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What Is The Real Cost Of Your Time?

Are you not fully appreciating the real cost of your time, and leaving money on the table as a result?

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More often than not, the true cost of time, that is, the hourly rate of each person working on a project has never been accurately calculated and therefore not factored correctly into the quotation price, including overheads that are paid annually and profit. Owners forget that they too are selling time in managing the project, but more often than not, include the cost of their time as part of the profit.

Many business owners do not realise that part of what they do is sell time and they do not consider calculating how much their hourly rates and those of their employees are. For example, take a small artisan ice-cream producer who has two employees who mix the ice-cream ingredients and place the mixture into ice-cream machines all day, while the owner spends half of every day supervising this process.

The employees are selling time and the owner is selling a half day of her time every day. They are not just selling ice-cream. These costs should be factored into each ice-cream tub’s selling price.

Related: Your Comprehensive Financial Stability Check List

In simple terms, hourly rates are calculated using the employees’ annual remuneration package, including benefits such as medical aid, provident fund contributions and travelling allowances, company contributions to statutory obligations and overheads plus profit divided by the average labour capacity in a year.

To simplify this, here is the equation:

Annual Remuneration + Benefits
+ Company Contributions
+ Annual Company Overheads + Profit

____________________________

Labour Capacity

If the owner of the business is providing the service personally, the remuneration should be market related and relevant to the years of their experience as well as the skill level and risk attached to the actual service being provided. For example, in the medical profession a cardiac surgeon provides more complex services and carries more risk in his work than a general practitioner and would therefore have good reason to demand a higher fee or hourly rate.

Real costs

Depending on the industry, some element of an employee’s day will be unproductive as it is unreasonable for any person to be productive for a full eight hours, particularly in a high-skilled industry.

That leaves just 14 working days a month when averaged over a year. That’s right, less than three weeks a month.

Make sure that you recalculate your hourly rate and that of your employees each time there is a change in remuneration or benefits. The remuneration paid to employees who do not directly generate income, such as receptionists, administrators and sales personnel should be included under overheads.

If the hourly rate costing is correct, each employee’s true productivity can now easily be measured against the income they directly produce or have contributed when compared to their remuneration package. This provides useful information when conducting employee appraisals and addressing pay rises.

Related: How to Get the Better of Debt

Related: Understanding Your Responsibility As An Employer

Monique Sharland is the CEO of Business Accounting Network. She is a professional accountant, SME tax law expert and franchising specialist.

EasyBiz QuickBooks – Business Management That Balances

EasyBiz QuickBooks – By Entrepreneurs, For Entrepreneurs.

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EasyBiz QuickBooks are known for their business management software that makes accounting easy and the reason for that is EasyBiz was once a start-up business too.

Developed from the entrepreneurial spirit of Gary Epstein who wanted to offer small to medium businesses the opportunity to take ownership of their business success and growth by offering them an accounting package that would help them to achieve these goals.

EasyBiz have been there – done that, and are striving to share this knowledge and experience with their loyal customers to ensure that they bypass all of the possible pitfalls associated with the transition from being a growing business to a big business.

Related: 5 Time-Management Tools for Small Businesses to Improve Productivity

QuickBooks’ history in South Africa started 22 years ago, in 1994, when it was part of the Brilliant Accounting Software Company. In 2003 Softline Pastel merged with Brilliant and a year later QuickBooks was set up as a separate company within Softline.

Gary Epstein: Managing Director of EasyBiz QuickBooks

Gary Epstein saw the value of this global brand and seperated from Softline by way of a Management Buy Out in 2005. Since then, guided by passion and a belief that this software truly lives up to its promise of making accounting easy, the company has gone from strength to strength in the South African market.

With over 50 000 users in South Africa and 63 Million around the world, QuickBooks has indeed gone from a relatively small business to a force to be reckoned with in the accounting and payroll software space.

This growth is not surprising when one considers the innovative and comprehensive nature of QuickBooks’ business software solutions. QuickBooks recognises the challenges that most small and growing businesses face – they have faced them too.

Many entrepreneurs, executives or managers are very good at what they were trained to do, but have very little idea about how the financial side of the business operates.

How many business owners and managers have you come across that can’t read a balance sheet? If you ask them why, they will always say that they rely on their CFO, FD, FM or accountant to tell them what’s happening to their business’s finances.

This lack of financial acumen has resulted in business owners being misled, which in turn has led to the demise of many businesses.

This is why QuickBooks not only developed accounting software that is quick to learn and easy to use (for operators as well as senior management), but it can also be accessed by different levels of a business, as the business grows.

Take for example QuickBooks’s latest innovation – the Business in a Bag concept – aimed at start up’s and fledgling businesses, this package includes software, a training manual, discounted training and mentoring (all at a very reasonable price) and has been devised to help new business owners to achieve their goals.

QuickBooks continues to focus on serving the needs of small and medium-sized businesses in South Africa.

There are no hidden surprises and of course, with QuickBooks’ legendary, easy-to-use interface that has made QuickBooks the choice of millions of users globally.

Related: 16 Entrepreneurs Share 16 Tools They Cannot Live Without

Their entrepreneurial spirit and understanding of the needs of their customers has certainly been a contributing factor in creating the massive support network that they offer to businesses, whether they are just starting out or managing exciting change and growth in their organisation.

Says Gary Epstein, MD of EasyBiz QuickBooks, “We are an entrepreneurial concern and know how difficult it is to start and manage a small business. On this journey, one thing is certain, without a good financial understanding and a feature-rich accounting package, most new ventures fail. We believes in assisting start-up and growing business and our goal is to help ensure that the entrepreneurial spirit of South Africa stays alive”.

How the Right Technology Makes DIY Payroll As Easy As 1-2-3

Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR, offers a simple guide to easy DIY payroll with the right technology.

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If you own a small business and employ people, making sure they’re paid accurately and on time each month is probably one of your biggest headaches.

After all, it’s not worth your while to pay a full-time resource to run a small payroll, while outsourced providers can be expensive and unreliable.

Related: HR Management Basics for the Small Business

However, it’s simpler and less time-consuming than you might imagine to run your own payroll, provided you put the right tools in place.

Here are a few steps to follow to successfully process a SARS compliant payroll and pay your employees on time, and all in just a few hours a month.

1. Have the correct employee info

Ensure that you have up-to-date and accurate personal information for each employee, including:

• date of birth (age affects the tax calculation)
• banking details
• medical aid contributions and dependents (for tax credits).

Employee self-service solutions allow your employees to view and edit their personal information from a web browser or a mobile device. That means they can help you keep their records up to date, which can save you a great deal of time and inconvenience.

2. Get the basics done

Capture the basic data for each payslip that will remain constant each month, for example, monthly salaries, pension and medical aid deductions, and fixed allowances.

If you store this information in your payroll software or on a spreadsheet, you won’t need to recapture it each month.

3. Getting the variable payroll input

There are many fields on the average payslip that change all the time – overtime, bonuses, commissions, travel claims, and loan deductions or garnishee orders.

Some of this information might be on email, some jotted down on bits and pieces of paper, and some claims might still be outstanding. Use technology to bring order to the chaos.

Insist employees use employee self-service to submit their timesheets and claims for overtime and expenses, so that you will have access to the information in one place when you need it.

4. Calculating deductions

This is the most difficult, time-consuming and error-prone step in the whole process, particularly if you try do it yourself with a spreadsheet or a calculator and a piece of paper.

Rather invest in a reliable payroll solution. There are affordable options with flexible, per-payslip pricing.

The really good ones allow you to do your payroll at your convenience nearly anywhere you have access to the Internet. You can do your payroll from your tablet or smartphone while travelling as easily as you can from your computer at work.

Related: How to Survive The SARS Season

5. Producing a professional looking payslip – in paper or electronic version

Providing your employees with a proper payslip is a requirement of the Basic Conditions of Employment Act. If you make use of a software solution, you will be able to generate a well-designed payslip with all the information required by law simply by hitting the print or email button.

6. Reporting to SARS

Each month, you must report your Pay as You Earn, Unemployment Insurance Fund (UIF) and Skills Development Levy calculations to SARS, and of course, pay the money to the agency. You also need to send the UIF a list of your employees, how much they earn, and how much their UIF contributions are.

Payroll software will produce these reports in the correct electronic formats so you can email them or upload them to SARS’ e@syFile software.

5 Surefire Ways to Get Clients to Pay on Time

Simplify the way you bill and collect funds from your company’s customers.

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Late payments can be one of the most frustrating parts of owning a business – not to mention being potentially crippling to the bottom line.

As the lifeblood of any business, healthy cash flow gives business owners the means to pay employees and procure the goods they sell. In contrast, when times get lean and cash dries up, even the most finely tuned operation can be at risk of collapse.

For many small business owners, uncertain cash flow is what holds them back from reaching their full growth potential.

One of the leading culprits of poor cash flow is late-paying customers. By implementing a few, simple billing practices, you can reduce the time before payment and establish steady, predictable cash flow.

Related: Hate Making Collection Calls? How to Do Them Right

1. Embrace the cloud

It may be a cliché, but the cloud has changed the way the world does business and. Leveraging the cloud can improve nearly every aspect of running a business.

With the cloud you can have information at your fingertips, anywhere, anytime. You can access the same documents you edit on your desktop from any mobile device. Should you receive a question about an invoice and need to put last-minute touches on it, you can confirm information and send it right away.

Mobile-enabled interactions can solve genuine pain points for businesses and their customers.

2. Invoice correctly on time

Setting reminders and alerts can help you streamline the process for submitting invoices consistently and on time each month. You may even be able to set up automatic, recurring invoices.

This would reduce the amount of time required for the company to perform redundant communication between customers, businesses and employees.

Better yet, for recurring monthly bills, your customers may even be able to set up automatic payments to the company, saving time on both sides and providing your company faster payment.

3. Offer incentives for paying early

Use incentives to establish desired customer habits such as paying invoices early. Consumer apps that track rewards and deliver additional incentives and discounts for using and paying through a platform reinforce continued use.

Offer incentives or discounts and give individuals a reason to act quickly and in a timely fashion. Sometimes a little push is enough to get someone over the hump and pay early, the Holy Grail of cash flow.

4. Keep a detailed audit trail

Track your paperwork. Storing all your invoices, bills and documents in one place (preferably online) lets an organization to keep the business running smoothly. Creating this type of audit trail also adds security for the business and its customers.

You never know when you will need the audit trail to show a customer that he or she hasn’t paid yet.

Related: Do This to Improve Your Cash Flow

5. Keep open lines of communication with customers

I have found that often when people have not paid they just didn’t know they had not. Sending a simple email reminder to customers can go a long way. A simple gesture can be the gentle nudge people need to get a payment on its way.

Best of all, you can automate these reminders using cloud solutions. Part of the value of an email reminder is that it reinforces your relationship with the customer and provides an opportunity to engage.

Use the email reminder to create an open dialogue with clients, providing them with a sense of security and comfort.

When your customers know they can come to you with questions, they will want to be sure they do right by you and pay on time. More important, helpful customer service provides customers an incentive to stay with the company amid tough times.

Related: (Video) How To Ask Investors For More Money