New Credit Rating rules you need to understand

Any time you apply for a loan, your information is shared by lenders for the purpose of assessing what sort of credit risk you pose.  This obviously helps them determine whether or not they're prepared to loan you money or not.

New Comprehensive Credit Reporting changes the way credit information can be shared by lenders and will have a significant impact on whether or not your application for financial credit will be approved.

Up until recently, you really only received a negative credit score if you defaulted on a loan or didn't pay a bill.  But as of 12 March 2014, loan and credit repayment details are just one of the additional pieces of information that lenders can pass on to credit bureaus as part of a new more comprehensive credit reporting regime.

Under the new rules, there'll be a lot more data sharing and a lot more information available to your financial institution. In fact, every time someone misses paying a bill or loan re-payment of more than $150 by more than five days, their credit file is marked and their credit rating is affected.

On the flipside, under the new regulations, the data provided will also include positive information such as how often repayments have been made on time, so you can actually be rewarded for your years of good behaviour.

The type of information your financial institution will be able to obtain as part the new credit checks include:

• If repayments have been made on time over a two-year period;
• If payment of a bill over $150 is more than 60 days late, it will be listed as a default;
• The limit on credit cards that you have applied for;
• The date your credit account was opened, type of account, and when it was closed; and
• If, because of a default, someone has entered into a new varied arrangement for repayments.

For more information on the new regulations, what it will mean for you and other ways you can take control of your credit history, click here.

In the meantime, click here for our brochure on Protecting Your Credit Reputation, which includes more details on the new rules, as well as handy tips for getting yourself a good credit rating, and avoiding a poor rating.

Of course if you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Money" radio segment on 98.1FM Radio Eastern.

Talk soon,

Caren

PS. Special thanks to our Senior Financial Adviser Michael Crowe from whom I pinched a lot of this information!

PPS. Please don't keep me a secret!  If you know someone who'd enjoy this or find it useful, pass it on! 

Hate bookkeeping? Some handy tips.

Do what you do best, and that's not bookkeeping (unless you are a bookkeeper)!

Read to the end for details on our free education session for local business owners.

I'm always telling business owners they should be spending their time doing what they do best, and frankly - unless you are a bookkeeper - that's NOT bookkeeping.  But it's vital for all businesses to know how they're doing.

You need to know if you're actually making money and whether you are in a position to grow and improve your business.  To do this you need to have accurate financial records.  Not to mention that it's a legal obligation and if you don't get it right it can be very expensive.

A lot of this can depend upon the software you use.  And just because one package is good for one business owner doesn't mean it's the best one for you.  Often the cheapest option is not the best, and while it may save you in the initial outlay it will cost you in time and efficiency.  You need to consider:

Who is doing the bookkeeping?
If you have a spouse or qualified bookkeeper maintaining the records for you then having quality software to work with means there's less likely to be errors.

And if you're the bookkeeper, as well as the business owner, as well as the business manager, as well as the key worker, then your time is precious and you definitely don't want to be wasting valuable chargeable time fighting outdated or inappropriate software.

Don't stick with a particular software just because it's what you've always used - explore your options.  You might be surprised by what's available, and the small amount of training required might be nothing compared to the time you'll free up to do what you do best, not to mention less stress.

One of the options that is worth exploring is cloud based accounting software, especially if you move around a bit in your working day.  Cloud accounting software allows you to work anywhere, anytime, on any device.  Invoice on the spot with your smart phone, and thereby improve your cashflow.  And we all know cashflow is still king.

Software aside, unless you have a specific expertise in bookkeeping then we always recommend getting good advice for your business.  Yes, you will need to pay for it - but perhaps not as much as you think.  And the cost is usually negligible compared to what you save by getting it right the first time.  Perhaps even more importantly, it gives you time to spend building your business rather than the compliance work, which someone else can probably do faster and more accurately than you anyway.

At the very least, you should consider having an expert look at your processes to make sure you're doing everything correctly and as efficiently as possible.  That way even if you do wish to do your own book work, you know you're on the right track.

Last year we published an article by expert Jenny Edwards "5 Bookkeeping Pitfalls for Business Owners" that received lots of great feedback from our business clients.  If you missed it, just click here

And finally, on Tuesday 25 March at 5.45pm, The Hendrie Group is hosting a FREE education session about Xero Cloud Accounting software for all local business owners.

We have no ties with Xero, but as an Accounting firm we want to keep you up-to-date with your options and Xero is a pretty good offering for many business owners.  Most importantly, we feel it can save you time and stress so that you can focus on what you do best.  After all, you probably didn't go into business to be a bookkeeper...

At our own cost, we've engaged an expert to give you a live demonstration of the benefits of Xero cloud software.

We want to help you decide if moving to Xero is appropriate for your business, and if you're already using the software - we want to help you make the most of it.

Drinks and nibbles provided from 5.45pm with the presentation starting at 6pm and running for 60 minutes.

Click here to register online of call us on 9725 2533.

If you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You &Your Business" radio segment on 98.1 FM Radio Eastern.

Talk soon,
Caren     

PS. Please don't keep me a secret. If you know someone who’d enjoy this or find it useful, pass it on!