Tag Archives: EFTPOS

Gift cards – why you should offer them!

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A gift card is a convenient way for a customer to provide a gift to a friend, family member or business associate. They are most commonly used for gifts when you don’t know what to buy someone. Interestingly a survey done in 2017 by finder.com.au found that one in seven gift cards purchased in Australia went unused. This guide will look at why you should offer them, what are the rules you must abide by and how you go about offering them.

A gift card, gift certificate or gift voucher is a prepaid stored-value money card or certificate, usually issued by a retail store or bank, to be used as an alternative to cash for purchases within a store or related businesses.

WHY should I offer gift cards?

Gift cards offer several advantages for small businesses; the cost to provide them is minimal compared to their potential return. Consumers generally feel a gift card is an opportunity to spoil themselves.

Small Business Advantages include:
  • Give customers an incentive to spend money at your business and create repeat purchases.
  • Revenue is generated in advance sales as no goods or services are redeemed yet.
  • Having customers carry a gift card around with your logo builds your brand.
  • In most cases, customers will spend more than the gift card amount.
  • Gift cards provide you with a promotional opportunity. Spend $100 and get a $10 gift card.
  • Customers may never actually spend the value of the card, whether it be the last few dollars on a card or the whole amount.

WHAT are the Rules around gift cards or vouchers?

As of November 2019, the rules changed around gift cards. The rules now state that a gift card must have a minimum expiry date of 3 years from the date the card is sold. That expiry date must be listed on the card and no post-purchase fees can be added. A post-purchase fee would include activation, account keeping or balance enquiry fees. Penalties for non-compliance are $6,000 for an individual and $30,000 for a business.

When you sell a gift card/voucher, the customer has an asset of your business until the voucher is used. Thus, from an accounting perspective, when you record the sale of a gift voucher, it needs to be recorded as a liability posted to an Unclaimed Gift Certificate account. When the customer redeems the voucher, all you need to do is create an invoice and pay for it using the funds from the Unclaimed Gift Voucher account. This way, you can easily track the value of outstanding gift vouchers or write off any that remain unredeemed after the expiry date.

From a GST perspective, a gift card has a monetary value but does not need to be included in your GST activity statement until it is redeemed for products or services. The exception to this is when a gift card is not for money but rather a tangible product or service, then GST must be paid and reported on the voucher sale. For example, 10 hours of technical services.

 If the voucher expires before it’s redeemed, you’ll need to report the unredeemed amount as income and 1/11th (being the GST component) is reported and paid to the ATO.

HOW do I offer gift cards?

The three most common forms of gift vouchers/cards are:
  1. A credit card-sized plastic card electronically loaded with a specific money amount. Note that some cards can have additional funds added or topped up later.
  2. A gift certificate is some form of a paper promise from a business allowing you to redeem the specified amount back from the store.
  3. eGift cards or vouchers. This is normally a set of codes and sometimes a barcode that you can receive via email. These codes/barcodes can then be applied at the checkout for credit.
As a small business, you should consider the following:
  • Which type of cards you will offer as above?
  • How do you tell customers they are available? Signs, internet, etc
  • Will you restrict to set values or variables? Such as $50, $100 and $200?
  • Will the expiry be 3 years or more?
  • Can it be redeemed in your online store if you have one?
  • If you have multiple stores using the same brand, is the gift voucher transferable?
  • Integrating your POS and Accounting systems allows you to process and track these vouchers simply. (most have this functionality)
  • Are there any special terms? Such as not allowing gift cards to be used to buy gift cards or transferable for cash.

Some plastic card solutions make it simple to activate and redeem cards by simply swiping the card through your EFTPOS reader. Other solutions will require some other type of solution, like keying in a number. Be wary of a manual system that can be lost or stolen.

You can brand your gift cards by having a custom gift card printed by various companies for less than $1 each. However, note some POS software solutions require you to use their gift cards which may cost more.

HINTS

If you sell gift cards, make sure to showcase them in a highly visible place that customers must walk by. For example, placing gift cards next to the sales desk will lead to more impulse buys from customers.

SUMMARY – gift card solutions

Offering gift cards allow customers a convenient way to provide gifts to others. A small business benefits from having the money upfront and encouraging repeat visits to the store. Tracking and accounting is key to managing them with POS and accounting package companies offering solutions.

EFTPOS accepting credit cards

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Depending on the type of business you are running or planning to start, it is important to make it as easy as possible to receive payment in a face to face scenario.  You have two main options today, which are cash or credit card.  In the future, we will see other money transfer options driven by smartphones, but today we will focus on credit cards. You will need an EFTPOS solution (Electronic Funds Transfer at Point Of Sale) to facilitate this. This guide looks at what is involved in offering EFTPOS in your business.

An EFTPOS terminal or machine is an electronic device that assists in transferring funds from a customer’s bank account to your business bank account. To pay at an EFTPOS terminal, your customers must have an EFTPOS card, Debit Card, or Credit Card. You can also load the identity of your credit card onto your mobile phone and use that as a tap solution with an EFTPOS terminal. The EFTPOS solution does need the internet to function. The transaction settlement into your account normally occurs the same day or overnight.

WHY is EFTPOS easier?

EFTPOS is a convenient form of paying for the consumer as they do not need to carry cash. Indeed modern solutions don’t even need a card to be carried with payment able to be done from a watch, phone, or even a ring.

The merchant (you) reduces your need to have cash, less change, fewer security concerns, fewer visits to the bank, less counting, etc.  Instead, money is quickly transferred, and the time taken to tap & go a card is significantly quicker than other methods allowing you to move on to your next customer faster.

One might also argue that using EFTPOS makes a customer less concerned about cost as a tap is more vanilla than counting out notes.

WHAT EFTPOS fees are there?

EFTPOS Solutions are available from different providers, including banks and independent software developers. Some providers offer a flat fee, with other fees applied to each payment option, so it is worth shopping around. Any of the following fees may apply:

  • Price per month. A set fee that will be charged per month up to a certain dollar value of card transactions, after which you will be charged a fee as a percentage of every purchase over that dollar value.
  • Credit card authorisation fees. These are fees charged when an inquiry is made to ensure funds are available on a card before a transaction is processed.
  • Credit card service merchant fee. This fee may be charged by the bank when you process a credit card and is generally expressed as a percentage. Some cards have higher fees than others, like American Express.  It is your decision about which cards you will accept. Some retailers choose to pass this fee onto their customers, but there is government restriction as to how much you can pass on. https://www.accc.gov.au/consumers/prices-surcharges-receipts/credit-debit-prepaid-card-surcharges.
  • Payment terminal and account fees. You may be charged fees for administering your account, installing your payment terminal, or establishing your account. Establishment fees, cancellation fees, and equipment fees may also apply.
  • Chargeback fees. If the cardholder disputes a credit card transaction, you will be charged a fee.
  • Terminal access fee. This is a rental fee for providing and maintaining your EFTPOS terminal.
  • Debit card fees. You may be charged fees for processing debit purchase transactions or for a customer getting cash out at an EFTPOS terminal.
  • Sign up offers. Rental fees or others may be waived for the first x months of operation.

HOW do I pick which EFTPOS terminal is right for me?

EFTPOS terminals can come with several different features to consider when deciding which provider to choose:

  • Portable payment terminals. Not all terminals need to be plugged into a power point, and a portable unit has a battery and uses the mobile phone data network to transact.
  • Connect to a smartphone. This is a device that will connect to your smartphone physically or wirelessly. It allows the credit card to be tapped or inserted to complete the transaction via an app on your smartphone.
  • Payment options. Refers to what payment methods can/will accept Visa, MasterCard, American Express, Union Pay, Diners Club, Apple pay, Google pay, JCB, or Alipay.
  • Insights and analysis. Results and analysis of sales can be done via the terminal.
  • Settlement time. This is how quickly you will see the money in your bank account.
  • Email receipts. The option to email customer receipts rather than giving printed receipts to customers.
  • Receipt printer.  The option to physically print a receipt. It is normally done on heat-sensitive receipt rolls.
  • Terminal location.  The ability to store the GPS location (address) of where the transaction took place.
  • Accounting package.  The ability of the EFTPOS solution to be integrated into your accounting package.  This simplifies backend accounting procedures.
  • Customer Service. This can be telephone support through to a replacement of a terminal.  Make sure you also check the operating hours.

HINT

Beyond the major banks, we also recommend you compare a company called Square which sells a solution you can pick up at Officeworks and have running in minutes via your mobile.

It is also possible to make EFTPOS payments via most accounting packages without needing additional hardware. Note this will require all card details to be entered manually.

SUMMARY – Show me the money!

EFTPOS does not require you to go to the bank or keep cash secure, and the money will be available the next day.  Tap and Go facilities and mobile solutions mean you can collect payment quickly anywhere you can get mobile or internet coverage.

Buy Now Pay Later (BNPL)

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Let’s say you have a customer interested in your product or service, but they don’t have the money this week to buy it.  What can you do? Persuade them to use a credit card, or maybe you should offer a Buy Now Pay Later (BNPL) solution.  The best known of these today are Afterpay, Zip, and Humm. There are many new players, including PayPal, MasterCard and Commonwealth Bank. Although this appears to be free, nothing is ever really free, so let’s discuss. This guide will help you understand and decide if you want to offer Buy Now Pay Later.

In a sense, customers have for years had this option through a credit card. You do not incur a charge as long as you pay the balance off at the end of the month. However, some consumers find it hard to get a credit card or have realised how easy getting themselves into debt is. Thus the buy now pays later explosion has occurred in Australia.  It is a new type of layby where you get the goods immediately rather than waiting for all outstanding money to be paid. The amount that can be financed is usually low compared to other forms of credit.

Buy now pay later works by a 3rd party financer providing credit to a consumer so you, the small business, get paid straight away.  The consumer walks away with the good or service and then must repay in regular instalments. If the consumer does not miss a payment, then they pay no interest. The 3rd party financer makes money from charging you a transaction fee and from charges to the consumer if they fail to pay on time. Note other charges may apply from the financer.

WHY should I offer Buy Now Pay Later (BNPL)?

The benefits for your business:

  • Customer may spend more or make a purchase that may not have happened
  • Customer repurchase rate may be higher
  • You get your money straight away with no fraud risk
  • The process is all automated so there is little paperwork and there is the ability to process refunds

WHAT do you need to know about BNPL fees and charges?

The downside of this method of payment:

  • The % charge per transaction is much higher than an EFTPOS payment (up to 3 x at time of writing)
  • Unlike a credit card, the customer must already have a credit in their buy now pay later account. So for example, if spending $100 must have $25 credit
  • There may be an additional transaction fee per sale
  • If consumers fail to follow the terms of the BNPL provider they may wrongly blame you for additional charges.

HOW do I decide which BNPL vendor?

What you should consider before selecting BNPL vendors:

  • Will you offer more than one solution?
  • Will the solution integrate into your existing POS, accounting, or eCommerce solution?
  • What is the reputation and take-up of each BNPL vendor? Consider the largest vendor will have the most registered consumers
  • Will the available maximum sales amount cover what you are selling?
  • How quickly will you be paid?
  • Is there a per transaction fee?
  • What percentage fee do they charge per transaction?
  • Can you reach additional customers by BNPL supporting your business?
  • What are your competitors doing in the BNPL space?
  • Is there any lock-in contracts?

HINT

If what you sell is below $50 in cost or more than $1,000 this might not be the right solution for you.

SUMMARY – Research Buy Now Pay Later (BNPL)

You need to evaluate the different providers and decide if the additional cost of selling is worth the extra business by offering a BNPL solution.

Accounting Software to run your business

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You started with a shoebox of receipts, now you have a storage box or maybe you are meticulous and have it all on a spreadsheet.  Either way it is time to start thinking about accounting software. This guide will look at why you need it and lead you through what you should consider in making your decision.

Accounting software, package or system describes a type of application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, journal, general ledger, payroll, and trial balance. It functions as an accounting information system.
source Wikipedia

Accounting software has changed a fair bit over the last few years with new competition driving new features and simplicity.  Probably the biggest change however is that it is all in the cloud. Put simply this means you rent access to the solution and do everything via the internet.  You no longer have software that you must buy and host internally on extra computer hardware that you must keep safe.  Instead you have a user-friendly solution that you can access from anywhere that integrates with your bank, POS system, etc.

WHY should you buy Accounting Software?

WHY should you buy Accounting Software?

Saves you time – track invoices, manage bills and expenses and pay staff in a few clicks
Tax time ready – calculate GST, PAYG and BAS reports
Built for Australian legislation reporting
Get paid faster – online invoices, pay now buttons and automatic payment reminders
Enter receipts on the move – use your smartphone to take a photo of the receipt from Bunnings. Great for travellers and tradies.
An external accountant or bookkeeper can have instant access at the same time you do
Reporting lets you quickly get a good idea of how your business is going now
Accounting software becomes increasingly beneficial as the business gets more complicated

HOW to make a decision on which Accounting Package

So now we understand that this software solution is so much more than getting a bill in the system, it is about automating the whole process.  Let us look at the features you should consider when selecting which vendor:

  • Different accounting package vendors offer different features and even within the same company they offer different levels which means you only get what you need.  For example, if you have no employees you do not need the payroll functionality. Consider what package you will need?
  • Pay Staff – Do you want payroll integration? Does the system calculate all payroll requirements including PAYG, annual leave, long service leave etc.? From July 2019 small employers with 19 or less staff must report payroll info to the ATO through Single Touch Payroll. https://www.ato.gov.au/Business/Single-Touch-Payroll/ (Be sure to read our essential guide on Payroll)
  • Ease of use – As an untrained small business owner how easy is it to learn to use the package and be assisted through the software to understand what the requirements are of controlling your finances?
  • Invoicing – Send customised, trackable invoices.  Can clients pay right from the invoice?  Can automatic payment reminders be sent?
  • Tax and GST –  Can you easily and automatically track what you owe, and see all your position at a glance?
  • Does the software support Standard Business Reporting (SBR) allowing you to lodge your GST BAS requirements? (Be sure to read our essential guide on GST)
  • Application integration – Can the package be connected to other software solutions you are using?
  • Time tracking and billing – If you charge by the hour are there features that will simplify gathering this data? For example, a smartphone App.
  • Reports and budgets – What level of detail do you need and can you compare against a plan or budget?
  • Track jobs – Does the system track stock, work in progress, orders, jobs, and other task management requirements?
  • Bills and expenses – How easy is it to upload your bills and easily categorise expenses?
  • Point of Sale (POS) integration – Is there a seamless connection to track sales and inventory movements?
  • Inventory – If you hold inventory/stock will this package help you forecast and manage it? Can you barcode scan items in and out if you want to?
  • Bank Reconciliation – Will the system be able to handle multiple bank accounts?
  • Manage customers & suppliers – Can you easily see which customers owe you money, and which you need to follow up on?
  • Take payments – Does the software allow EFTPOS or credit card processing?
  • Cash flow management – Can you see your money in and money out at a glance, and understand quickly what your cash position is?
  • Online accounting – Is there a smartphone or tablet app that lest you enter data or receipts as well as run your business from anywhere?
  • Multi-currency – Does the system need to handle foreign currency?
  • Account sharing – Can you invite accountants, bookkeepers, and partners so they can help you manage your business?
  • Security – What security and backup procedures do they offer to help you protect your data?
  • Customer Relationship Management (CRM) – Does the system keep detailed records on customers including what they buy, how often they buy, and when they buy?
  • Service – What support and training are available, what hours and does that support understand Australian regulations?

HINTS

For more information on what accounting tools are available and the specific features, they offer visit

Free trials are available to help you compare and chances are your financial expert will have an opinion on which one to use.

The accounting software packages you should consider in no particular order include Xero, MYOB, Quicken, Reckon, QuickBooks and Sage.

SUMMARY – Right Accounting Software

Having the right accounting package will save you vast amounts of time and effort and will help keep your business compliant with government regulations. 

Although these modern tools are brilliant in helping you control your business finances they will never replace having access to a financial expert.  We strongly recommend you have access to an accountant or bookkeeper to help guide you.

If you do not have external financial support today you can visit this site to help you find the right person

Bank account for small business

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You have started your new business, you open your wallet and pull out some cash, and you wonder is that my money or some petty cash from my business?  Even if you have chosen to be a sole trader it’s a great idea to open a bank account, if you are any other business structure you must have a business bank account for tax purposes.  Once you do it opens up the ability to articulate which money belongs to you and which to the business. This guide will help you understand the benefits of having a business bank account and help you understand what you should consider in selecting an institution.

A bank is a financial institution that accepts deposits and recurring accounts from the people and creates demand deposit. Lending activities can be performed either directly or indirectly through capital markets.
Wikipedia

WHY have a separate Business Bank account?

When running a business you must keep account of business transactions and a bank account is a great way to have an auditable paper trail.

A separate business bank account will help you to:
  • Clearly show your business finances separate from your personal finances
  • Analyse your cash flow
  • Monitor your business income and expenses
  • Extract information needed to meet your tax and reporting requirements
  • Get detailed records of your business transactions. These can be downloaded to a spreadsheet or imported to an accounting package.

WHAT else can you do with a Business Bank account?

If you have a credit card attached to your business bank account and do most of your transactions through your credit card, your bank statements will, in effect, be a checklist of those expenses.

Some banks offer overdraft facilities, essentially providing a loan facility to go into a minus balance.

To open an account you will need an ABN and ID documents of an authorised owner or director of the business.

HOW to choose a business bank account?

So which bank should you choose? In fact you may not choose a bank, it may be a building society or credit union.  The answer is the one that suits you best and you should consider these points when making your decision:

  • What are the fees and charges?
  • Do they offer merchant facilities like EFTPOS?
  • Are their interest rates competitive if you need to borrow?
  • Do they cater to the needs of small businesses and do they have offers/solutions to suit?
  • Is there a local branch in case you need to visit? 
  • What is their online banking interface like and will it integrate with your accounting package?
  • What information is reported on each transaction?
  • What security measures do they offer for online transactions to protect your business?
  • How fast do they transact instructions and until what time at night?
  • Do they offer foreign transfer arrangements and what are the charges?
  • Can you have access to your own bank manager or business banking specialist?

For more information and comparing various bank accounts visit
https://www.finder.com.au/business-banking

For taxation purposes, the ATO provides the following guide on record-keeping https://www.ato.gov.au/Business/Record-keeping-for-business/Detailed-business-record-keeping-requirements/Running-your-business—records/Banking-records/

Here you will find useful information such as the requirement to keep records for 5 years including the period of review.  For example, did you know that if you did your 2015 tax return in 2016 you would need to keep your 2015 tax records until 2021.

HINTS

Regularly bank all the cash your business receives so your income and expense information is always up-to-date and you can easily reconcile your accounts and analyse your cash flow

Register for online banking – this may simplify your record keeping and bank reconciliation process as you can:
  • easily get detailed records of your business transactions
  • download financial information from your online account to your accounting package
  • identify extra transactions in your account including bank fees or interest charges, and direct debits and credits
  • check and record any errors or omissions
Regularly reconcile your bank records, which may help:
  • you be more confident that your records contain all the information you need to prepare your tax return and activity statements
  • you to better understand your cash flow
  • reduce the time it takes to prepare your activity statements or tax returns

SUMMARY – Small Business Banking

Unless you are a sole trader you must open a business bank account.  It will help you manage your finances and different providers will have an offer to suit your needs.  Always check to see what other services the bank may be able to offer your business.

A handy comparison of bank rates and fees is available here to help you compare. https://www.finder.com.au/business-banking

POS system or terminal

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In the old days we had a cash register which is a cross between a calculator and a cash box.  These days we have a POS System to transact a sale or order and take cash or credit card payment. In this guide, we will look at why you might need a POS terminal, what you kneed to know and how to buy the right one for your retail environment, cafe or restaurant.

A Point of Sales system (terminal or machine) is an electronic device that allows a physical transaction to occur between a merchant and a customer for a product or service. This is much more than an EFTPOS terminal which we have covered in a separate guide. Put more simply it’s the device they use at McDonald’s to enter your order and take your money.

WHY do I need a POS System or Terminal?

A POS system will automate your process of completeing a transaction rather than writing on paper, using a calculator or simple cash register.

Retail POS software brings many benefits to retailers aside from simply completing transactions. These include:

  • Sales reporting and analytics: Provides retailers with insight into their sales, helping users make informed decisions that strengthen the business.
  • Inventory management: Automates stock control and helps retailers determine optimal product counts and when and how to reorder top-selling products.
  • Customer management capabilities: Help retailers automatically record and track valuable customer information, enabling stronger relationships, and encouraging repeat business.

WHAT do I need to know about POS systems?

 They come in various flavours and can be from simple to very complex.  You could have a solution as a stallholder, a restaurant, or a retail store.  In a retail store with such a system you could scan a bar code to have the item automatically added to a sale, take payment, adjust instore inventory, and pass sale information through to your accounting system. Additionally, in a restaurant you could take an order via a smartphone, add a table number and have the order print out in the kitchen.

Many POS solutions today will help you run and grow your entire business, with information such as detailed sales reports and analytics, employee management and tracking software, inventory management, and gift cards.

HOW to choose the right POS system?

As a small business, it will make much more sense to try to find an off the shelf system rather than going for a custom solution that will have large upfront costs.  The benefit of using a POS system is that it can simplify and automate many of your administration tasks freeing your time up to spend growing your business rather than maintaining it. These cloud solutions will also integrate with your accounting package (see our essential guide on accounting packages and cloud solutions) prepopulating all the data so no manual input is required.

Even though this solution is cloud-based it will still require some hardware at the point of sale like a smartphone, tablet, PC, or dedicated terminal which you will interact with. A cloud-based solution is one where the computing and software sit external to your business and for a monthly fee, you get the functionality without having to invest and maintain expensive backend computing hardware and dedicated software.

When choosing a POS system you should consider
  1. Stand-alone system or Cloud-based?
  2. Does the package suit Australian conditions, for example GST?
  3. Will it work offline?  You need it to still function if the internet goes down.
  4. Does the provider have appropriate security in place to stop others from accessing your data?
  5. Does the solution come with hardware or do I need to buy separate hardware like a tablet?
  6. Cost – how much per month per terminal/store?
  7. Usability – Can it easily be used day to day with minimal training?
  8. Fast & efficient –  How quickly can the operator complete a transaction? Nothing worse than keeping a customer waiting
  9. Will it meet your future needs?  Can you easily add extra terminals?
  10. Does it support value add functionality that might assist your business? For example, inventory tracking
  11. Will it integrate into your existing or planned accounting package?
  12. Does it support EFTPOS or can EFTPOS be integrated?
  13. What reporting is available and how easy is it to interrogate and interpret?
  14. Is customer support available and during what hours?

Some of the companies providing cloud POS solutions in Australia today include Hike Up, Kounta, Retail Express, Square, and Vend.

HINT

Now that you have selected a POS system you also need to consider what additional physical hardware you might need beyond the terminal, tablet or smartphone, such as a cash draw, printer, EFTPOS terminal, bar code scanner, tablet mounting bracket, or contactless credit card reader.

SUMMARY – Off the shelf POS solution

A bit of time invested in this solution will pay dividends in years to come, streamlining your business and freeing up manpower to work on other parts of your business. An off the shelf solution will meet the needs of most small businesses.