Breaking News for all Directors

Earlier this year ASIC introduced the requirement for all company directors to hold a director identification number (director ID).  From next month directors will need to verify their identity as part of the new requirements.

What is a director ID number?

A director ID is a unique identifier given to a director who has verified their identity with the Australian Business Registry Services (ABRS).

Do I need one?

If you are a director of an Australian corporation you will need a director ID. A ‘director’ includes an alternate director who is acting in that capacity.

When do I need to apply?

This will depend on when you become a director. The transitional arrangements for existing and new directors are set out below.

How do I apply for a director ID?

You will need to set up a myGovID account which you will use to verify your identify at https://www.mygovid.gov.au/set-up. (Please note it is imperative you set up myGovID properly first)

This will save you time when you go to verify your identification via ABRS.

As one client said “once myGovID was set up it only took 5 minutes”

Once you’ve verified your identity, you need to apply for a director ID via the ABRS website from November 2021.

Setting your myGovID, verifying your identity and applying for your director ID must be done by you. We are unable to do this on your behalf.

Do I need to let Indigo Financial know my director ID?

If we (Indigo Financial) are your ASIC agent, we will contact you to get your director ID and also ask that you provide us with the director ID of all directors of the company.  We will store these to ensure we can support future director appointments.

We ask that you notify all directors of the new requirement and the need to apply for a director ID.

Another great way to work on your leadership and many other areas in your business is to attend the Global Business Camp on the Gold Coast.

The next event will be held at the Hilton, Surfers Paradise on the 28^th to 30^th of March 2022. It will be a great way to supercharge you, your team, your business and also have a break on the Gold Coast.

Please be aware there is absolutely no risk for you in booking and joining us at the 2022 event. We wear all the risk so join us.

The World’s Greatest Global Business Camp is On!

Here’s just some of the takeaways you’ll enjoy:

HOW to “systemise” your business, so it runs smoothly WITHOUT your 24/7 involvement.

HOW to then “position” your systemised business for nice big PAY DAY when you decide to sell.

HOW a modest increase in “customer loyalty” can result in up to 80% increase in profitability.

HOW to retain employees & enthuse them to work smarter.

HOW to find more “A Grade” clients or customers & HOW to keep them longer.

HOW to be “the disruptor” & grab more market-share, no matter what your business is.

HOW to avoid “price-discounting” forever & alternatively use “value-add incentives” as a massive customer drawcard.

HOW to introduce “wow factor marketing” into your sales pitches.

HOW to use LinkedIn & other social media as wildly cost-effective “lead generators”.

HOW business strategy is critical in this post Covid era and understand how to implement your strategies.

HOW to measure and manage everything that is important in your business.

HOW to know the difference between leading, managing & selling.

Posted by: Tony Robbins, the following is an excerpt from one of Tony Robbins’ keynote speeches.

“The question is, how do we make ourselves better leaders? What is that leadership?

I believe leadership’s job, one, is to come up with that vision, something larger. What a great leader does is they see something better than everyone else, and then they raise the standard. They have so much certainty, they can pour that certainty into others.

Some of you may remember Walt Disney, or at least be familiar with who he is. My grandfather worked for him. He told me many stories about him. I can remember I got a chance to meet Roy Disney, Walt Disney’s partner, brother, I should say. When they opened the Epcot in Florida Disney World, which you may be familiar with, it was a big deal. They had worked on it for years. When Walt was alive, they started purchasing the land. He had this full vision.

The day of the opening, people from all over the world came to Epcot, came to Disney World. There are always people looking to tear something down. One of the reporters came up to Roy Disney, the brother of Walt Disney, and said, “Well, I know it seems like a beautiful day, but it must be bittersweet for you knowing Walt never got to see this.”

Roy Disney’s response was of classic leader response. He smiled to the man and said, “You’re mistaken. It’s clear why you are merely a reporter of other people’s visions, and not a creator of vision, and not a leader.” He said, “Walt saw this. That’s why you’re seeing it now.”

I think that’s what’s true for all that we’ve seen here. He had this vision. He had this certainty. He had this capacity to build momentum, to move people.

A great leader has vision, and 100% certainty. They are a person of influence. A person who influences the thoughts, the feelings, the emotions, and the actions of people for a greater good, not just for themselves.

Because motive does matter. If your motive in your business is just to make money, you can make it because you’re focused on it. But I believe life moves to support whatever supports more of life. And I think a reason why companies like Airbnb or Salesforce grow the way they do is because they have a higher purpose; which is to serve something more than themselves.

You try to take care of your family; you’re going to get different levels insight than just yourself. You try and take care of your company, even bigger insight. Try and take care of your community, the world, humanity—if that’s really in your intention, that will affect the quality of your results.

What we need today are leaders who are truthful, who have vision and who are driven to get a great result. And for those leaders to come together and create a shared vision of shaping a better future for everyone, everywhere”.

What a great way to understand what great leaders do and how they work.

A great way to become better leaders is to mix with other like-minded leaders and business people. We would love to establish some leadership groups that could meet monthly online or face to face and discuss issues and brainstorm ideas etc. If you are interested in something like this please come back to us and we can provide you with details. They would be small groups of 6 businesses and everything discussed would be confidential.

If you are interested to find out more e-mail jtsoulos@indigofinancial.com.au

The coronavirus crisis has led to the adoption of strategies that will continue to provide benefits in the years to come. By Andrew Harding, FCMA, CGMA1 June 2021.

Over the past year and more, European finance professionals have helped guide their businesses through the COVID-19 pandemic. They have played a key role in supporting their organisations to first navigate the initial shock and panic and then reset their strategies in response to events.

At a recent Money Talks roundtable, hosted virtually by the Association of International Certified Professional Accountants (AICPA & CIMA), a panel of European finance leaders discussed the challenges they faced during the pandemic. They also shared their lessons learned and explained how digital transformation had helped their businesses reimagine their futures post-pandemic.

Their key learnings were:

1. The crisis has highlighted efficiency opportunities

Using digital tools to run meetings and workshops drives efficiency because it saves employees’ time and reduces travel costs. Homeworking has also resulted in many organisations’ choosing to scale back their real estate footprint.

2. Automation can help drive profitability

The finance leader of an airline group explained that linking the company’s operational system with its accounting system had allowed it to create a real-time P&L for each flight, enabling the business to undertake quick analysis and allocate airplanes, pilots, and crews to profitable routes. This will help drive profitability for the airline once travel restrictions are eased in the future.

3. Sell the benefits of digital transformation to drive culture change

It is essential that finance professionals bring leaders and colleagues with them on the transformation journey. They can do this by involving the business in decisions around new systems and explaining how the systems will help them in their work.

4. Don’t put off bold decisions

During a crisis, businesses may be cautious about taking investment decisions. In doing so, however, they could miss out on opportunities to better serve their customers and grow their markets.

5. Maintain the agility, flexibility, and pace to adapt to fast-changing circumstances

Going forward, finance teams should look to maintain the agility and creativity they demonstrated during the COVID-19 crisis. They also need to support their companies’ efforts to innovate — for example, by developing new products or services or selling directly to consumers when they previously used indirect channels to market. Agility requires finance teams to make decisions at a rapid rate, without necessarily having access to solid financial analysis.

Increasingly, they are spending less time on forecasting and more time analysing different scenarios and the implications of these for the organisation. Many organisations have stopped doing three-year plans. One finance leader described the new agile approach of finance professionals as “adapt to win” and indicated that, at the moment, progress is more valued than perfection.

6. Engagement underpins productivity in remote teams

By having a weekly check-in with team members, finance leaders can help maintain morale. Celebrating wins — for example, at the month close — is also a good way to keep people engaged. To avoid overload, people should be encouraged to separate their work and home lives. One simple way of doing this is to change clothes at the end of the working day.

7. Establish an agreed protocol for running an online meeting

Many finance professionals had little experience with videoconferencing prior to 2020 and were initially reluctant to switch on their cameras during meetings. One finance leader suggested that a good approach to online meetings is to ask everyone present to switch their cameras on at the start and when speaking. Communication within teams can also be improved if people are encouraged to hold non-business-related meetings, such as virtual coffee times. Collaboration tools, such as Miro, can help finance professionals work together more effectively.

8. Remote working offers opportunities to recruit from a broader talent pool

Finance teams can now recruit staff from smaller cities and towns in their countries and even from other countries, depending on the sector they operate in.

Rise of the chief value officer

The roundtable highlighted that as well as advancing digital transformation, the pandemic has served to accelerate the transformation of chief financial officers into chief value officers. Increasingly, finance leaders are expected to take a holistic view of all the value generated by their organisation — both financial and nonfinancial — and this trend is likely to accelerate further as the recovery gathers pace. By taking fast and bold decisions, they’re able to grab opportunities.

This is a great opportunity for us to get more involved in your businesses as chief financial officers. Talk to us about how we can do that and provide you with so much value.

Over the next decade, as the baby boomer bubble of small and medium sized business owners roll through the system, Australia will experience one the largest transfers of business wealth in its history.

Succession planning is more important than ever. Not just because of the transfer of wealth, but because of the polarising impact of high supply and low demand on the saleable value of a business.

Australia is expected to see the retirement age of baby boomers peak over the coming decade. The basics of the law of supply and demand suggest that as supply increases, prices will be driven downwards. For SMEs however, there is a much greater probability we will see a dramatic polarisation in the price of SMEs for sale. High quality businesses command premium prices while low quality businesses will be highly price sensitive and, in some cases, unsaleable.

If your children are not offering you a retirement strategy, selling your business can be difficult if there are not obvious competitors or complimentary businesses knocking on your door for your market share or unique offering.

Forward planning for succession is a critical issue for SME owners who want to exit their business over the coming decade. This planning, with an adequate timeframe, allows you to actively enhance the value of your business.

Most business owners have a view on what their business might be worth and the factors that influence business value. The key question then is, what do you need to focus on to enhance business value for a potential buyer? There are four key areas: growth, capacity, profitability and risk.

Growth

Buyers will generally pay a premium for a built-in level of growth. Growth, if well managed, will produce increased profits. So, a potential buyer knows that the revenue stream they are purchasing with the business, comes with a growth increment. Not only does this growth factor offer future profit increments it also insulates the business against the ‘what if’ factor. Any major change in a business causes a disconnect and these disconnect events can impact revenues and profits. Built in growth offers some protection against this.

Capacity

Provides for both the present and capability to facilitate growth in the future. Areas where capacity needs to exist includes infrastructure, systems capability, and management capability. Systems and management are often the areas given the least amount of focus, yet they are the very areas where value can be leveraged and enhanced the most. One of the reasons why franchises command price premiums is because they offer a level of systems and management. These same factors can be built into any business.

Profitability

A history of profits and strong cashflows are normally the two greatest influences on SME business value. When assessing your profitability, you need to compare yourself at two levels. First compare your performance against the top quartile of your industry sector. Top quartile businesses always attract higher valuations. Then, look outside your own business sector. Measure your Return on Investment (ROI). Buyers of your business will not only be comparing you with your industry. They may be looking for investment return more than they are looking for a specific business. So, in a potential sale you may be competing with a business from another industry to secure your buyer. You should be looking for a ROI in excess of 25%.

 Risk Management

Business owners are becoming more sensitive to risk. Strong corporate governance and risk management policies will enhance business value. Buyers will be looking for a history of compliance and a risk management culture. Risk management can include the existence of current employment contracts, operating licences, customer and supplier agreements and OH&S procedures.

These four areas will normally be high on the business value hierarchy and the areas where change can most significantly impact on business value.

If business succession is on your agenda, you need to assess your business under these criteria. Where your performance or position is below what it needs to be, you can identify the issues that you need to focus on to change your business value.

This process may not simply mean the difference between an ordinary sale price and a good price. It may be the difference between a sale that releases your business capital or no sale at all.

Talk to us about succession planning for your business that makes a difference.

Most people would think that money provided by the Government to support people and business during a crisis would be tax free? Otherwise, it’s like giving money with one hand and then taking it away with the other, isn’t it?

But, the tax laws don’t work like that. To make a payment tax-free, legislation is required to enable it to be classified as exempt income or non-assessable non-exempt income. In general, any income received will be assessable unless the Government has legislated for it to be tax-free. JobKeeper for example was not tax free and anyone who received it in 2020-21 will need to declare it in their income tax return.

At the Federal Government level, the Prime Minister recently announced that the COVID-19 Disaster Payment will be tax free and legislation enabling this change is before Parliament. Other payments however, such as Pandemic Leave Disaster Payment, remain taxable.

The Treasurer has also been granted the power to make State and Territory grants tax-free but only from 13 September 2020, and only if they request the Commonwealth Government to make it tax free. If you’re confused, it’s not surprising. The result is a mix of tax treatments depending on what support you received and from whom. To date, only a series of Victorian business grants are tax-free (but we expect more will be made tax free).

The general rule is that grants are likely to be taxable unless they are specifically excluded from tax. If the grant relates to your continuing business activities, then it is likely to be included in assessable income for income tax purposes. The position can be different in cases where the payment is made so that the entity can commence a new business or cease carrying on a business but there will still often be some tax implications.

The support available to individuals and business has been constantly evolving and changing. Here’s a summary of where support stands around the country.

For individuals

From 2 August 2021, the COVID-19 Disaster Payment has increased to a maximum of $750 per week for those who have lost 20 hours of work or more, and $450 for those who have lost between 8 and 20 hours of work. In most cases, the payment now applies from day 1 of a lockdown. In general, you need to be living in, or impacted by Commonwealth declared lockdown to receive the payment although some States have funded an extension of the payment beyond hotspot areas.

A special separate $200 a week ‘top-up’ payment has been added for those currently receiving an income support payment through social security, ABSTUDY Living Allowance, Dad and Partner Pay or Parental Leave Pay in addition to their existing payment, if they can demonstrate they have lost more than 8 hours of work and meet the other eligibility requirements for the COVID-19 Disaster Payment. The payment was put in place because people receiving income support payments are not eligible for the COVID-19 Disaster payment.

New South Wales business

In New South Wales, the following grants and payments are accessible:

• Up to $100,000 in weekly JobSaver cashflow support payments. Payments are based on 40% of your NSW payroll payments. Eligible businesses without employees that meet the eligibility criteria (such as sole traders with no employees), can access a payment of $1,000 per week.
• Up to $15,000 through the expanded NSW 2021 COVID-19 business grants program
• NSW micro-business grants

The decline in turnover test required for the JobSaver, COVID-19 business and micro-business grants has been causing a lot of angst but some additional flexibility has been provided. Businesses and non-profit entities can now pass this test if they can show a decline in turnover of at least 30% due to the Public Health Order over a minimum 2-week period within the relevant test period compared to:

• The same period in 2019;
• The same period in 2020; or
• The 2-week period immediately before the start of the relevant test period.

The test period depends on which payment you are looking at:

• COVID-19 business grant: 26 June 2021 to 17 July 2021 (this is changed to 27 May 2021 to 17 July 2021 for entities on the NSW border with Victoria);
• JobSaver and the micro-business grant: 26 June 2021 until the Greater Sydney lockdown ends.

This additional flexibility is helpful for businesses that started after the comparison period in 2019 and for those that have undertaken an acquisition, disposal or restructure.

Queensland business

$5,000 Business Support Grants are available for those impacted by the lockdown from Saturday, 31 July 2021. Your business does not have to be in the local government areas locked down but needs to be impacted by it. To access the grant, you will need to show a decline in turnover of at least 30%. The grants are available to businesses with a turnover of $75,000 or more and annual Queensland payroll of less than $10 million. Applications open mid-August. See Business Queensland for details.

South Australia

Grants of $3,000 for employing businesses and $1,000 for non-employing businesses are available to businesses that experienced a decline in turnover of at least 30% as a result of the health restrictions from 20 July 2021. The grants are available to those with a turnover of $75,000 or more and Australia wide payroll of less than $10 million. See COVID-19 Business Support Grant – July 2021 for details.

More funding for Victorian SMEs

There are two main streams for grants in Victoria:

• Those who qualified for the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021; and
• Businesses that previously did not access grants

Existing grant beneficiaries

If your business previously received the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021, additional grants of $2,800 for the Business Costs Assistance Program Round Two and up to $20,000 for the Licensed Hospitality Venue Fund 2021 have been announced. Your business cannot retrospectively apply for these grants. See Helping Victorian Businesses Who Need It Most.

New grants

For businesses that did not access previous grants, the Business Costs Assistance Program Round Two July Extension offers grants of $4,800 for employing and non-employing business depending on your sector. For those in the hospitality sector, a new Licensed Hospitality Venue Fund 2021 July Extension is available offering grants of up to $7,200 for each eligible premises. Applications for both grants close 13 August 2021.

A new Small Business COVID Hardship Fund grant of up to $8,000 has been announced for businesses that are not eligible for existing support funding. To access the grant, your business must be severely impacted by the COVID-19 lockdowns with a decline in turnover of 70% or more. No further details are available at present.

Other support

For Alpine businesses, additional grants between $5,000 and $20,000 will be available to 430 Alpine based businesses. See the Alpine Resorts Winter Support Program (closes 20 August 2021).

Rent relief for commercial tenants is also now in place for businesses that have suffered a decline in turnover of at least 30% as a result of COVID-19. Landlords will be required to provide proportional rent relief in line with a business’s reduction in turnover and mediation is available through the Victorian Small Business Commission. A hardship fund will be established for landlords providing rent relief although no details are available as yet.

Please contact us if you would like support to prepare for, or to access, the support you need.

Business advisers will tell you that you need to begin a business with the end in mind; a phrase popularised by Michael Gerber in E-Myth

The announcement of the intended sale of Australian born fintech company Afterpay, pioneer of the ‘buy now, pay later’ platform, is a case in point.

The company was founded in 2015 by Nick Molnar and Anthony Eisen, listing on the ASX for $1 per share in May 2016. In 2017, they hit 1 million customers and 7,200 merchants, launched into New Zealand, and merged with Touchcorp Limited. A year later in 2018, they entered the US market. In 2019, it was the UK under the brand name Clearpay. In 2020, Hong Kong listed Chinese tech giant Tecent paid $300m for a 5% equity stake. By then, Afterpay boasted 5 million active US customers, 1 million in the UK. In this same year they took the opportunity to launch into Canada. In 2021, Afterpay announced the purchase of tech group Pagantis by their UK subsidiary in preparation for their launch into Europe.

Afterpay was also exceptionally well placed for the dramatic COVID-19 shift in consumer behaviour that supercharged online retail. As at 30 June 2021, the company had 16.2 million active customers (63% growth on 2020) and over 98,000 merchants (77% growth on 2020). When COVID-19 struck, Afterpay’s share price dipped to a low of $12.44 on 20 March 202 but by 19 February 2021, hit a high of $151.92 ($96.99 at 30 June 2021). At 30 June, (unaudited) group revenue was $925m, growing 78% on the previous period (of which merchant revenue was $822m). However, growth comes at a cost with the 31 December 2020 half year results showing an after-tax loss of over $79m.

The rise of Afterpay has been extraordinary; a combination of a game changing concept delivering consumer flexibility and the ability for merchants to grow their customer base with the potential of increasing per transaction values, all backed by an aggressive expansion plan. They are a brand that became a verb.

On 2 August, the announcement was made that US financial services and digital payments giant Square, had agreed to acquire all of the issued shares in Afterpay for approximately US$29 billion (A$39 billion). The sale is expected to be all in stock and Nick Molnar and Anthony Eisen will join Afterpay as employees in first quarter of 2022.

For many innovative and fast growth companies, sale is the end game – generally to another company in the same or similar market with strong synergies that is willing to pay a premium for the opportunity. Afterpay has achieved that in spectacular style. And, you can see the appeal of a business model that is replicable, utilises unique systems and technology, is adaptable, and has proven its ability to grow and expand globally.

The model

For consumers, Afterpay offers a way of spreading the cost of purchases over four payments across six weeks. No fees are charged unless the payment is late. If a payment is late, an initial $10 late fee is charged, and a further $7 if the payment remains unpaid 7 days after the due date. For each order below $40, a maximum of one $10 late fee may apply per order. For each order of $40 or above, the total of the late fees that may be applied are capped at 25% of the original order value or $68, whichever is less.

While free to consumers (unless they pay late), Afterpay charges merchants a 30 cent fee, plus a commission ranging from 4% to 6% to the merchant. Payments transacted through Afterpay take 48 hours to be delivered in full to the merchant.

The fee structure, and the fact that Afterpay makes spending easier for consumers to rationalise, has not been without controversy. A Senate committee and the Payments System Review explored whether more consumer protections, such as customer credit checks, were needed. However, neither review wanted to stifle the growth of financial competition or innovative fintechs, leaving regulation to market forces. At present, late fees represent less than 10% of the company’s revenue.

Afterpay store cards are available in the US and other markets. And, in July this year, Money by Afterpay launched in Australia and New Zealand with Afterpay staff trialling the product ahead of a full-scale launch anticipated in October 2021.

What if you have Afterpay shares?

The sale of Afterpay has a number of hurdle points including regulatory approval from the Foreign Investment Review Board and approval of the shareholders of both Afterpay and Square.

If the transaction proceeds then Afterpay shareholders will have two main options. They can either receive NYSE-listed Square shares or they could receive shares in Square that are listed on the ASX. This is because Square will establish a secondary listing on the ASX allowing Afterpay shareholders to trade Square shares via CHESS Depositary Interests (CDIs) on the ASX.

Afterpay state that the transaction is intended to be tax-free for Australian shareholders electing to receive NYSE-listed Square shares or CDIs. Among the conditions precedent is a ruling from the Australian Taxation Office (ATO) for Australian shareholders to apply scrip-for-scrip capital gains tax (CGT) rollover relief. If the rollover applies, then the cost base and acquisition date of the Square shares will basically remain the same as your Afterpay shares.

Below is a summary of the financial support available to businesses experiencing a decline in turnover due to the impact of the current Covid-19 outbreak.

2021 Covid-19 Business Grant

On July 19, the government’s 2021 Covid-19 Business Grant became available to businesses who are experiencing a decline in turnover due to the lockdowns in Greater Sydney and restrictions in regional NSW. Eligible businesses are entitled to a lump sum payment calculated based on their percentage of decline in turnover, as outlined below.

• $7500 for businesses who have had a decline of 30% or more due to public health orders
• $10,500 for businesses with a decline of 50% or more due to public health orders
• $15,000 for businesses who have experienced a decline of 70% or more due to the public health orders (paid in two separate sums)

The decline in turnover test covers a minimum 2 week period from 26 June 2021 to 17 July 2021, compared to the same period in June or July 2019.

To obtain further information and apply for this grant online, please visit https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant

Jobsaver

This payment will see eligible businesses receive fortnightly payments of up to 40% of their weekly payroll, provided they have experienced a decline in turnover of 30% or more. Businesses will also need to maintain their employee headcount as at 13 July 2021. The maximum payment for Jobsaver is $10,000 per week or $1000 per week for sole traders.

Applications for Jobsaver will open in late July.

Covid-19 Micro Business Support Grant

Businesses with a turnover between $30,000 and $75,000 can apply for fortnightly payments of $1500 for the duration of restrictions. Eligible businesses will need to have experienced a decline in revenue of 30% or more, and must have a person associated with the businesses reliant on the business as their primary income source.

Applications for the Micro Business Support Grant will open in late July.

If you would like any additional information on the grants above for SA, Vic or NSW please don’t hesitate to contact us.