What to expect in 2019: From the trenches
Paul Meissner and David Boyar host From the Trenches – Real Life in the Accounting Industry podcast. Subscribe at www.fromthetrenches.com.au. Paul is the founder of Freedom Mentoring David is the managing director and founder of Sequel CFO. Having scoured the business and accounting news for the last two years for our weekly podcast, the From the Trenches team are here to give you their take on what we think are the two biggest issues businesses and their accountants can expect in 2019.
Editor’s note: As we gear up for 2019, we wanted to get your thoughts on what to expect in the year ahead. So we’ve asked some of the most influential voices in accounting, bookkeeping, technology, and public policy to weigh in. Today, we hear from Paul Meissner and David Boyar, the voices behind the From the Trenches podcast.
The year of compliance, welcome to Single Touch Payroll
Single Touch Payroll (STP) is something that, for businesses employing 19 or less staff, you’ve probably avoided talking about. STP increases the frequency of reporting staff wages to every pay period, rather than an annual payment summary.
Designed largely to combat employers who under-report PAYG and superannuation, this will be a wake-up call for businesses that have used the ATO as a form of lending and/or haven’t been lodging their business activity statements on time.
Businesses that have historically struggled to pay staff superannuation on time will also feel the strain with the threat of losing a tax deduction looming in future legislation.
For businesses already using Xero payroll, the process will be easy, just a simple setup and one extra click per pay run.
For those businesses that aren’t yet using Xero payroll, they only have until 1 July 2019 to find a way of complying.
The ATO are doing some great work to ensure businesses with related employees or limited digital capacity can manage the transition. For any business employing arms-length staff, the time to start thinking about it is now.
Having assisted in the conversion of over 3,000 clients from desktop to Xero, I certainly don’t underestimate the task accountants will have in ensuring compliance with STP across a legacy client list. The conversion process, from convincing the client through to implementation, can put a strain on accountants who are already busy – not to mention the client negativity around this being more government compliance.
A process that uses Xero for payroll only might be a way to stage the conversion and ensure STP compliance without the overwhelming workload of converting a client’s entire accounting system.
2019, the year of new financing relationships
Was it the royal commission? Was it not customer calls not being answered? Was it taking three months to get a loan approved – or worse, to find out it wasn’t a goer? Was it the credit squeeze? Was it the rise of fintechs who skirted regulation?
It doesn’t really matter why it came, but the reality is that a perfect storm has come to fundamentally change the way businesses get finance.
In the ‘old world’ corner, we have four very big banks that have spent millions wining and dining accountants and businesses to keep up their relationship whilst, in the background, their credit lending policies and products were becoming more and more aligned.
There isn’t any real competition. Not the type that will make a banker really truly bend over backwards for you.
This is leading to a potentially daunting $80 billion funding gap. That’s capital needed to grow, innovate, invest, expand, hire, buzzword buzzword SMEs. And for all of our communities, it’s a fraction of the size of the potential missed opportunity for Australia.
In the ‘new world’’ corner, we have challenger banks, fintechs, new regulation, new banking licences, peer-to-peer lenders, and super funds with lots and lots of cash they need to do something with.
Judo Capital is one such new-world player. They claim that businesses trust in banks scores a paltry 2.5 out of 10, and that an insistence on using the family home combined with long wait times form the two biggest complaints about the current lending market. They should be getting their full banking licence in early 2019.
And if Judo can’t lend to you, businesses are changing their attitude to interest rates with many happy to pay a bit more than big four bank rates and fees to have money when they need it with service they can rely on. Working capital lenders like Banjo loans play in this space where short-term debt (for a price) is being deployed quickly and peer-to-peer lenders like True Pillars will even lend to help you buy a business.
Source: Xero Blog