and climb into the hundreds of thousands (or even millions) if you cause serious injury or death to another person as a result of your negligence. It’s important to remember that you won’t always be covered by the main contractor’s insurance If you are the one found to have been negligent, you are the one who will be held financially responsible. Even if the company engaging your services does not require that you hold public liability insurance, it is still incredibly important for your own protection.
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Income Protection Insurance As a subcontractor you are not covered by sick leave, and in many cases worker’s compensation won’t protect a subbie either. For this reason, income protection is not only important, but also mandatory for subcontractors on many worksites. Income protection will cover a large percentage of your income for a period of time whilst you are unable to work due to injury or illness. As you won’t be receiving any sick leave, this is vitally important. Other insurance types For a typical trade business there are no other insurance types that are a mandatory requirement for subcontractors, but there are certainly others worth considering. Tool insurance is a common one, especially if you’re providing your own tools and equipment like most subbies do. If your business is a little larger and operates from its own premises you’ll need more of a business package, but you Do subcontractor insurance requirements vary by state? There is really no difference in the subcontractor insurance requirements from one state to another. For public liability there is certainly no difference. Whichever state you operate in, you will need to have your own public liability insurance in place. There is one slight difference on the income protection side in NSW. It’s not that the income protection is different, but if you operate as a company in NSW you can access workers compensation, even if you’re a one-person company. This may mean that you can hold workers compensation instead of income protection and may still meet the requirements of the company you are subcontracting to. But remember that workers compensation is very different to income protection. It will only cover you for incidents at work, so if you simply fall ill or suffer an injury on the weekend, there is no cover.
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A good income protection policy will cover you for both accident and illness regardless of whether it’s related to your work or not. Does it matter if I’m a sole trader or company? For public liability insurance there will be no difference regardless of whether you operate as a sole trader or a company. Either way, you will require public liability and there is no difference in the cover itself or the cost of the cover. Income protection is no different. The insurer will class you as self-employed regardless of whether you operate as a sole trader or company, so the insurance will be the same either way. As mentioned in the previous section, if you operate as a Pty Ltd company in NSW you may be able to use workers compensation instead of income protection, but it is a very different type of cover. How much does subcontractor’s insurance cost? The cost of subcontractors insurance can vary widely depending on a number of different factors. For public liability insurance, the cost vary depending on the size of the business in terms of revenue or staff numbers, as well as the business activities and whether or not those activities undertaken in hazardous locations. For example if you’re a one-person business undertaking standard residential carpentry, the public liability cost for the minimum $5 million cover will start from around $400 a year. But if you’re a larger business with multiple staff undertaking higher-risk activities at locations such as airports or mine sites, the cost will be well into the thousands or even tens of thousands per year. Income protection is different again. The cost of income protection for a subcontractor will depend on your age, occupation, smoking status and the trade you’re undertaking.
2021 June Issue | 11
MY TIPS FOR
Business Owners PERSONALITY: If you don’t utilize this trait correctly, you have decreased your chances of winning the job, even though you may have ticked all other boxes relating to a successful outcome. (As there is too much to talk about on this particular subject, I have included a past article I wrote in 2015 in the magazine). WEBSITE: When a client is searching for a contractor they want to know as much as possible about that business. Unless someone has recommended and given you a high approval rating, they have to source you in some other way. Once found, having a website can provide abundant information about your business. A client needs to know things like company information, customer testimonials, picture gallery, guarantees, what products you use, contact numbers, etc. All this information will help ease their mind that they are choosing a reputable company. ANSWERING SERVICE: A second party that can answer your phone professionally in your company name if you are unavailable, is far more personal than an automated recording. A client is more likely to leave a message to someone that is actually conversing with them than having to talk to a machine. There is only a small cost to this service but it far out-ways the possibility of losing a prospective client. LETTER DROP: This is a great way to promote your business around the areas you are working in; and the best part is that
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it’s free to do. I have two introductory letters that you can use. Just email me on jimbaker@notjustapainter.com.au and I will send them to you. DATABASE: It takes a lot of time and effort to gain a client from an advertising source. So keeping a record of all your clients is one of the most important factors of a successful business. You need to know everything about your client, not just their contact details. If that client is happy with the work you have produced, there is a 50-80% chance that in the future they will recommend you to a friend, relative or neighbour. Because these referrals are coming to you by word of mouth, it means you won’t have to spend as much on advertising or, you can keep your advertising going at the same rate and expand your business at no extra cost. Also by keeping a record, it means after a certain period you can make contact with them again to see if they require any more work done. Many people forget your details after 5 years or more so a friendly reminder that you are still in business is great PR work. KNOW YOUR ‘BREAK-EVEN’ RATE: This is where many businesses have absolutely no idea what their hourly rate should be to cover their outgoing expenses. You cannot go by what someone else is charging because every business is different and has different costs. When you are desperate for a job, you need to know how low you can charge. If you go below your ‘break even’ cost, then you are losing money. To check out what you should be charging, follow the link to ‘My Hourly Rate Calculator’ at www.mytools4business.com
DON’T ARGUE WITH THE CLIENT: Even though you may not agree with a client, it is in your best interest to listen and accept what they have to say and fix the problem. Arguing only causes friction between both parties and hence, lead to slow or non-payment. So what if it takes you an extra four or eight hours in time! Look at the time, cost and stress of using a debt collector. It is simply not worth it. Swallow your pride, do what they want and you will find they will appreciate the effort and recommend you to others. Sue them and your name will travel quickly as a painter to not recommend.
VEHICLE SIGNAGE: If you spend $1000 on signage for your vehicle, it will work for you for at least seven years. That’s a small investment of $142 a year. It acts like a moving billboard. It goes with you to every job or trip you do and will be seen by tens of thousands of people. BE ON TIME: The easiest way to upset a customer is to be late. If you can’t make an appointment, have the decency to call them and arrange a new time. They may have gone to a great deal of trouble to stay home especially, so don’t disappoint them. DON’T BE AFRAID TO ASK FOR ADVICE: Every business person wants to achieve success, but when there are problems, most are too proud to seek help. Asking for advice or guidance is not a sign of weakness, but a sign of intelligence. Sometimes you have to come to terms that you can’t do everything yourself. No one is going to laugh or think you are incapable of running a business. I can guarantee that every successful business has been mentored or have taken advice from a peer at some stage in their life. Most people are willing to give advice and share their success, so don’t hold back and don’t be afraid.
KEEP ON TOP OF WHAT IS OWING TO YOU: Constant cash flow is the key to all successful companies. As soon as a job is finished, send an invoice, otherwise you may find you have run the bank account dry and need to go into an overdraft. If the job is large, then have a clause in your Contract Agreement that you require progress payments.
Listen and learn from others as I have done. ----------------------------------------------------------------------------
Jim Baker
www.mytools4business.com
2021 June Issue | 13
Are Your Beliefs Hurting Your Business? Motivational speakers have been known to say things like “you are what you think about”. I am not so sure. If that were totally true, I would have probably turned into a can of beer or a pretty young girl at the age of 18. However, there is no question that our lives become an accumulation of what we think and believe. Our beliefs and thoughts are determined by influences, personality, and experiences. Of course, perspective varies from individual to individual. The internet and politics have created a society of absolute rights and absolute wrongs. I do not believe life and business are so simple. Changing some of your internal beliefs regarding your business may help you adapt to today’s ever changing business environment. Remember, for hundreds of years people thought the earth was flat. Here are some common false business beliefs. atered a contractor who at first did not believe his or her business was one of the most expensive contractors in the market. The number one reason contractors fail is they do not charge enough. I get calls from contractors who are absolutely convinced they are the most expensive in their market; Yet I have contractors in their market who are 20-30% higher and have more work than they can get done. Living in a vacuum can generate beliefs that just are not true. One of the greatest values of our networking groups is to see what other non-competing contractors are charg-
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ing. Many contractors are amazed that when they too raise their price, they lose very little business. “I can’t afford to pay people that much.” Understand that economics and wage competition drive wage prices, not what you are willing to pay. Most contractors understand that you have to pay more money for good tools. You also have to pay more money to attract and keep good people. Competition for good employees is fierce and demand for tradespeople will continue to grow. Many Americans just do not want to do bluecollar jobs. We do not see this changing. As fewer and fewer people want to do manual labor, the more competitive the marketplace will become. “If I can just grow, I will make more money.” Maybe, maybe not. Make money to grow, do not try to grow to make money. Growth requires more workers, more cash, more equipment and more overhead. Think of a contractor that went bankrupt. I bet that failing contractor had lots of work. A funny story my deceased partner like to tell was about two contractors who sold produce in the winter when their business was slow. They would drive to Florida and pay $1 each for watermelons and sell them for a $1. They could not seem to make any money so what they decided to do was buy a bigger truck. Most contractors who fail are busy not idle. Buying a bigger truck may not be your solution.
2021 June Issue | 15
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A snow tire is great in a snowstorm but not so good on a drag strip. My teenage daughter’s definition of doing a “good” job of cleaning her room varied great from my definition of a “good” job.
“If you do good work, your business will grow.” This statement includes lots of assumptions. You are assuming people understand the difference between good and bad work. Remember when buying contracting services, you are buying a promise of performance, not a product you can touch or feel. Just because you build a better mouse trap does not mean customers will flock to your door. They may be happy with the mouse trap they already have or fail to see the value of yours. Without a website or other marketing, those customers may not be unable to find you. It takes more than doing good work to grow a business. Remember, quality is in the eye of the beholder. Quality is performance to a set of standards.
“I’m going to sell my business for big bucks and retire.” Really, who are you going to sell it to? And is your business really worth anything without you? Unless you build a business where you are not needed as a daily hands-on owner, I doubt the business is worth very much. Your employee or employees may be the most likely owner but how are they going to pay for it? Yes, contracting businesses can be saleable but it might not be as valuable as you think. My advice is not to put all your eggs into one basket. The older I get, the more I realize there is a lot of I do not know. Others seemed to think they have it figured out with age become less open minded. Socrates said, “the only true wisdom is knowing you know nothing.”
Monroe Porter
is president of PROOF Management a firm that teaches seminars and runs networking groups for painting contractors.
www.proofman.com
The portable, inexpensive method to prevent paint waste-water polluting the environment.
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AUSTRALIANS HELP PAINT DISPOSAL SCHEME SMASH COLLECTION RECORDS
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2021 June Issue | 19
1 - 8 8 8 - 4 9 - S T I N G | s t i n g e r b ru s h .c om S T I N G E R @ S T I N G E R B RU S H .C OM
"First innovation in a brush that works in a long time." - Todd H Professional Painter for 35 Years
U.S. Patent 10,674,809
Congratulations to Paintback th on your 5 anniversary. APN have been involved in communicating Paintback’s message to the industry since it’s inception 5 years ago. It was great for Branko and myself to catch up with Karen Gomez the Chief Executive of Paintback, in Brisbane last week. We discussed the industry and how Paintback is doing its think to save the planet. It was a lighthearted meeting incorporating a photo shoot with the media with both Karen and Branko the models. We are looking at organising some events for paint drop off so painters know more about how the system works. Nigel Gorman
Top Tips from a Commercial Lawyer The 5 mistakes business owners make that can derail their business and what to do to prevent it. As commercial lawyers we see the same mistakes made by business owners time and time again, and most (if not all) of them are easily avoidable if they had been proactive about their business legals. We wanted to share with you some of these common mistakes and let you know how you can address them now, before they become costly mistakes.
using your business name (in your designated classes of good and services).
1. They do not protect their intellectual property…
2. They do not have a contract in place with their clients…
The only way to stop someone else using your business name or logo is through registering a trademark. If you are doing great work for your clients and people are recommending you – you do not want other people looking for you online and ending up connecting with (or worse still engaging) a competitor that is using your name or something deceptively similar. And yes, this happens all the time! On the converse, you do not want to be inadvertently associated with a bad business. Imagine if you got a bad Google review for poor services but this was not even you. This could happen if a copycat starts using your name. These bad reviews are hard to remove and can damage your goodwill. So, what can you do to help prevent this? Easy, register a trademark. Registering your business name as a trademark gives you the widest form of protection, it stops anyone
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The good news is that REGISTERING A TRADEMARK is relatively inexpensive and easy to do. A commercial lawyer with trademark experience can complete the registration on your behalf.
You cannot simply leave it to chance and trust that everyone you do business with will pay you. You need to have the law on your side and for that you need a contract with your client. The amount of business owners we talk to who are owed considerable sums of money and who do not have terms of trade/terms and conditions is scary. The easiest way to make sure you get paid is to have business terms and conditions attached to your client quotes. This then forms your contract with your clients. If you already have terms and conditions, then have a good read of them and make sure that they contain robust clauses around late payment and enforceable limits of liability. You should have a client agreement, and this is usually your quote and your terms and conditions attached.
Your contract with your client should include as a minimum the following clauses:
Here are some of the things you should have in a well drafted contractors agreement/subcontract:
• • • • • • • • •
• the subcontractor’s responsibilities • Workplace Health and Safety obligations • restraints of trade (to make sure they do not steal your clients or employees) • Dispute Resolution Procedures
Agreement regarding Price Payment Terms Your Refunds or cancellation policy Your Ability to charge interest on late payment Your Ability to charge Debt recovery costs Termination provisions Your suspension rights (e.g. for late payment) No liability for delay Disclaimers and limits of liability
If you are worried about your terms and conditions (or lack of them!) and want to know more grab our FREE GUIDE ON HOW TO GET PAID
3. They trust people who work for them too much…
Sometimes you need extra help in your business but are not certain enough about the amount of work you can give someone to take on an employee. When this happens, you tend out to reach out to people you know to help you out. This is all well until something goes wrong and you have no written agreement in place, and we see the costly aftermath of this a lot. If you are a business owner who engages subcontractors, you need a well drafted subcontractors agreement in place because everything is fine… until it’s not.
If this is of concern to you there is more detail in this article on SUBCONTRACTOR AGREEMENTS 4. They trust people in business with
them too much…
Sometimes you rush into starting a business with friend or family member and do not think about what will happen if things go wrong. There is a simple fix, a legal agreement. If you have a company this is called a shareholders agreement and if you are partnership (more rare) a partnership agreement. All too often we see company directors/shareholders embroiled in costly disputes in circumstances when a shareholders agreement could have prevented unnecessary legal costs and disruptions. In fact, I will go out on a limb here and say that most successful businesses I deal with all have well drafted shareholders agreements in place.
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A well drafted shareholders agreement should cover all the rules of holding shares in the business including: • • • • • •
Appointment of directors and voting rights Clauses dealing with rules on transfer of shares Shareholders rights and obligations Dispute resolution clauses Restrictions on competition Confidentiality
Click here for more information on SHAREHOLDERS AGREEMENTS and their importance.
5. They have completely the wrong structure...
When first setting up a business, it is common to use a sole trader structure, as it is relatively easy and cheap to get your started. However, as your business grows, it is crucial that your business structure evolves with it. One of the biggest benefits gained from structuring your business as a proprietary limited company is that you can protect your personal property (by keeping it separate from the business). As a sole trader you are personally liable for all business debts. You can incur debt and you can be sued, which means your personal assets are very much at risk. Changing to a company structure turns your business into a separate legal entity, meaning the company can sue and be sued.
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This limits your personal liability. For more information read our article SHOULD I START AS A COMPANY OR A SOLE TRADER? So, what can you do to protect your business? If you are concerned abut any of the above or if you have not confidently ticked all of these boxes above then we would love to take a deep dive into your business, asses the risks that you may have and come up with a strategy to get you better protected. Click here for details of our unique 1 on 1 LEGAL AUDIT Typical Legal Disclaimer!… Unfortunately, there is never a ‘one size fits all’ formula to apply. Every situation is unique and it can be tricky to wrap your head around some areas of the law. To ensure you are setting yourself and your business up for success, it is always best to consult a legal professional with expertise in the field. If you require any assistance with with your business legals or any other commercial legal issue, please do not hesitate to contact me.
Helen Kay
07 5619 6858
www.riselegal.com.au
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www.oldfields.com.au
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Why networking is like mortar for
Building Women’s Construction Careers Working in a male-dominated industry makes construction a particularly challenging sector for women, particularly when the media often misrepresents the roles women hold, whether it’s being on the tools or in the office. Networking with other women in the building industry helps overcome the sense of isolation – and helps women grow their careers too.
One of the major positives of networking for women is understanding they are not, in fact, alone, according to Rebecca Paech, AWIC Events Coordinator and Customer Service Manager at PGH Bricks and Pavers.
Jo Kirley, Recruitment Manager at Aussie Painters Network and Educational Committee member of Awesome Women in Construction (AWIC) says networking has been essential for her. Her work within the VET system would be “impossible” without the network of contacts she has developed in the building industry, she says.
“It lets you know that what you are seeing and experiencing on site and in the office is real.”
“I call on my contacts all the time to get things done,” she says. Jo became involved with AWIC because her other role as the partner of a tradie, doing all the office side of the business, she needed to be able to talk to other women experiencing the same difficulties.
Sharing stories has enormous benefits, Rebacca says.
Some of these experiences involve behaviours from male colleagues that show a level of internalised sexism. “The perception is that we (women in the workplace) will unpack the dishwasher, for example,” Rebecca says. “It is present on all levels of a business.”
Networking is a way to help overcome this, through sharing strategies, reality-checking and supporting other female colleagues. The contacts in the industry gained through an organisation like AWIC are also one of the most valuable assets a woman in construction can have. “If you are looking to progress your career or move out of the role you are currently working in, contacts help. There are so many stories of people connecting through AWIC and that helping them move to another role, for example,” Rebecca says. “A lot of people [in AWIC] know a lot of other people, and if you are not in that kind of loop, you can be left behind. It’s a very interconnected industry… so networking helps you get in the game.” Rebecca has found networking has helped build her own confidence in career in the industry – and this is something she has also been able to pass on to her daughter, who is looking at carpentry as a post-school career choice. Jo says that when she is working with female apprentices who are facing challenges, connecting them with a female employer really helps. “Female apprentices often feel more comfortable talking about what is going on for them to a female employer,” she explains. For female apprentices and tradies who have a male boss, AWIC can provide a space to “simply be heard”, Jo says. “I feel it’s important for employers to encourage their female employees to be part of AWIC. The support that is there is so valuable. Sometimes you just need to vent to a female person who understands how stressful your job is – somebody on the same level, who can offer advice if you want it.” “Sometimes you don’t need advice – you just need someone to listen.” Rebecca has found the events organised by AWIC including workshops and keynote speakers have also provided some excellent tools for her work and helped grow her capabilities.
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The social aspect can also be extremely important. “We are social beings. Humans like to talk; we like to communicate. It is good to be able to talk about having an [awful] week or the juggle of kids and getting them to soccer, or finding time to cook, that kind of thing. With AWIC, there is no judgement, it’s the sisterhood. “The network makes you feel like you are being supported, the struggle is acknowledged.” The general conversations are also an effective way to be aware of what is happening more broadly in the industry, outside of one’s own company or trade. For example, when there are major changes happening such as proposed reforms, legislation, programs or policies, the topics also come up quite naturally during casual chats at events. Rebecca says that because everyone is facing issues specific to their company or trade sector or professional role type, there Is also a chance to swap notes and learn about the issues others are facing and how they are navigating them. In Queensland residential construction, for example, supply shortages are currently affecting many builders and subcontractors. Fabricated metal components, PVC pipe and structural timber framing, for example, have been hard to come by due to COVID-19 impacts on international shipping. That has affected the ability of builders to get projects to lock-up stage. For PGH Bricks, the shortage of key materials such as framing has a flow-on effect for orders of bricks for completing brick veneer walls. “It is important for me to get those insights [from others] for my team.” -------------------------------------------------------------For more information about Awesome Women in Construction (AWIC) visit www.awic.org.au or email hello@awic.org.au
2021 June Issue | 31
Your Keys to the 2021/22
FEDERAL BUDGET Every year, with great fanfare and pride the Australian Treasurer presents the budget for the year ahead. We’ve had a close look at the details in this 2021 Budget for you. Highlights are covered below as they relate to individuals, businesses and superannuation. This is not a complete list by any means, for a detailed overview visit our website, where you can find details on the following proposed budget measures: • Increasing the Medicare levy low-income thresholds • Modernising the individual tax residency rules • Reducing compliance costs for individuals claiming self-education expense deductions • Employee Share Schemes • Digital economy strategy • Debt recovery for small business • Tax treatment of qualifying storm and flood grants • Age limit for downsizer contributions • Residency requirements for SMSFs • Changes to the First Home Super Saver (‘FHSS’) scheme It is important to remember that although these measures are in the budget, it may take some time to implement them. Furthermore the Government reserves the option to back date any measure’s effectiveness to budget day.
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1. Personal Income Tax Changes
Retaining the Low and Middle Income Tax Offset (‘LMITO’) for the 2022 income year. The Government has announced that it will retain the LMITO for one more income year, so that it will still be available for the 2022 income year. Under current legislation, the LMITO was due to be removed from 1 July 2021. The LMITO is a non-refundable tax offset that provides tax relief for low and middle income taxpayers and is available in addition to the Low Income Tax Offset (‘LITO’). The LMITO is proposed to apply as follows for the 2022 income year. The LMITO is a non-refundable tax offset that provides tax relief for low and middle income taxpayers and is available in addition to the Low Income Tax Offset (‘LITO’). The LMITO is proposed to apply as follows for the 2022 income year. Consistent with current arrangements, the LMITO will be applied to reduce the tax payable by individuals when they lodge their tax returns for the 2022 income year.
2. Changes Affecting Business Taxpayers
back losses under this measure can still carry losses forward as normal.
In the prior year (2020/21) Federal Budget, the Government announced amendments to allow businesses with an aggregated turnover of less than $5 billion to access a new temporary full expensing of eligible depreciating assets until 30 June 2022. Temporary full expensing became law when Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020 received Royal Assent on 14 October 2020.
Removing the work test for voluntary contributions The Government has announced that it will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps.
Temporary full expensing extension
In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses. Temporary loss carry-back extension In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed ‘corporate tax entities’with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years. The rules relating to the temporary loss carry-back regime have been enacted and are contained in Division 160 of the ITAA 1997. In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year. Consistent with the current law, the tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry
Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions. The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022. Currently, individuals aged 67 to 74 years (inclusive) can only make voluntary contributions (concessional and non-concessional) to their superannuation fund, or receive contributions from their spouse, if they satisfy the work test (subject to a limited work test exemption). Generally, to satisfy the work test, an individual must be working for at least 40 hours over a period of not more than 30 consecutive days in the income year the relevant contribution is made. Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and will increase flexibility for older Australians to save for their retirement through superannuation. Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility The Government will remove the current $450 per month minimum income threshold, under which employees do2. Changes Affecting Business Taxpayers Temporary full expensing extension In the prior year (2020/21) Federal Budget, the Government announced amendments to allow businesses with an aggregated turnover of less than $5 billion to access a new temporary full expensing of eligible depreciating assets until 30 June 2022. Temporary full expensing became law when Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Bill 2020 received Royal Assent on 14 October 2020.
2021 June Issue | 35
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Temporary loss carry-back extension In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed ‘corporate tax entities with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and/ or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years. The rules relating to the temporary loss carry-back regime have been enacted and are contained in Division 160 of the ITAA 1997. In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year. Consistent with the current law, the tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.
3. Superannuation Related Changes
Removing the work test for voluntary contributions The Government has announced that it will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps. Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions. The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022.
exemption). Generally, to satisfy the work test, an individual must be working for at least 40 hours over a period of not more than 30 consecutive days in the income year the relevant contribution is made.
Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and will increase flexibility for older Australians to save for their retirement through superannuation. Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid SG contributions by their employer. The measure will have effect from the start of the first income year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022. If you need any support with your year end tax planning, call us on 3399 8844 and we will be happy to help you with a FREE Tax Planning Session. You can visit our website at www.straighttalkat.com.au and complete your details on our Home page to request an appointment.
Currently, individuals aged 67 to 74 years (inclusive) can only make voluntary contributions (both concessional and non-concessional) to their superannuation fund, or receive contributions from their spouse, if they satisfy the work test (subject to a limited work test
2021 June Issue | 37
FINDING MONEY within your business Most small businesses experience cash flow problems from time to time and urgently need working capital. Many business owners immediately think of the bank or loans when they’re short of money. But there are other resources you can tap before you ask for that expensive overdraft or overdraft extension. The money you need might already be there, locked up in inventory, assets or your debtors’ book.
in small businesses where the owner(s) are so busy getting the business off the ground, products out the door, or services completed, that they don’t pay enough attention to basic business procedures. Many customers will take advantage of this ‘free money’. But your business is not to serve as a free bank.
Here’s how you fix the problem: Get invoices out promptly
You can often free up funds from within your business by re-examining your business systems, and these funds might in themselves be sufficient for your immediate needs. GOOD MANAGEMENT Even if the funds you free up from within your business are not sufficient, there is another payoff: the effort you make in searching for them helps to ensure that you are running your business in an efficient manner.
Whatever else you do, become efficient at getting invoices out early. This is your future cash flow— the lifeblood of your business! You want to receive it as soon as possible. Start this new system NOW. Depending on your business, you can often cut out statements simply by printing at the bottom of the invoice: ‘Please pay on this invoice as no statement will be sent.’
Send the invoice with the goods or immediately the service is completed
Date the invoice from no later than the day it is sent rather than following the standard ‘last day of the month’ date for invoices. The earlier the invoice date, the better your chances of getting paid earlier. Change the terms
ASSETS Your assets include debtors, stock, pre-paid expenses, vehicles, plant and equipment, fittings and property. Each of these is a possible source of funds.
This could be for some of your customers or for new customers only. For example, can you reduce ask for immediate settlement or set reduced payment terms such as 7 days or 14 days from date of invoice?
DEBTORS Are you letting some customers have the free use of your money for months? This is a common occurrence
Follow up invoices aren’t paid by due date
38 | Aussie Painting Contractor
This is critical. Be polite but firm. If you don’t have the time to do this, appoint someone to do it for you.
Monitor your debtor collection days
Set an improvement target each quarter. For example, can you find out the benchmark standard for your industry? IF the average in your industry is 30 days, but you are taking an average of 45 days to collect outstanding debts, then there’s clearly room for improvement. If your customers or clients have been taking advantage of you because of your previous laxity in invoicing, then you may need to re-educate them. Do this politely so you don’t offend customers: “Have you received our invoice, Peter? I’m just checking that you’re happy with the goods/services we provided? “We’ve got a new invoicing system going here, because we’ve been a bit lax in the past. My accountant has set some tough goals for me to meet in reducing our average debt collection cycle, so if you could settle that invoice promptly I’d be most obliged.”
Consider factoring
This simply means selling your outstanding invoices to a finance company. So instead of waiting 30 days or more until an invoice is paid, you receive most of your money up-front from the finance company that then in turn collects the money from your customer. The finance company will of course charge you a commission for this service. Be aware, though, that there are pros and cons to factoring. For example, check that the finance company will not antagonize your customers with a heavy-handed approach. Talk to them first about their collection methods.
Offering a discount for prompt payment
businesses, but can be an option for high-margin operations. You have to work out whether the use of money gained earlier is worth the discount you’re offering. NEVER give the discount if the person has missed the due date for the discount offer. (Yes, some will try this on.)
Inventory
Do you have excessive capital tied up in stock? This can occur in two ways: • carrying high levels of items that you could obtain from suppliers at short notice • having too many slow-moving items (and too few fast-moving items).
A quick sale?
Review regularly your stock levels, your stock turnover rates and your purchasing policies. Can you free up money by reducing stock? What about moving out of the slower-moving lines or having a quick sale of dustcollecting stock? It might pay you to reduce some items quite heavily to get some money in quickly. Can you approach suppliers to take back any excessive stock you may have ordered? They might help you out of a temporary tight corner as a goodwill gesture if you explain you have a temporary cash flow crisis. If you need additional funds to purchase more stock, make sure that you’re replacing slow-moving stock with the faster selling lines.
If you’re going to pay a fee for factoring, why not try offering a discount to your customers instead? Discounts are not a good option for low-margin
2021 June Issue | 39
Business Management Courses FOR PAINTERS!
Assets
Assets can drain significant amounts of cash out of a business. Do you really put all your assets to full use? You might be able to: • Sell off little-used assets and hire suitable replacements when you require them. • Lease or rent assets and equipment that depreciates rapidly such as computers and or vehicles
Customers
Don’t forget your customers can be a source of business funds. Apart from debt collection improvements already discussed, try these tactics: Here’s a ‘thinking outside the square’ tactic. Ask some of your credit customers (start with the ones you know best) if they would be willing to use their bank credit cards for purchases from you, instead of using the account facility they have with you. For example, if they purchase say $2,500 worth of goods or services from you, they would pay for this by means of a business credit card. They still get 30 to 55 days credit before having to pay the credit card company, but you get your cash as soon as you sent in the voucher to the bank. You have to pay the (around) 5% commission, but otherwise it’s almost as good as a cash transaction.
There’s another benefit here too. If the customer turns out to be problematic, you’ll discover this quite early on instead of at the end and you can cut your losses before they mount up and perhaps drag your business down. This tactic is therefore very suitable for tradespeople subcontracting to a developer.
Suppliers
Finally, consider your suppliers as a possible source of funds. Ask for extended payment terms to give you the opportunity to sell the goods first before you have to pay. If the supplier won’t budge, try this tactic: split the order in two and offer to pay normal credit terms (30 days) on the one half of the order and 90 days on the other half. Your suppliers will be more likely to agree to this kind of arrangement if you’ve paid them promptly in the past. After all, they have a vested interest in helping you succeed. • Quantity breaks – incentivise customers to order more through quantity discounts. • Re-order levels – Setup minimum stock levels to avoid stock outages on important lines. • Default reorder quantity – Setup re-order quantities so the most economic order quantity is placed. • Receive Stock – Receive items into stock so you can sell them before receiving the final bill
Take advantage of discounts
Pay accounts that give discounts on time. This is an easy one. If any suppliers offer a discount for early payment, then take it (and there is no harm in asking for a discount). These are just suggestions and may not be suitable for your business. Feel free to contact us about ways to find money in your business.
If you’re starting a new business, consider establishing it on a cash only basis to keep the funds inside your business rather than locked up in Accounts Receivable. Ask for progress payments If you supply goods over a period of time, or if you’re a service business, ask if you can invoice for progress payments. This is quite a common method of ensuring you get some cash flow during a project instead of waiting until the end of a project or delivery period to invoice—and then still waiting at least another 30 days for payment.
Sandra Price
www.tradiebookkeepingsolutions.com.au Facebook : Tradie Bookkeeping Solutions
2021 June Issue | 41
Personality My best tip for running a successful business When personality first came to my mind, I instantly remembered a song I liked from my earlier years. Most of you young’uns wouldn’t know the American black singer, Lloyd Price. He co-wrote the song ‘Personality’ which became a top hit in 1959. An interesting fact when I was Googling, ‘People With Money’ magazine recently reported he is the highest paid singer in the world, earning $46 million between July 2014 and July 2015. The reason for mentioning the song is the significance of the lyrics in the chorus, as they are based around five personalities: Walk; Talk; Smile; Charm; and Love. Let me break these down and I’ll explain the importance (to me) of each. When you go to a client’s house and meet them for the first time, what message are you sending out? How is your body positioned? Are you standing up straight or slumped over, disinterested and wishing you were somewhere else? Do you approach with confidence and have direct eye contact with them? Do you give a formal greeting with a handshake? People can gather information about you from your body language before a word is spoken? We all do it without even thinking about it. Our poise and posture reflect our mood and our confidence level. We stand and walk a certain way when we’re confident and another way when we’re nervous. It can also show if we’re apprehensive or outgoing, relaxed or aggressive. Being confident in your mind about the product and what you are selling is one thing, but it takes skill to verbally relay this without fault or hesitation. It’s not just the paint job you are offering them but your professional service also and this is what you have to get through to the customer with confidence in your voice. In most cases the end price is not what sways the customer into accepting a quote. For a job accept-
ance they need to know that you know, what you a talking about. Being hesitant or indifferent in your approach is not a good sign for them. If the client has a question, you need to have the answer straight away. If you ‘umm’ and ‘ahh’ it’s showing a lack of knowledge on your part. A good smile can break the ice on any meeting but unfortunately this isn’t happening enough in today’s society. Be genuine though, or at least try to look that way, as there is nothing worse than a fake smile. A sincere smile portrays friendliness and trust. You may be working on their site for days or weeks, so if you look unhappy it can form an uncomfortable environment. A bit of charm doesn’t hurt and is another good way to build good will in a relationship between you and a client. Listen to what they are saying and expand on it. For instance, if they mention they have just come back from a holiday, be honestly interested and ask questions about it. People love to talk about their experiences and it can ease any tension between you. (A word of warning though; don’t overdo the charm, or pry as it could backfire on you). A big part of your personality is love. You need to love yourself, love what you are doing, love life and love living. If you can’t do this then you are missing out on so much, and your customer will too. All these traits make up your personality and I truly believe it helps you to be a better person, tradesperson and owner. Not only that, it helps you in business and helps you win jobs. The added advantage too is if a client likes you they will more likely pay you on time, be less difficult to work for and (maybe) overlook some of the minor faults in your workmanship. It’s a win-win situation. --------------------------------------------------------------------
Jim Baker
www.mytools4business.com
50 YEARS A HOUSE PAINTER This book contains 36 topics of industry related knowledge and information which will help you in the way you operate your business.Topics under headings of; Business Checklist, Staff, Marketing and Sourcing Customers, Professional Behavior, Successful Operation and Looking Ahead.Highly recommended by Jason Osborn, Dulux Business Development Executive as; ‘A very easy interesting read, that combines industry facts and great topics.’
www.mytools4business.com
Terminate or Performance Manage This week, I received a call form a painting contractor seeking my advice on terminating his employees. His accountant had reviewed his books and advised that his employees weren’t completing work in an efficient and timely manner which was impacting heavily on this business’s viability. The Accountant’s solution was to terminate these employees and get new ones in that would do the job more efficiently and effectively. The contractor then rang me asking how he would go about terminating if not his whole workforce, then a large percentage of them. Now, I get that having employees who are under performing can be particularly frustrating for employers. Tackling underperformance is one of my biggest champions as a HR consultant but even if there was cause to terminate these employees, how was this going to fix the problem. I asked the contractor can you finish the projects you have lined up by yourself or with a reduced team? His answer was a straight out No. therein lies the problem in the Building and Construction industries, particularly painting. You need employees to complete the projects but finding qualified, competent and efficient employees – that you can afford! – is the bane of many business owner. Whilst the Accountant meant well, I knew, as
44 | Aussie Painting Contractor
did the Contractor, that finding replacement painters in a short period of time was going to be next to impossible which would’ve meant that the Contractor would lose those projects. So, what should this Contractor do? Certainly, his business cannot afford for him to continue on the path he is on so changes need to be made. He needs to sit down with his employees both at an individual and team level and discuss his concerns. Be open and upfront here. I’ve been to the Accountant and he says we’re not performing to the level we need to. We need to either raise our prices, reduce our expenses or increase our output and efficiency. Seek your employees input and buy in. A good employee will understand and jump on board. The ones that don’t? Well, they’ll most likely be the first to be let go. Implement a plan. Relook at your quoting and work flow practices? Are there changes and improvements that can be made here to ensure the job is being quoted correctly, everyone has the tools and resources they need when they need them and holds ups and delays are kept to a minimum.
Set clear expectations and timeframes. Things will always go wrong and there will always be delays or blow outs, but by continually assessing & reassessing them you can get these down to a fine art. It also then becomes clear if there is a weak link in your process or team. Which you can then address with knowledge and certainty. Now that you’ve identified and set out the expectations, make sure that you tackle any issues or concerns early. This will ensure that everyone stay on track. If you have an employee though who is not improving then it may be time to look at a formal Performance Improvement Plan (PIP). A PIP should clearly outline your expectations, detail achievable goals and a reasonable timeframe for the employee to turn their performance around. Your mindset when implementing a PIP should always be to set your employee up to succeed. You want to be working with your employee to assist them in correcting their poor performance and turning a low performing employee into a high performing employee.
Key points to remember • Underperformance should be dealt with promptly. • The longer poor performance is allowed to continue, the more difficult a satisfactory resolution becomes as well as having a negative impact on well performing employees. No one likes to feel that they are carrying the burden of an underperforming employee. • Be consistent. Consistently deal with transgression. Don’t let them slide. • Set your employee up to succeed. HR Maximised can assist with developing a performance management meeting plan to help turn a poor performing employee into a high performing employee. -------------------------------------------------------------------------
If you would like assistance, please reach out to Vanessa from HR Maximised on 0418 190 106 or vanessa@hrmaximised.com.au
2021 June Issue | 45
Due Dates For Payment
Which one will work best for you? It is unfortunately all too common for a contractor to produce a detailed quote for the work they will do for the client that contains pages of description regarding the scope of works, but no mention at all of payment terms! One of the most important things in the quote needs to be the agreed due dates for payment. It is interesting to note that despite having numerous options, contractors will stick to either ’30 days’ or ‘7 days nett’ regardless of whether it suits them or if it is realistic. This article will encourage you to explore other terms that may better match the client and the work.
KEY POINTS FIRST Before considering other terms you need to note some important concepts: Terms must be agreed beforehand: You cannot stick payment terms on your invoice and then hold your client to them. Terms MUST be agreed beforehand in your contract, quote, or agreement. You will find that you cannot enforce terms in any formal process unless your client has had the opportunity to agree to them before the work. This makes it very important that you have a written agreement upfront.
46 | Aussie Painting Contractor
Nail it down: You need to nail your terms down in time. For example, too often I see a term like ’30 days’. That is meaningless. Thirty days is simply a period of time: ’30 days from what’? The same goes for ‘7 days nett’; it means nothing. You need to state when that period runs from. So ’30 days from receipt of the invoice’ is a good term. Take a look at your terms and you may find they are simply periods of time rather than a payment term. Use ‘Business Days’: If your terms are only described as ‘days’, then it is possible that the due date for payment will land on a weekend or public holiday. These are sometimes called ‘calendar days’. However if you make your payment terms in ‘business days’ then the due date will always be on a day that your client will be open and in a position to pay. Consider changing to ‘business days. For example instead of ’14 days from invoice date’ why not ’10 business days from invoice date’. It is about the same period and the due date will not be a weekend. Invoice on time: As payment terms need to run from the date the claim was received or dated, then make sure you are invoicing at the time agreed, or regularly.
PAYMENT TERMS: YOUR OPTIONS COD: or Cash on Delivery: Under this term you get paid before you leave the site. This is a good term if you do low value quick work. It is very important to inform your client before you attend site that payment will be required before you leave. If you want to use this term often, it is helpful to have many avenues for payment such as credit card and eftpos facilities. 7 (business) days from the date of the invoice: This is usually too short in construction unless it is home building work. In my view it is realistic only for claims up to $20 000. If you are going to use this term then it is vital to follow up after the 7 days. You need to make the term meaningful so your client knows that 7 days means 7 days. 14 (business) days from the date of the invoice: This is a pretty useful term period. Fourteen business days is in fact 3 weeks and so gives your client plenty of time to pay without being too long for your cashflow needs. If you are going only with ’14 calendar days’ then get this agreed upfront. On large commercial work you can sometimes get a deal where the client pays you fortnightly.
21 (calendar / business) days from the date of the invoice: This is a very underused term. 21 calendar days is not a full month, and business days make it about a month. This can be used for high dollar work, especially if you client is the principal / developer. In that scenario they are not waiting for a payment from their client; they are the sole client. It improves cashflow, and is not too short or too long. Take it out for a run on your next commercial project. 30 (calendar) days from the date of the invoice: This is what is commonly called ’30 days’. This is an industry standard. I think it can still be widely used but you must a) ensure that it is expressed as ’30 days from invoice date’, and b) that you enforce it. Once it is overdue, chase your money. 30 (calendar) days from the end of the month in which the invoice claim is received: This is also very common and in unavoidable on big jobs. They key here is to make sure you invoice at the end of each month. --------------------------------------------------------------------
Anthony Igra
1300 669 075 www.contractorsdebtrecovery.com.au
2021 June Issue | 47
The Low and Middle Income Tax Offset has been extended yet again
It delivers help neither when nor where it’s needed The Low and Middle Income Tax Offset (known as the LMITO or “lamington”) has been given yet another new lease of life.
This meant the LMITO was no longer needed for its original purpose, but the Government extended it for a year.
What started in 2018 as a stop-gap until broader tax cuts were introduced, was extended because of COVID after the tax cuts were introduced in the 2020 budget and has now been extended again in 2021 to assist with the COVID recovery.
In the budget, the treasurer labelled the extension a “new and additional tax cut”.
Which is odd, because, being a delayed payment (it is only paid out as tax refunds after the end of each financial year), it offers anything but real-time support.
Read more: The budget’s dirty secret is the hikes in tax
And despite its name, it isn’t offered to Australians on very low incomes. If you earn less than the A$18,200 tax-free threshold, LMITO gives you nothing. If you earn more than that and up to $37,000 it will cut your tax by up to $255. The LMITO gradually increases with income until it reaches $1,080 for taxable incomes between $48,000 and $90,000. Beyond $90,000 it starts falling and cuts out entirely for taxable income over $126,000. The quick fix that came to stay It was introduced by the Government in the 2018 budget as a temporary measure until the ‘stage 2’ tax cuts came in from 2022. In the 2020 budget the Government brought forward the ‘stage 2’ tax cuts.
Others might see it as continuing to escape a tax increase. rates you’re not meant to know about
The extended LMITO will be received by about 10 million taxpayers from July 1 2021 after they lodge their tax returns. The extension will cost $7.8 billion. This cost makes it one of the more expensive decisions announced in the budget, and — especially if it gets extended again, it will as good as destroy the promise in earlier budgets of a simpler, flatter tax schedule. Here’s what it does to tax The LMITO (and its sibling, the longstanding Low Income Tax Offset) make the tax schedule more complicated. Ignoring them, there are four marginal tax rates, soon to be three after the Morrison government’s stage three tax cuts are introduced. Including them, as this graph prepared by Steven Hamilton for The Conversation in 2019 shows, there are many more marginal rates which fall and rise and fall and rise again.
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Our calculations using the National Centre for Social and Economic Modelling’s STINMOD+ model suggest the LMITO could be more accurately called the “medium and high income tax offset”. In the following charts the ‘“Q1” columns refer to the poorest fifth of households and “Q5” to the fifth with the highest incomes. The largest benefits from LMITO accrue to households in the middle. The impact of LMITO is very small compared to the planned stage three cuts, due to arrive in 2024-25. Our graph drawn on the same scale shows they are extraordinarily highly skewed towards high income earners. Treasurer Josh Frydenberg called the LMITO extension “a stimulus measure that will support the recovery”. But it is astoundingly poorly suited for this purpose. Timely stimulus deferred The extra year of LMITO won’t be paid until July 2022, at the earliest, depending on when people submit their 2021-22 tax returns. By then the economy ought to be well over a year out of recession. Worse still, in the view of economists including Nobel winner Richard Thaler, lump-sum payments such as LMITO are more likely to be saved than would be cuts in ongoing tax that lifted fortnightly pay. A much better stimulus would have been to have kept in place the boost to JobSeeker payments delivered by the coronavirus supplement and removed at the end of March this year. Almost all of the people on it spent it. Extending LMITO enables the treasurer to escape the political opprobrium that would come from being seen to increase middle class taxes.
John Hawkins
Senior Lecturer, Canberra School of Politics, Economics and Society and NATSEM, University of Canberra
Jinjing Li
Professor, NATSEM, University of Canberra
Michael James Walsh
Associate Professor, University of Canberra
But it runs the risk of making permanent a poorlydesigned stop-gap that neither delivers money to the people who need it most nor delivers economic stimulus when it is needed.
Riyana (Mira) Miranti
Associate Professor & Convenor of BGL Indonesia Program, University of Canberra
Yogi Vidyattama
Senior Research Fellow in Social and Economic Modelling, University of Canberra
2021 December Issue | 51
The Industry Idiots
52 | Aussie Painting Contractor
IMPORTANT
Contacts
Aussie Painters Network aussiepaintersnetwork.com.au
Ph. 0430 399 800
National Institute for Painting and Decorating painters.edu.au
Ph. 1300 319 790
Australian Tax Office ato.gov.au
Ph. 13 72 26 / Ph. 13 28 65
Award Rates fairwork.gov.au
Ph. 13 13 94
Fair Work Building & Construction fwbc.gov.au
Ph. 1800 003 338
Mates In Construction matesinconstruction.com.au
Ph. 1300 642 111
Workplace Health and Safety Contacts Comcare WorkSafe ACT Workplace Health and Safety QLD Victorian WorkCover Authority WorkCover NSW SafeWork SA WorkSafe WA NT WorkSafe WorkSafe Tasmania
comcare.gov.au worksafe.act.gov.au worksafe.qld.gov.au vwa.vic.gov.au workcover.nsw.gov.au safework.sa.gov.au commerce.wa.gov.au/WorkSafe/ worksafe.nt.gov.au worksafe.tas.gov.au
1300 366 979 02 6207 3000 1300 362 128 1800 136 089 13 10 50 1300 365 255 1300 307 877 1800 019 115 1300 366 322
actcancer.org cancercouncil.com.au cancercouncilnt.com.au cancerqld.org.au cancersa.org.au cancervic.org.au cancerwa.asn.au
(02) 6257 9999 (02) 9334 1900 (08) 8927 4888 (07) 3634 5100 (08) 8291 4111 (03) 9635 5000 (08) 9212 4333
Cancer Council Australia ACT NSW NT QLD SA VIC WA
2021 June Issue | 53
