Rules to Better Accounting - 20 Rules
There is an SSW Rule called Do you use 'Checked by xxx'?, which encourages people to check each other’s works for better quality. When it comes to accounting, there is something more important than a 'Checked By'.
Accounting data is highly aggregated and there is only one source of truth. When the team is working together to contribute to the accounting system, it is more important to make sure that any changes are well informed within the team and the data contributed is accurate and free from errors.
Systems generate bugs, and humans can make mistakes. An error-free system does not exist. When accountants work together, it sometimes feels like two pilots operating the same plane. The captain and co-pilot keep notifying and monitoring each other’s activities.
A small error can cause fatal crash, that is why every major and essential system will have one or more backup systems in case the primary system fails. A small error may not bring the business down, however it is important for accountants to have cross-checks to minimize human error during their daily work. When two people independently verify each other's work, it reduces the chance of errors. Cross-checking also promotes accountability and a sense of shared responsibility for the quality of the work being performed.
A football player should not take on the role of the referee. The issue here is not with trust, but rather with ensuring that you have good systems that minimize risks.
When an accountant applies for a leave request, a reimbursement, a salary sacrifice or has a pay rise (congratulations), the best option is always to have another accountant make those changes. The best practice always involves at least 2 individuals – 1 person requesting the change and a 2nd person processing the change.
It's great when someone can solve problems quickly and professionally. However, the knowledge and skills on how to solve problems related to the role needs to be documented so anyone can follow.
Keep that knowledge in the cloud and create procedures that can be shared to individuals who might not have your knowledge and experience.
This can be beneficial in different ways:
- Continuity: When knowledge is tied to a role, it is less likely to be lost if the person in that role leaves the organization. This helps to ensure that essential processes and procedures continue to be carried out effectively
- Scalability: By keeping knowledge in the cloud, it becomes easier to train new hires or skill up a team. Rather than relying on the expertise of a single individual, the organization can draw on a shared pool of knowledge and skills
- Resilience: It helps to create a more resilient organization, as the loss of a key individual will have less of an impact. This can help to mitigate risks and minimize disruption
- Transferability: It becomes easier to transfer knowledge to other individuals within the organization. This can help to foster a culture of learning and continuous improvement
Keep in mind that every task is tied to a role, a position or a duty, rather than a specific person. This ensures that the organization has access to the knowledge it needs to achieve its goals and objectives, even as personnel change over time.
It is important to have monthly meetings to get an overview of where the company finances are throughout the year.
Since different people need to report for different sections, it's a good idea to split this into 2 meetings.
In this meeting, key staff members should review the past month and look at forecasts for next month.
Here is a sample agenda:
- Reconcile invoicing system with the Accounting system
- Print Monthly Profit and Loss Report
- Print YTD Profit and Loss Report
- Print Monthly Profit with graph
- Complete and print current cash position and include the previous signed version
- Review invoices that should be canceled or removed
- Fix any invalid data
- Print Monthly Receipts Report
- Print Invoices vs Receipts by financial month
- Print Expenses by Financial Month Report
- Print Snapshot Report - Monthly and Cumulative Data
- Print Profit and Loss Return % Report
Note: the pre-meeting section should be done the day before meeting #1, and a lot of it can be delegated to admin employees
- Review Sales reports
- Review billable leaderboard
- Review utilization report for the month
Note: It's a good idea to record a quick summary of this meeting so people in Meeting #2 know the executive overview.
- Review Cash Position
- Review revenue by client
- Review monthly invoices and receipts
- Review monthly profit with graph
- Review monthly expenses
- Review monthly profit and loss
- Review trends year on year
- Review trends profit contribution %
- Review profit and loss return %
We all know the situation but never think it will happen to us. Many businesses believe they are well prepared in the event of a disaster or a downturn in business activity.
In the unfortunate event that all your customers suddenly stop trading (meaning your income levels are reduced to zero), do you know how long you can keep the business afloat based on your cash balance, without taking any cost-cutting measures?
It is recommended to keep track of your "Gas in the Tank" report at least every month to determine the number of weeks your business will remain afloat in the unlikely event of the above scenario.
For most businesses, a good amount of cash to hold should cover approximately 26 weeks of costs .
The length of time which the business can survive on cash reserves is not as high as ideal. 13 weeks is not a lot of time to respond to a significant downturn of activity, assuming it was identified at the first-week activity went down. This report would have revealed the calculations and henceforth increase the business awareness and to keep the foot on the pedal.
This example is a good indication the business has enough cash reserves, that even with a significant downturn in activities, there will be enough time to respond and likely reverse the situation. They achieve this by either maintaining cost measures low or consistently driving for new customers and a minimum level of business activity, as well as other business-specific strategies.
Often a business can become satisfied with a few good months of positive cash flow whether it be a result of cost-cutting efforts or improved business activities for those months.
As a result, some businesses become complacent and not realise their actual ability to stay afloat based on their cash reserves if disaster strikes.
Maintaining a Gas in the Tank report will provide a visual indication and a prompt to revisit costs and additional measures in driving business activities, before it becomes a problem.
Tip: Use Fathom - an extension for XERO Accounting.
You can make this report very easily with Fathom Reporting. Here is an example:
You should be reimbursed for all reasonable expenses incurred in carrying out your duties, which are above your normal costs, to and from the office.
A common example is bus and train fares to client sites. In Australia, amounts under $100 could be reimbursed through Petty Cash but in China, it would be around ￥300.
Remember to treat your company's money like your own and minimize costs where possible. Try to search around for a better price before committing to a purchase.
All expense claims must:
- Be work-related
- Be made within a week
- Be signed by the claimant and authorized by the relevant Manager
- Be supported by Tax Invoices
- Not include alcohol, as it incurs FBT
- Receipts should be in English (where possible), or you must write on the receipt what the expense is, and what it was for
Tip: If necessary, you can use the Google Translate app to translate your receipts by taking a photo!
🇨🇳 If you're in China, all-expense claims must:
- Be work-related
- Only Fapiao is available
- Be made within a month
- Be authorized by the relevant Manager
Tracking expenses can be a painful process of accumulating receipts and entering them into outdated systems… but there is a better way.
Various apps help solve the above problem. Using a modern Accounting system such as Xero, some connected apps can be used in conjunction with the accounting system and they include:
It may be difficult to determine which app would be best suited for your business so below is a comparison of some of the major features of each app.
There are 2 purposes when evaluating an Expense app:
#1 Reimbursements – when you are at the shop and you pay for something personally and want the app to take a photo and send it to the office and later see the $ come back into your account. #2 General expenses – when you are at the shop and using the company credit card, you don’t need reimbursement, but you do need to give accounts a photo of the receipt and the purchased item.
Product Xero Me Expensify Hubdoc Pricing $5 per active user/mo $840/year (minimum) Free with Xero✔ Submission Procedure Phone App – take a photo and submit it through the app ✔ Same as Xero Me ✔ Same as Xero Me ✔ Restriction on Invoice uploads Unlimited ✔ Unlimited ✔ Unlimited ✔ Back-up Unlimited - use cloud back up and security. Never deletes ✔ Unlimited – Never deletes and remains archived ✔ Unlimited – use cloud back up and security. Never deletes ✔ Organizing Organised on user-submitted, expense type or date order ✔ Can be manually organized into folders or reports Requires greater security privileges than uploader only. Automatically organized into folders (can be updated). Expense Rules Automate rules (or after the first occurrence) as to where expenses are to be accounted to (account categories) Same as Xero Me – little easier to navigate to the section ✔ Same as Xero Me – however seems to only be on each invoice (can’t create outside of existing invoice – not that important) Accounting Codes Syncs with Xero account categories and automatically chooses those options. Brings bank reconciliations of these invoices to 90% of the way ✔ Only available on the subscription plan of $1800/year Same as Xero Me✔ Phone Compatibility All Phones ✔ All Phones ✔ All Phones ✔ Two-factor Authentication Yes ✔ No Yes ✔ How-to Videos Yes Yes - The most videos ✔ Yes Descriptive Notes Yes ✔ Yes ✔ Not available Bank Specification Yes ✔ Not at $840/year Yes ✔
Overall, the winner is Xero Me. The design of the Xero Me app provides all the user experience to enable simple and convenient reimbursement requests or company spent money receipts for reconciliation.
The best feature of Xero Me reimbursement is that the employee's bank details are automatically assigned when they submit a claim. The approver (Accountant or Business Owner), approves of the expense, it will be generated as a payable invoice in the 'Bills' section of Xero and dealt with like any other bill.
Although Expensify is capable of performing this function, it is expensive.
Expense apps are a timesaver, both for the day to day user, as well as the accountant receiving the expenses.
As a user, all you have to do is take a photo of the receipt from your mobile app, file or add any comments (all other data is pulled in via OCR “Smart-scan”), then all of these expenses get batched together and sent on a weekly basis to the accountant, who can then manage them in bulk.
As an added bonus in Xero Me, employees can also see their leave entitlements and payslips.
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More at Google Trends
There are several factors to consider when choosing the right expense receipt system, such as:
- Frequency which a reimbursement is made (daily, weekly, monthly etc.)
- Number of employees approved to request expense reimbursements
- Value of expenses allowed to be reimbursed (minor, major or any values)
- Subscription cost of system
- Integration capabilities with Accounting Software
It is recommended to use the Xero Expense app in tandem with the Xero Accounting software because this combination makes it simple to perform reimbursements and has a high level of customer satisfaction.
- Open the Xero Expense mobile app and submit a photo of the receipt for reimbursement or filing. For digitally emailed receipts, you can either take a photo of the email and upload it as per usual or you can upload the PDF version of it within the app.
- Either allow the app to analyse the details automatically or enter the details yourself (if you are strapped for time, you can take a photo and come back to it or hold on to the receipt and attend to it when possible)
- Confirm whether the expense was paid personally or with company money
- When all details have been checked and are complete, click submit for approval and then wait to be reimbursed. If you are not ready to submit and run out of time, you can save as draft and get back to it by the next day
Note: if not already done, make sure purchase approval is forwarded to the Accountant or included in the photo submitted.
- Review the Xero Expense claims weekly
- Complete a general check of the receipt details
- Follow-up on any invoices awaiting approval, or obtain approval where appropriate
- Schedule for reimbursement to be in line with the upcoming pay
- Submit the reimbursement along with wage payments
- Send remittance to employee via Xero
When a company manages its small expenses, it is common to let the employees use a company credit card to avoid staff being blocked by reasonable purchases after appropriate authorization.
Accountants are aware of the risks that come with sharing one credit card amongst multiple employees as transactions often become unaccountable as well as presenting opportunities for unauthorised use. However, issuing credit cards to each employee also brings pain due to extra administrative overhead and the increased risk of lost/stolen cards.
To simplify expense management and improve financial processes, we encourage the use of Apple/Google Pay for company expenses. Adopting virtual wallets as the preferred payment method for in-store purchases streamlines expense management, increases accountability, and improves company expenditures management.
Each Apple Pay / Google Pay will have a unique card number and will always show on the bank statement when making EFTPOS purchases (in-store purchases), and accountants will know who made the payment.
For example, here are 3 purchases from the same vendor at the same time. By referring to the unique card number from the statement, it can be determined that 2 payments were made by different staff members, while 1 of them was paid with a physical credit card.
Apple/Google Pay provides a centralized and easily accessible record of transactions. Each purchase generates a digital receipt, capturing important details such as the date, time, amount, and vendor information. This streamlined record-keeping simplifies expense tracking and reduces the administrative burden of manual expense reporting. Integrating Apple/Google Pay with expense management software allows for seamless synchronization of transaction data, providing real-time visibility into expenditure patterns
Apple/Google Pay incorporates robust security measures to protect against fraud and unauthorized transactions. Tokenization and biometric authentication ensure that only authorized individuals can initiate and complete transactions. By encouraging staff to use Apple/Google Pay, we can mitigate potential financial risks and safeguard company resources.
Scenario: Everyone share the same credit card detail, hard to know who made the purchase.
Scenario: Everyone receives a physical card, with each of them having independent card details (a risk multiplier). The accountants know who paid the money, but hard to manage them and easy to get hacked.
Scenario: Everyone can access funds through Apple/Google Pay without creating separate credit cards, and the payment must be approved through the phone with biometric authentication.
There is also an option that company can manage those expenses through third parties.
✅ Pro: They usually provide good reporting, customized credit limits and are good for controlling your budget.
❌ Con: It can be costly, carrying the risk of potential financial loss if the third party faces bankruptcy and forfeiting your credit card rewards.
The business owners need to decide to take risks on the employee or the other business.
Apple/Google Pay is free. Physical credit cards may charge an admin fee, but they can be avoided by switching to Apple/Google Pay.
Virtual credit cards seamlessly integrate with various expense management systems, facilitating streamlined expense reconciliation and reporting. Linking Apple/Google Pay transactions directly to expense reports automates the reconciliation process and eliminates manual data entry. This integration provides accurate and up-to-date expense information, enabling comprehensive financial reporting and analysis. It also facilitates efficient auditing and compliance monitoring.
When using Apple/Google Pay, you still get the same benefits and rewards as you do with physical credit cards.
Most bills in this modern age of technology are no longer mailed to a physical address and are accessible online.
The downside of this is that a business may have tens or hundreds of invoices each month and it would not be worth the time for a team or staff member to either login to the supplier portal to obtain the invoice or sift through layers of emails in a dedicated accounts/invoicing email, to then submit it to the accountant or into the accounting system.
Some systems or accounting add-ons would have an auto-fetch function. What this means is that whenever an invoice is generated, certain suppliers have made it possible for the system or add-on to bring in the invoice from the supplier platform to the system or add-on. This is called fetching of invoice.
As auto-fetch is in place, there should no longer be a requirement for any staff member to manually forward regular or periodic invoices to the accountant or to enter into the accounting system. These systems and add-ons can be organised or set-up in a way to automate the majority of the steps from fetching the invoice to the payment or reconciliation of these invoices in the accounting system.
The level of automation can be customised in a way so a staff member can get involved at a certain step to do a manual check, or alternatively, the invoices can be automated from start to completion without any manual work.
At SSW, we use Hubdoc which integrates with our accounting platform (Xero) and has some of the most Australian suppliers connected with the auto-fetch system, compared to its competitors.
Subscriptions are part of the very fabric of everyday business, these include but are not limited to phone bills, rent, software subscriptions and many more. Businesses can commonly become unaware of the real costs of subscriptions, especially to those businesses that enter in a direct debit system with their suppliers. Have you ever been prompted to look at the cost of a subscription and asked yourself, "since when has this subscription cost gone up two times?"
We strongly believe in the benefits of accurately tracking recurring subscriptions both for cash flow purposes and for avoiding surprises down the track.
It may be the subscription was entered many years ago and you have yet to revisit it since and likely missed the emails of automatic increases somewhere in your many thousands of emails in your inbox.
With technological changes, comes a greater need to focus on tracking your subscriptions before it becomes a problem for the business or an unpleasant surprise.
A common solution many business owners used to solve the issues of tracking is by delegating the responsibilities to their finance team or accountant. This is a big assumption that they follow accurate and proper due process when completing the regular tracking procedures.
- Do they follow a proper process in tracking by using a tool or software? Excel is a great simple tool which all businesses can use successfully.
- Is there an agreed time each month, to review and update the dataset from the tool?
- Does the dataset make it simple to pinpoint when significant or unusual changes have occurred? Example includes increases in subscription costs or non-payment of a subscription. With excel, we recommend the use of formulas and conditional formatting to ensure these occurrences can be pinpointed.
- Can the dataset extract information on the owner and the total cost of the subscription?
- Has the owner of each subscription provided their initials or confirmation each review period, that the subscription is accurate and as expected?
There is no foolproof process that will avoid every unwanted situation, however, by following proper expense tracking will ensure these situations are discovered before it becomes a major issue and it may provide more reporting layers in order to make better financial decisions.
It is always a good idea to provide more details when submitting an expense claim or recording an invoice. This helps to ensure clarity and avoid any confusion in the future.E.g. The period the invoice relates to.
Make sure to include the following details as much as possible:
- The purpose: Clearly state what was for.
- Relevant project or client information: This helps with tracking and allocation.
- Authorization details: If it requires approval from someone, mention who authorize it.
- Supporting documentation: Attach any necessary documents that validate it.
Hubdoc is great for tracking and accounting for receipts, but if you don't use it in the right way the reports can be made more difficult to reconcile.
To avoid confusion, add as much detail as possible about the purchase and who authorized it. To make this easier, your company can set some required fields to ensure that you have all of the relevant data entered for each claim. This will make your claims a lot more unified and easier to process.
The user or the administrator of the account can set up rules for each invoice in regards to their publication status and reconciliation details on the first instance. Going forward, any repeat of the invoice or the supplier will be filled in based on those rules set up.
There is still an opportunity to review all the details, so setting up rules will simply fill in the repeat details each time. This is to ensure consistency in the reconciliations and save time for both user and the Accountant.
Depending on the permissions of the User, they can also publish the invoice to Xero which can be recognised conveniently when completing the reconciliation process on Xero.
Tip: Hubdoc will automatically create folders to categorise the invoices and store for the user. These folders can be reorganised or renamed with ease. We recommend updating the folders early on so the invoices are collated in a useful manner for your business.
When an organisation grows and has multiple offices, corporate cards can be issued to the various office managers to provide relevant amenities for their respective offices.
Issuing cards can be both an administrative and financial burden. Administratively, the accountant needs to be able to reconcile the expenses incurred and ensure they are of business relevance. Financially, card limits and spend amounts needs to be checked and reviewed regularly to avoid overspending uneccessarily.
To assist the accountant with any administrative burdens, the office manager (or the office assistant) should record all receipts to the accountant within a week of the spend. The best way to file these receipts is to use the company's expense receipts app. This allows for the quick disposal of the receipts and the maintenance of a digital copy.
Note: If your business does not use any mobile app for expense receipts yet, review the comparison between 3 apps particularly useful apps and determine which app may be best suited for your business.
By using an expense app, the accountant obtains the digital copy of the receipt which should match to the relevant transaction in the bank statement lines within the accounting system and allow for faster reconciliations.
Depending on the rule of your organisation, office managers should have some level of approval powers e.g. up to $100 can be approved by the office managers. Other alternatives could be that 2 office managers together can approve up to $500 or alternatively everything must be approved by 1 person such as the accountant. Based on the rule, the expense app should be set up in a relevant manner so expenses are approved by the right person.
Making payments should not require too much admin and the systems in place should mean making payments becomes a standard process. Most businesses should have an accounts department to handle payments and supplier relationships.
It is recommended that you schedule payments through your accounting system and make payment on a regular and consistent period, for example, every Friday. This enables a more connected reconciliation of the books and a greater ability to manage supplier relationships and cash-flow.
Scheduled payments means you won't need to make individual payments through your banking portal at random intervals and you will be able to send remittances all at once at a regular time.
At SSW, we use our Accounting software (Xero) to schedule payments. All invoices and bills are either emailed or pushed through to the bill's section via an expense app (we recommend using either Xero Expense or Hubdoc app).
Once the invoice is in the bill's section, you can schedule a planned payment date.
It is important to have a usual day of payment, so the accounts department is able to follow the agreed terms for scheduling and maintain consistency throughout. At SSW, we batch our payments on a weekly basis to be paid on Friday. Additionally, the accounts team should agree on whether payments are made prior to the due date or a number of days following the due date.
It is then super easy to make a batch payment on the day of payment. Simply select the relevant date under the schedule of planned payments and select all invoices to be batched and paid through your banking portal. There should be no restrictions to the number of invoices to be paid at any one time so the business should be able to make all the weekly payments in one go, saving countless amounts of time not needed to process invoices daily and earlier than required.
Another important aspect of creditor payment management is forwarding remittance advices to suppliers. When using bulk payment in Xero, the details that appear on the suppliers' bank statement might not be sufficient for the supplier to allocate the payment against the correct invoice or group of invoices. For this reason, it is highly recommended for the payer to forward remittance advices to respective payees immediately after payments have been arranged.
It is a good practice to email the remittance advice directly from Xero. This will leave an audit trail in Xero and will enable you to quickly identify it the remittance advices were sent. If any suppliers have queried the payment before the payment was arranged, consider replying with a done email - "Done - made the remittance, see other email from Xero with the remittance advice".
In some instances, such as replying to an email sent by a staff member of your organisation, it might be preferable to attach the remittance advice pdf to the email reply rather than to email the document directly from Xero. Xero does not have a download option for remittance advices. However, the remittance advice pdf can be emailed to the Xero user and the user is then able to attach the document to the email reply. Ensure to untick suppliers when emailing the documents to the Xero user.
Note: All scheduled payments should ideally have an attached PDF of the invoice, as represented by the image of a paper document on the end of each transaction. This is useful for auditing purposes and referring or double-checking.
In terms of cash-flow planning, it is useful to know the payment amounts that are expected to be paid on a certain date. This helps to avoid any surprises and assists in knowing the amount of cash available to be spent up to a certain date (after considering bills payable).
Following good due processes will ensure suppliers know what the business standard payment procedures are (expected payment dates can be defaulted) and can help to improve supplier relationship. Invoices won't simply go missing or forgotten and all audit steps are tracked.
In your first month as an Accountant for a new company, you should print out the general ledger for the week and ask your boss to initial to say that the "cheque numbers and memo descriptions are good".
It's good to catch any mistakes early, so that you know the requirements early on and don't have to go back and fix up large amounts of data later.
Do whatever you have to do e.g. drive to your boss' house to get this done! It can save you days of work down the track.
If you negotiate with a supplier in relation to an invoice, do you ensure the invoice is reissued?
It is not always common but sometimes you will negotiate a change in the agreed price once an invoice has been issued by a supplier. This might be because there was a change or defect in the good or service provided and a lesser amount is agreed or an agreement that a certain amount of the invoice will be paid later when the rest of the product or service is delivered.
Do not pay an invoice in part. You should ask the supplier to reissue the invoice or issue a credit note in relation to an invoice. Otherwise, the supplier may say that there is a balance of the invoice owing.
“Jim. OK, I'll just pay $165, not the $220 on the invoice"
Figure: Bad example - Not paying the full amount of an invoice
“Dear Jim, please reissue the invoice or provide a credit note for the now agreed correct amount."
Figure: Good example - Requesting a new invoice that will be paid in full
Xero is a great Accounting Software for all small businesses and especially for managing payroll.
Xero Payroll allows for the employee to access their payroll details on web. These details include payslips, leave entitlements, requesting leave, personal information and bank accounts. It is a useful tool and many employees would benefit for long term planning with this kind of access, as well as saving countless hours of admin and back and forth emails for the payroll officer.
Xero has released a mobile app version of Xero Payroll called "Xero Me" which has a majority of the same function as the web version. Similarly, employees would be able to access their usual information as per the web version except for salary and bank account.
As such, the app makes for a great handy tool for employees to check their information, submit timesheets and request leave on the go.
Requesting leave is simple with the app and can be approved just as quickly by the relevant approver with all systems updated simultaneously.
Simply click the plus symbol to add a new leave request and put in the basic information (type of leave, approver, days or hours taken and description). The approver will then get a notification and can easily approve or reject the request.
The app is free and as versatile as the web version with an added function of convenience. We highly recommend the use of a Xero mobile app to manage your personal payroll.
Payroll tax is a common wage-related expense that many businesses will have to account for in their month-to-month operations.The rules around when you begin paying for payroll tax and the amount you have to pay is dependent on your State Government's rules.
The Australian Government has general information about payroll tax, including affected businesses and possible exemptions. However, because the State Government laws take precedence, your business should take information from the State Government's website. For a general understanding of payroll tax, see the Australian Government's main website as follows:
It is important to stay up to date with the State Government's rules as they may change from time to time. The relevant State Government websites for NSW, QLD and VIC are as follows:
Tip: A common error businesses make is not realising the available exemptions for payroll tax. The most common exemption missed in calculating payroll tax is salary sacrificed items (excluding salary sacrificed superannuation). These items reduce the taxable wages. For example, the NSW State Government rule states payroll tax is applicable on the 'reduced wage that the employee pays income tax on'. You can refer to the relevant NSW page below.
Every state treats salary sacrifice differently for payroll tax purposes, so be sure to check your State Government's rules before processing your payroll tax return.
It is essential to be familiar with your organization's Terms & Conditions, as it may impact the way you invoice.
SSW Terms & Conditions allow SSW to invoice on a Prepaid basis as per part '6 - Pre-Paid Work' & '19 - Payment Terms'.
It is also highly recommended to invoice customers, who have been in existence for less than 2 years on a prepaid basis. It may, however, be an awkward conversation or irrelevant on the customer's behalf to ask of their organization's age in an initial meeting. Instead, you can perform an ASIC Company Search to determine the customer's organization age.
To do so, follow these steps:
- Navigate to ASIC Company search page above and change the filters to 'Organisation & Business Names'. Enter the customer's name or ABN number
- Select the appropriate company
- Review the registration date or alternatively, purchase a $9 company extract which provides the same details on the free page with some additional information (however irrelevant for prepaid purposes)
- Should the registration date be less than 2 years old, ensure that the message is pushed across to the state managers so they can push towards invoicing on a prepaid basis wherever possible.
In the course of business, you may occasionally provide some services or products to selected customers free of charge or at a discount rate. Often, because you're waiving one rule (the "please pay me" one!), people assume all other rules of service are waived - you should avoid that assumption!
When you are giving something away at a discount or for free you are expecting a loss compared with a regular client. If you fail to follow regular processes not only will you incur an even greater loss you provide a lesser standard of service and put greater risk on the success of the project.A discount or freebie should follow all the standard processes such as:
- Initial meetings
- Written contracts
- Specification reviews
- Release plans
- Triaging additional items
- Release debriefs
- Issue a Discount Code for a free ticket to our regular events
Consider the follow scenario:
You have a concreter buddy who offers to do your driveway for mate's rates. He won't accept full price (because you're friends) and he thinks he's doing you a favour. The problem is, he won't commit to a timeframe because he has customers that ARE paying full price. You're quite happy to pay full price, because you know he does great work and you want to support his business. In the end, no one is happy. You have an extended wait to get the job done for a discount you don't want and he feels pressured to do extra work in his spare time.
A better approach is for the concreter to offer the discount AND book you in as a normal customer. He can give dedicated time and professional service and you get the job done with minimal delay. You can also provide excellent feedback and suggestions on the service he delivers, being both a friend and a customer. It is a much better outcome.
Often the people you choose to provide a freebie are the best people to provide feedback on your product or services. When you waive all your standard processes, they have no opportunity to review how you conduct your business. So if you're offering a freebie (or any discount), you should ensure every normal standard of business is followed (including sending $0 invoices!) and make sure you get valuable feedback to help you run your company better.
To: Bob Cc: Adam Subject: Glad to have you + feedback
Sure we would love to have you at our event for no charge. You may register just like a real client.
You will receive an invoice with the items on it at $0.
It would be great if you could give us feedback on anything that could improve the experience (just as if you were a normal client).
Figure: Good Example - Asking for feedback
When entering timesheets for free work, set your rate to $0.