Archives for September 2016

Financial fundamentals to fund a growth strategy

Fundraising Capital Donation Funds Support Concept

(First published by Inside Small Business)

It’s vital the primary financial controller of the business takes a commercial approach to the different funding options available and how each will lead to improvement in the business performance.

With the Federal Government currently promoting innovation and risk-taking in Australia through support and generous tax concessions, it’s now more attractive to invest in Early Stage Innovation Companies (ESICs) and to obtain capital funding. Whether it’s a new business or an existing sustainable business, what funding options do you look at to continue to grow and expand your business?

Generally, SMEs seek funding through two sources, capital contribution from owners and debt financing with a corporate lending institution. SMEs tend to provide the last set of financial statements to their banker and hope for the best. Lenders will evaluate the business to determine the ability to repay debt. The healthier the business looks, the more the funding options available, and usually at better rates.

How can you avoid the pitfalls of seeking finance?

One of the key steps that businesses fail to consider prior to seeking funding is reviewing their credit profile. Whether you are seeking financing through debt or equity, here are a few key areas that will better your credit profile for lenders or potential investors:

  • Prepare an Information Memorandum (business plan). Outline the key information that investors will be seeking, such as:
  1. growth plan and forecasting
  2. identified opportunities within your business
  3. clear breakdown of how the money will be spent
  4. valuation of the business
  5. core drivers of the business
  6. ability to repay debts or return on capital
  7. strategic value and key assets
  8. outline of key stakeholders within the business.
  • Identify the amount of funding required to uplift the business through the growth stage. This ensures profits are not diluted through debt repayments or capital return.
  • Seek professional advice and assistance from tax and legal advisers.

Linking with the right investor may be valuable as you may be able to leverage off their experience and networks. Look for opportunities where the investors can add more value to your business. Consider whether you are able to leverage off their experience and networks (this is known as ‘smart money’).

You are the heart and soul of the business, and as much as you would like to work with a particular investor, they would need to want to work with you, too. Potential investors will not only be looking at the business opportunity but who they will be partnering with.

What other financing is available?

Besides larger scale debt and equity financing, your business may require short-term capital. For example, where you need additional funds to satisfy short-term cashflow requirements. This type of funding generally doesn’t require the same level of detail as above. Partner with an advisor who can help you to analyse your situation to determine what funding would best suit the circumstances.

Capital for cashflow management could take the form of one or more of these arrangements:

  • Debt factoring – selling outstanding invoices to third parties at a discount to help with cash flow management.
  • Trade financing – with international trading getting easier, there are still some risks involved such as currency fluctuations and non-payment for goods or services. To protect against these risks is to issue a letter of credit, i.e. the exporter is guaranteed payment by the bank upon receipt of confirmation the goods have been shipped or services provided.
  • Inventory financing – loan or a line of credit to assist the purchase of inventory which then serves as collateral should the business be unable to sell the products or repay the loan. This can help cash flow during seasonal fluctuations and/or slow moving inventory.
  • Credit-card stacking – using credit cards to finance purchases of supplies or equipment. As credit cards tend to have higher rates, planning is required to ensure consideration for: 1) minimum amount required, 2) ability to repay debt, and 3) timing of repayment (considering the rate of interest).
  • Reward crowdfunding – A way to raise capital (as well as increase your customer base) through products, gift cards and rewards.

It’s vital the primary financial controller of the business takes a commercial approach to the different funding options available and how each will lead to improvement in the business performance and ultimately meets the requirements of the business and its investors.

5 Super charged tips to maximise your corporate superfund


A corporate superannuation plan is the default superfund that a new employee has the choice to join when they commence as an employee at a company. After reviewing our clients’ corporate super plans, it’s clear there is plenty of opportunity for members to utilise their default super fund in a more optimal way. This article looks at some quick, simple wins that a member – of any corporate fund – can take advantage of today.

Super charged boost #1: Paying multiple fees and premiums?

If you are like many Australians entering a new job, it’s likely that you have accepted the default employer corporate plan with the default investments and insurances, perhaps not considering current superannuation arrangements that may already be in place.

Quite often, fund members have multiple funds and this doubles up on fees and also lacks one consistent investment strategy. Fund members may also be doubling up on insurances, such as salary continuance insurance, and don’t realise that they can’t claim on both policies at once should they need to.

If you are considering consolidating your super funds, be sure to compare the fund administration fee, investment option fee, the insurance cover and premium. Also keep in mind if you move away from your employer fund there is the possibility of losing benefits such as lower fees and automatically accepted insurance (no medical underwriting) which is usually part of a group employer plan.

Super charged boost #2: Do you understand where your super is invested?

If you joined the fund after January 2014, it’s likely that you will be invested in a MySuper compliant product.

MySuper is part of the Stronger Super reforms announced in 2011 and took place to ensure market participants create a range of easily comparable, relatively simple products, which in turn will focus  on net costs and returns.

Under current legislation, there are two types of default investments allowed. The first is an aged based or “Life Cycle” investment option which changes its investment style and mix overtime as the fund member approaches retirement.

The second is a single diversified investment option that is generally based on the age demographic of the members within an employer super fund plan.

This does not necessarily mean that the default is appropriate for you.

To help assess whether or not this is appropriate for you, you may want to consider:

  • Investor profile: are you a conservative or a growth investor?
  • Attitude to volatility: are you likely to make emotional decisions based on movements in the market?
  • Time horizon: how long do you have in the work force? When do you want to retire?
  • Diversification: is your super invested across the different asset classes to manage risk?

Super charged boost #3: Not all insurances are created equally

Just because you have default insurance offered in your fund, it does not mean you are adequately protected to the level you need to be.

Typically, a person will receive default cover based on income levels. This is a great start as a base but consider if the following events are adequately covered.

If a death or total disablement occurs, have you factored in an amount to clear debt? Have you considered that your household income will now reduce – is there an amount factored in to ensure a similar standard of living for your surviving family? Have you considered carer costs if you cannot look after yourself? If you have children, have you considered the impact of their ongoing educational expenses?

If a major medical event should occur such as cancer, heart attack or stroke, have you considered protection to ensure medical costs are covered at a minimum? You may also want a buffer to reduce some debt, have an amount for emergency or if you require time out of the workforce for recovery.

If you are unable to work due to injury or illness, have you considered the impact of a drop in income or even worse, no income at all? You may want to review your income protection policy to ensure that your income is supplemented whilst you are unable to work. Things to consider include how long you are willing to wait for your first monthly payment or how long would you want the benefit for if you had to rely on it for income.

Super charged boost #4: Who is the real beneficiary?

It’s important that you have made clear nominations about what happens to your super balance in the event of your death. It’s all too common that advisers see account holders not making a nomination of beneficiaries. Without any nomination, your super is potentially contestable – for example, by a relative who you might not have a good relationship with.

If you are proactive and have made a nomination, it’s important to review your situation on a regular basis to ensure the beneficiaries are still appropriate. This is especially important if you have had a major event in your life such as a marriage, inheritance, divorce, new birth or asset acquisition. Also, be aware that you may need to refresh your nomination every three years depending on your superfund and type of nomination.

Because planning your estate is personal to you and your family, it’s important to seek advice for your specific situation.

Super charged boost #5: Is your lost Super sitting with the ATO?

It’s not unusual that we discover funds for clients that they did not even know they had. In one particular case, we were able to retrieve a remarkable $40,000.

If you have a lost account or not sure if you have lost any super, your ‘lost’ super account could be transferred to the ATO without your consent. The good news is that you can still retrieve it.

How can this happen? If you change jobs regularly, worked in part time jobs, started your own business, moved house, or just simply not paid attention, you could lose track of any correspondence from your super fund. Without regular contributions or contact, your account could be transferred to the ATO as lost.

If this is you, the ATO offers a free online tool called SuperSeeker which will give you a good start in relocating any lost super or your adviser can help you.

Although retirement seems a long way off for a lot of us, it’s worth spending a few hours on a regular basis to take stock of your situation and consider where things can be improved.



Prosperity Wealth Advisers is one entity within the Prosperity Advisers Group which spans three office location.

Disclaimer: Prosperity Wealth Advisers ABN 32 141 396 376 is an Authorised Representative and Credit Representative of Hillross Financial Services Limited, Australian Financial Services Licensee and Australian Credit Licensee Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your advisers, our firm, Hillross Financial Services Limited, its associates and other companies within the AMP Group may receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details. If you no longer wish to receive direct marketing from us please call us on the number in this document and if you prefer not to receive services information from AMP, you may opt out by contacting AMP on 1300 157 173.


Paving the way for women in finance


We all know there is a large gender gap in the finance and accounting sector. A recent report showed that in financial institutions, women are holding only 19% of senior positions, 14% of board seats, and a shocking 2% of CEO roles.

Many firms are struggling to reach appropriate levels of diversity, even though gender-diverse workplaces have been shown to perform better. While this gap has been shrinking in recent years, it is still an issue when looking at leadership positions. At Prosperity Advisers, you wouldn’t be able to tell by looking at our senior roles. Over 47% of our leadership team are women.  We sit squarely within the finance sector, and hold a total staff count of 60% women.

We have celebrated rapid growth within the company across our offices in Sydney, Newcastle and Brisbane. With this growth, there has been a strategic shift in management and staffing requirements. Prosperity is proud of our eight recent internal promotions, of which five went to women within the company – from accounting to the management team to Human Resources. The current promotions will bring the leadership team to almost 50% female.

Chief Executive, Allan McKeown said, “Our goal at Prosperity has always been to foster an environment that supports the growth and involvement of our people. We provide challenging professional experiences and deliver the right tools and support to assist our people to drive their careers forward.”

We are proud to have created a working environment in the financial sector that builds women and men up equally. Our unique work environment fosters the growth of the individual and business together.

One of the recipients of the new internal promotions is Kelly Chard. Kelly has elevated from the Business Services and Tax team to become a new Associate Director. Having worked for the firm for 10 years, Kelly is a role model to others, representing Prosperity’s equal love for mentoring others and promoting the firm’s vision.

Kelly’s career has evolved over time: “At the start of my career I thought a great accountant would just get the numbers right or find the best tax outcome. With the internal training and mentoring through Prosperity I was able to extend this mindset and focus on getting to know my clients on a more personal level so that I now advise them in far broader areas including growth planning, managing their time efficiently and financially protecting their families.”

Stephanie McCauley is another great example of the career diversity evident in Prosperity. Having worked for the firm for many years, Stephanie initially started in administration, and then moved through marketing before landing in Human Resources. She has just been promoted to Manager within the HR team. She was able to test her strengths and support our growth plans across many different departments. Highly capable, Stephanie has earned her promotion through dedication and a strong work ethic.

Katrina Brooker has been promoted to Team Leader within the firm’s Smart Drive group. Her expertise and management prowess ensures efficiency and high quality service to our clients. Kerry Kreutzer in the SMSF team has been promoted to Supervisor, and Ashley Read from our Outsourced Payroll team has been promoted to Payroll Officer. These promotions show the range and extent to which we are dedicated to raising all of our employees to their best potential selves.

When considering where to work, flexibility is a big part of the equation for professionals in today’s world. Prosperity strives to make this possible for both women and men. Kelly said, “I’ve worked part time and at times remotely to juggle my study and family commitments during my time with Prosperity which has been really important to me and my family.”

Prosperity’s Director of Human Resources, Tanya Craft says “the right cultural fit is integral to our success. We have clearly articulated our Prosperity DNA so we closely align values and beliefs with those of our team and prospective team. This alignment supports our high standards of performance and ethics and a strong culture of learning, development and achievement.”

Women are thriving in all offices at Prosperity Advisers, proving that the gender gap within the financial sector will hopefully soon be a problem of the past.