News just in: APRA, Australia’s banking regulator, just announced they have begun consulting on possible revisions regarding serviceability meaning banks no longer have to use its theoretical 7% interest rate floor when calculating if your clients can service a loan. They could instead use the loan product rate, plus a 2.5% buffer. So, if your client is applying for a 4% home loan, the bank will have to test them to see if they can handle rates at 6.5%. So get your opposable thumbs ready and expect a spike in calls from clients previously rejected for a loan but now after another crack. Needless to say, don’t hesitate to reach out if you think I can help.
In other news….
Going above and beyond for your clients is as easy as 1,2,3,4
Every year the earth orbits around the sun. Halfway through this cosmic process, the ATO celebrates its own form of Christmas—end of financial year (EOFY). Instead of a chubby, white, bearded guy squeezing himself down your chimney to shower you with gifts, there are ATO elves squeezing you and your clients for what is rightfully theirs . While it’s probably not a good time to remind anyone that giving is more important than receiving, it is the perfect occasion to get clients thinking about their goals for the next financial year. Your business advice may be the only gift they get…
What’s your strategy?
We all know that failure to plan equals planning to fail. Or do we? Remind your clients that every quarter they should step back and review their strategy. Ask:
You could also chat about tax changes and whether super obligations or contribution limits are different. Clients will appreciate your encouragement to really think things through.
Cash is king
She that cannot pay must pray! Clients need to juggle the wobbly skittles of income and expenses. A simple way of avoiding cash flow apocalypse is to manage late payments. Terms and conditions could request 21-day settlement of invoices. Or, for an especially big or long job, demand 50% upfront. When customers baulk at paying ahead, it’s a warning… Maybe a faithful credit card, or short term borrowing could smooth your clients’ annual lean months? Can you recommend a low interest loan and a plan to pay it back? Oh, and another thing – cheques were great for 1975, but EFT rules today!
Could you spend less?
Business expenses are a bit like the tide—you don’t always notice them creeping up until they’re lapping at your feet. Suggest clients don’t stand there gawping while the water rises or, pin their rescue solely on increasing sales. At contract renewal time, there are ways to pay less for water, electricity, internet and mobiles. Both hard negotiation, or a simple switch, can lower prices. And it would be a sad EOFY indeed, if you couldn’t find them a better insurance deal, or help with refinancing… Any of these measures will increase profit! Did I mention I can help with credit, refinancing?
Are your service providers up to scratch?
Make sure your clients expect and demand quality when they pay for a service. Loyalty is a noble trait, but if your bookkeeper can’t add up, your accountant appears clueless or your once enthusiastic cleaner now rarely vacuums; it’s misplaced. In a dog-eat-dog world, almost everyone is ready to sub-in a newer, better supplier. And remember, this advice also applies to everything you do!
“Merry EOFY everyone!”