Last week, we discussed how prioritising tax minimisation and writing off bad debt are two of the three common mistakes to avoid when doing your EOFY filing by end of June. Today we look further into reducing the amount of debt you actually have to write off, and address the importance of ongoing vocational training for you and your team.
Writing off bad debt
Depending on the value of the whatt you are owed, you can determine how much you wish to invest in third party collection assistance. Collection agencies will usually only charge you a percentage of their collections, so it’s worth a try. Just make sure to engage them as soon as possible as their rates will increase for older debts since it’s harder to retrieve the debt or locate the client the longer you wait.
If your debtor is a company and there’s no dispute over the debt, you may be able to issue a Statutory Demand Notice to the debtor, which is a fairly affordable process. Such notice allows the debtor 21 days to pay the debt. Most companies will pay, as they will have little choice. If they don’t, you are able to approach an official liquidator and essentially liquidate the debtor company at little cost to you.
Of course, before you find yourself needing to employ these debt collection strategies, it is always advisable to intervene early to avoid bad debt situations from escalating.
Giving up on business education
Even though the latest budget seems to be creating barriers to accessing vocational and higher education by increasing university course fees and lowering the HECS threshold, one should not see that as a sign to quit on business education.
However, having said that, it’s important that an SME owner be discerning when it comes to choosing how to spend their precious dollars (whether government funded or self-funded) when it comes to business education.
Vocational training is a great investment to increase your skill levels (or your staff’s skill levels). Just be sure to select the right type of training that will improve your earning capacity. Remember you want your business education to feed into your business priorities, which generally should be growth and profitability.
Don’t limit yourself to government funded courses. Although business courses like a diploma of business have relevance, often they’re not nearly enough to prepare you for running your business. Such courses (including a fully-fledged MBA) rarely scratch the surface on what is truly needed to run an SME.
Remember, not all vocational training organisations are created equal. The delivery of any business training is best provided by professionals who have been in business themselves. Ideally, many times over! We are big believers in the value of practical experience. So if you decide to put your time and cash into any business training, make sure you’ve carefully researched the trainers to establish the level of real-life business experience they’ve had.
Avoid wasting your training dollars. Retention of training material is often no more than 10-15 per cent after a six-month period, especially if you don’t actively engage in periodical revisions and continue applying the learnt materials.
We strongly believe in the value of group mentoring combined with training. Group mentoring can be one of the highest value-for-money methods of continuous vocational training and performance improvement. The best monthly mentoring programs include elements of training, combined with accountability and goal setting, and are delivered by experienced entrepreneurs who are able to answer your questions by drawing on their wealth of experience.
Rick Chisholm, Founder and Director, InnovestSME
