With the new financial year craziness wearing off and we settle into our new normal, now is a good time to rethink your strategies. For this year in particular, it is essential that you do this. It is essential that small businesses are on the ball in thinking creatively. Here are some simple tips to Read More…
How STP has made tackling the COVID-19 storm easier for Think Talent
Ainsley Johnstone and Natalie Firth, Think Talent founders
Thu 7 May 2020 - 9:34 amFeatured | Small Business
Founded five years ago by Ainsley Johnstone and Natalie Firth, Think Talent is a modern executive recruitment agency that connects Australian and international organisations with top talent across Technology, Marketing & Digital and People & Communications markets.
Growing from a team of two to 12, their success in part is due to enterprise clients wanting to work with boutique organisations offering unique and tailored services.
When starting up and looking to scale the business, Think Talent was challenged with growing profitability and its workforce at the same time.
The company was stuck in a catch-22 familiar to many fast-growth businesses: without more staff, it was impossible to increase sales and profits, but without increased sales and profits, there was no way of hiring.
Working with a range of clients across large enterprises, Think Talent are often exposed to extended payment terms. And a clear view and understanding of cash flow was critical to hiring new talent. For Ainsley, this is where the benefit of Single Touch Payroll (STP) and the associated use of digital payroll software was clearest.
The introduction of STP has driven a wave of digital payroll software adoption like never before, supporting businesses with seamless reporting of wages and superannuation information to the Australian Taxation Office. It’s also changing the way small businesses manage their finances.
Often using digital software of any kind for the first time, small businesses are reaping the other benefits of swapping spreadsheets for software. Digital tools are not only simplifying payroll and tax reporting, they are also supporting cash flow visibility. Businesses are better able to keep on top of account balances, generate invoices and track incomings and outgoings.
With people at the core of Think Talent’s operations, digital software is also assisting Ainsley and Natalie in applying for support during the COVID-19 pandemic. Think Talent has enrolled for the Australian Government’s JobKeeper program, which requires businesses to be STP-enabled.
We spoke to Ainsley on their business, STP and the COVID-19 impacts as well as to a Xero representative on managing cash flow in this challenging time.
What is the when, what and why of founding Think Talent? How have things changed since day one?
Natalie and I co-founded Think Talent in 2014. Both of us had returned to the workforce after maternity leave and wanted to create a new way of working that would empower us as females to continue at the senior level with the flexibility to manage our new work-life blend.
When we started the business, our focus was to bring the “human” back into recruitment and align ourselves to the future of work. The recruitment sector has always been very traditional, and we wanted to disrupt it and create a high-performance culture that focused on outcomes and offered flexible working arrangements that supported people to care for their whole selves.
Fast forward to six years, we’re now a team of 12. Our value proposition has evolved, we have listened to market feedback, tested different offerings and learnt from our mistakes.
We noticed technology changing the workplace, and businesses needing to be more competitive to keep pace. We saw the rise of personalisation and the connection between customer and employee experience changing the way our clients operate.
Think Talent responded by understanding the intersect between people, customer and technology experience. We have identified emerging skill sets, the talent needed today and into the future to help business thrive. We now connect leading Australian and international organisations with globally represented top talent across three portfolios: Technology, Marketing & Digital, and People & Communications.
Right now, we face an unprecedented situation with the COVID-19 pandemic, which has turned business on its head globally. We have pivoted to crisis management and are focused on implementing new ways of working, reducing costs, managing cash flow and keeping our team together to get our business through.
Can you explain how STP is helping you manage cashflow?
Think Talent’s business depends on our people, who are our greatest cost and opportunity, so we need to know where the business stands at any given point in time. Digitising our payroll through Xero has given us real-time data and full visibility of our employee cost, including superannuation and leave balances.
When faced with a crisis such as the COVID-19 pandemic, cash flow management is critical. We are looking at it every day to make tough calls under time pressure. It is essential to have a real-time understanding of cost so that we can make informed decisions efficiently in the effort to balance the books, get our business through and keep our team together.
With STP pushing for the adoption of digital payroll software to help cashflow visibility, what have you been able to do as a consequence that you couldn’t do before?
Understanding the cost of doing business in real time is a clear benefit of digital payroll and especially important when faced with the COVID-19 crisis. As a small business, we run lean and having a holistic view of our business’s finances allows us to make informed business decisions in real time, importantly how to make people decisions that avoid profitability risk.
STP also ensures the ATO has real-time information on our people’s pay and superannuation, so they have peace of mind. It also makes things easier for our employees come tax time as they receive an income tax statement via MyGov.
For us, we don’t need to send out the individual payment summaries as we have in the past which has reduced both work and cost.
What are your future plans for growth, keeping in mind STP is making things easier for you?
Our digital payroll software, reporting through STP, has enabled us to have greater visibility of our cashflow and as a result, we were planning to grow our headcount. Our strong growth plan in place for 2020 involved doubling the size of the business and growing our team. Unfortunately, the COVID-19 pandemic has turned these plans upside down and we are now focused on keeping our team together and weathering the storm.
Thankfully, it looks like the Australian Government’s JobKeeper support program will allow us to retain our people during this crisis so that we are positioned for growth as things recover.
JobKeeper is administered through STP and from our accountant Bluerock’s perspective, this will allow the Government to support small businesses in need quickly. Timing is critical and rebates can be issued with the touch of a button which is a massive cashflow advantage.
Did you find the transition to STP easy or difficult? Or perhaps somewhere in between?
Bluerock manages Think Talent’s bookkeeping and accounting requirements so we can get on with what we do best. We didn’t have to lift a finger to implement STP, making it a pretty easy transition at our end.
From our accountant’s perspective, the integration using Xero was seamless and the year-end data processes that support income tax have been simplified which makes things easier for them and reduces some cost for us.
Now, Xero’s Small Business Advocate, Angus Capel, talks us about managing cash flow during COVID-19 and how important it is to have digital tools for accounting in place.
What advice and help would you give to other small businesses looking to improve and manage cash flow?
The heartbreaking reality for many businesses now is that their focus is on surviving and managing cash flow is crucial to this. The Federal Government’s JobKeeper initiative is a lifeline for many businesses during this time, helping them to retain staff so they can continue operating in the future. If your business needs support, register for JobKeeper through the ATO so you can find out if you are eligible. This should be a priority to help you manage cash flow and to keep connected to your employees.
Now more than ever, cash flow is a big issue for small businesses. Understanding cash flow will help business owners in making informed decisions at the right time. There are some simple ways to start managing your cash flow now so you can be prepared when looking to rebuild from the impacts of COVID-19. Healthy cash flow shouldn’t be left up to chance, with business owners required to put in the time and effort to understand exactly what their cash flow position is.
Firstly, it is important for business owners to understand their net cash position. Every single business cost should be mapped – these include wages, rent, electricity, inventory, finance costs, day-to-day expenses and taxes, among many others. These costs should then be compared to revenue and revenue projections, to understand a business’s net position.
From here, it’s crucial to be doing a deep dive on bottlenecks, which is something you might do with the support of an accountant or bookkeeper. It’s likely an advisor can more easily identify opportunities to reduce bottlenecks, while also being able to advise on industry best practice. This might include looking at things like the gap between the end of a job and getting the invoice out, whether clients question invoices regularly, if the business is paying its bills early, whether there are consistent late payments, if a business is carrying excess inventory or if there are opportunities to change terms with suppliers. With this knowledge, you can take steps to systematically fix problems.
Finally, by harnessing technology to fix problems, streamline operations and replace manual tasks, you will get more time back to focus on what you do best. Again, your advisor is very well placed to help here. Bottlenecks can be drastically improved – if not fixed – by using a job management system, digital invoicing and an inventory management app linked to your online accounting software. These tools are designed to improve cash flow and by giving you a real time view of your business’s financial position, you can more easily address problems immediately.
Have you seen any trends in terms of why small businesses have been so late in adopting STP? Or why there has been some initial uncertainty towards it?
Businesses already using online accounting software have navigated the transition to STP relatively well. For them, the process of becoming STP compliant has been a matter of a few clicks to complete the sign-up and calling the ATO to confirm they are good to go. Having already been reaping the benefits of digital payroll, these businesses now have the added bonus of no longer having to complete PAYG summaries or ‘group certificates’ thanks to STP.
For business owners unfamiliar with digital payroll, this might come across as a big change and it can be overwhelming. For many in this cohort, it may be the first time they’ve used online tools to manage their business’ finances. Daunting at first, many are now finding the transition to digital payroll an exciting one. It’s a step towards using technology to enhance and simplify business processes. It can also speed up business growth. Xero’s Small Business Insights data shows that businesses who invest in technology grow revenue faster than those who don’t.
Business owners looking to sign up for JobKeeper need to be STP compliant. They can reach out to a trusted advisor to support the process or call on a range of resources available from the ATO. ”