Owning your own home is not getting any easier. And investing in property can be even more challenging. Being on top of your finances and maintaining (or rebuilding) a great credit history are crucial. Therefore, your financial future could depend on your bookkeeper.
Since the GFC (Global Financial Crisis) banks have come under increasing scrutiny, and have become more risk-averse. In July 2015, APRA (the Australian Prudential Regulation Authority) also introduced new “capital adequacy requirements for residential mortgage exposures” that will come into force on 1st July 2016. Which means banks need to have 50% more capital than previously to ensure their financial stability in connection with exposure to residential mortgages.
What does that mean for you? It means that banks are going to expect, on average, higher down-payments, and lower LVRs (Loan-to-Value Ratio). It also means that they’re starting to put their interest rates up to build their capital reserves, with the Westpac Bank today announcing an increase of 0.2% on their home loan variable rates. They have directly attributed this to the impact of the regulatory changes.
In short, you need to be able to provide more money up front, and convince any mortgage provider that your financial house is in order.
But as most self-employed or small-business owners can attest, being your own boss brings with it an additional burden of proof when it comes to you convincing the banks you’re a good credit risk.
You may have been told by business advisors that great businesses focus on their ‘core competencies’ and outsource the rest to sub-contractors, consultants, and specialist providers. And this is frequently true. Unless you have boundless energy, unlimited time, and a massive amount of experience, you’re usually best investing your time and energy into the aspects of your business/craft/industry/trade you know best, and paying other people to keep the administration, marketing, technology, and other specialist needs running smoothly.
This is never more true than when it comes to bookkeeping.
One of the biggest challenges faced by many businesses is keeping their financial records up-to-date, their taxes paid, and having accurate information available with which to ensure their sales, marketing, and cost-management is hyper-focussed and effective. But what many business owners fail to take into account is that falling behind on your bookkeeping, or having inaccurate financial accounts, can also result in penalties, legal action, and a damaged credit history.
Top Class Accounts have worked with a number of great businesses that have struggled to stay afloat due to poor cash flow management, late payments to the ATO, and being weighed down by penalties and additional fees. And when the business suffers, so too does the owner. Their dreams of owning a new home, and investing for the future, are frequently delayed or destroyed and they become trapped in a business which was supposed to be their ticket to a fantastic financial future.
Our bookkeeping services focus particularly on:
- Financial Reporting and Management Insights
- Tax Compliance
- Accounts Receivable and improving Cashflow
If you’re unsure whether you need a qualified and experience bookkeeper, speak to us with no obligation about what we can do to help you create a solid financial future.