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DOING MORE. The Diprose Miller Newsletter | Summer 2021.
SEASON’S
GREETINGS BREAKING NEWS
Our directors and staff wish all our clients
a safe and happy festive season with family
and friends. Thanks to a number of factors ACQUISITION OF AUCTUS EUAN LOCK
associated with the COVID-19 pandemic, ADVISORY PIAKO OUR NEWEST
it may be a very different Christmas than ASSOCIATE
many of us would have expected. In early November Diprose Miller
acquired the business of Auctus Advisory We’re excited to welcome
We’ll be taking a well-earned break for a based in Te Aroha. It’s both an exciting our newest Diprose Miller
couple of weeks, with a few staff carrying and challenging time for us. associate, Euan Lock.
out payroll and other necessary Our director Ed Wagstaff has driven the A real Waikato man, Euan
client work over this time. transition process to date and, while he grew up in Hamilton and progressed through
has enjoyed meeting the Auctus clients the dairy industry to 50/50 large herd
Be safe, be careful and be kind. and coordinating the transfer of their sharemilking before deciding that he wanted
We’ll see you next year! files, we’re pretty sure he’ll make the to try accounting as a career. He started
most of the Christmas shutdown to working at Diprose Miller in 2009 while
have a well-deserved rest. studying for a Bachelor of Management
The process of integrating the Auctus clients Studies at Waikato University. After
into our existing client management system completing his degree, Euan continued to
has required careful planning, as there is study for his Chartered Accountant status
a limit to the amount of data that can be with CAANZ, which he gained in 2015.
transferred automatically between Auctus Before re-joining the Diprose Miller family
and ourselves. The remaining information in 2021, Euan spent a few years as a DairyNZ
needs to be added manually and, even Consulting Officer helping farmers with
though we’ve made a good start, completing optimising farm performance, profitability
this work will take some time. Our focus
CHRISTMAS & NEW is on making sure that we have enough
and equity growth. He will be making good
use of this experience in his role as an
YEAR OFFICE HOURS “Christmas works information on hand to look after the associate. He’s looking forward to combining
clients’ needs as they arise. his accounting and farm management skills
Our offices in Te Aroha and Morrinsville will like glue, it keeps In late November we invited the Auctus to assist our clients with planning for their
future success.
clients to a welcome luncheon in our
close for the Christmas and New Year break
at 1pm on Thursday 23 December 2021 and us all sticking Te Aroha Boardroom. This provided the Euan is married to Maria and they have two
opportunity for us to tell some of them a little adult children. They live on their lifestyle
re-open at 8am on Monday 10 January 2022.
together.” about our firm, its history, our key people and block close to Morrinsville, where they are
If required, our directors and associates can services, and get to know them a little better carrying out a native planting restoration
be contacted on their mobile phones while Rosie Thomas over some refreshments. It also gave us an project. Euan also enjoys woodwork projects
the office is closed. opportunity to get a feel for what hosting and tramping.
clients under more permanent COVID-19
regulations might be like. Euan’s appointment as an associate was
announced at our delayed mid-Winter Xmas
function held in mid-November at the Falls
Retreat in the Karangahake Gorge.
2 | DIPROSE MILLER QUARTERLY NEWSLETTER DIPROSE MILLER QUARTERLY NEWSLETTER | 3
EDITORIAL
In my last editorial I stated but my crystal ball is not that good, last year which saw us having This is an opportunity for me to wish you
so who knows what that may mean? interesting discussions in regards all a very Merry Christmas and a Happy
that I was looking forward The upcoming summer break will be to tax commitments and how that New Year. I hope you get time over the
to summer. Well, it certainly interesting with Auckland coming out is going to look for the next couple next couple of months to have a break
seems to have arrived early, of lockdown. We’ll see what happens of years. It’s been good to see large and enjoy the sunshine. To me, spending
with case numbers and how well the amounts of debt being paid off and time with family is really important and I’m
especially in this part of health system copes if we have a surge businesses taking the opportunity looking forward to doing that, but I’ll be
the world. In fact, after the in hospitalisations. to consolidate their position in extremely busy leading up to the break.
kids’ cricket on Saturday Life has been busy for us here at Diprose
case there is a dairy downturn As we have done for many years, our
at some point. offices will be closed over the Christmas
I actually ventured for a Miller since our last newsletter was
period and, like our staff, we directors are
swim in the pool at home published and you’ll read that we have I’m writing this on 1 December and
all looking forward to
purchased another book of clients. This it’s a good time to reflect on what
and at that stage it was only was a relatively quick transaction and
recharging the batteries.
has been an extremely disruptive
November. Normally I won’t currently we’re in the process of getting and hectic year. I’d like to thank our Take care, stay safe and
go swimming until January to know the associated clients and how staff who have done (and are still have a Merry Christmas.
we can best look after them. We also doing) a fantastic job getting all the
when things get really hot! welcome another staff member, Mel financial statements processed for
Smith, as a result of this acquisition. the year. Our efforts are reflected in
being named as a finalist in the Xero
It’s been an interesting few months We have spoken with, or met with, a
NZ Medium Accounting Partner
and it seems that we can’t have any large number of clients over the last
discussion without talking about few months when reviewing their
of the Year award. “Christmas is a
COVID levels, traffic lights, vaccination 2021 financial statements. We’ve time when kids tell
passports or vaccinations in general. processed a large number of dairy
farming statements and the results
Santa what they
Personally I find the published
information somewhat confusing. have been better than I have seen for want and adults pay
Hopefully over the next few months a long time. This is mainly due to the for it. Deficits are
things will settle down a bit and we can increased milk payout, but it was also
get back to some sense of normality, a pretty good year for milk production when adults tell the
government what
they want and their
kids pay for it.”
Richard Lamm
4 | DIPROSE MILLER QUARTERLY NEWSLETTER DIPROSE MILLER QUARTERLY NEWSLETTER | 5
FUNDING
YOUR BUSINESS A golden rule with business borrowing is
to “borrow to match the life of the asset
In broad terms, funds to start your business
being funded”. In other words:
will be either “equity” funding or “debt”
funding. In practice, a combination of the two 1. Use short-term borrowing for short-term
is common. In simple terms, equity funding is assets such as working capital.
the business owner’s money and debt funding 2. Use
long-term borrowing for long-term
is someone else’s money. Generally only the assets such as vehicles and equipment.
debt funding will be interest-bearing.
The larger the initial capital requirement,
the more likely it is that debt funding will be MANAGING In fact, many clients tell us that it is not the
result of the forecast (although it is important)
required. Debt funding allows the business YOUR CASH FLOW
ED'S
but rather the process of putting it together that
owner to make a larger capital investment.
provides them with the most benefit. It provides
However, a lender will need to be We’ve all heard the expression “cash is king”
an insight into the key drivers that control
convinced that: and new business owners find out very
profitability and cash flow.
1. T
he business can service the repayments on quickly that this is true. Managing cash flow
(cash funds in and out of the business bank We greatly enjoy working with clients to develop
the loan. For a new business, the lender will
THINKING
account) is the key to the financial success cash flow forecasts for their businesses. They
want to review forecast financial information
of the business. help a new (or any) business owner to better
prepared by the business owner and
understand their business, predict funding
their advisor. To secure debt funding, a new business owner
requirements and react to unforeseen
2. Security is available to repay the debt if the will need to prepare a forecast statement of
cash flow problems.
business owner defaults on the repayments. cash flows that shows expected receipts and
The security can be over a fixed asset(s) such payments on a monthly basis for the first one
as a property, or a personal guarantee from to two years of business operation.
USE YOUR
a third party, or a combination of both. Even if there is no debt funding, a well-prepared
cash flow forecast is probably the most useful
ACCOUNTANT
Debt funding is most commonly obtained from
“third party” trading banks, although there are financial tool a new business owner can adopt. The advice and assistance we can provide at the
other “second tier” lenders in the market. The The preparation of a well-constructed cash flow early planning stage of a business is sometimes
EPISODE 4 : second tier lenders will often accept a higher
level of business risk, but expect a higher
forecast is an important part of understanding
how you expect your business to operate.
the most beneficial advice we can ever provide
to a client. There are few new business owners
interest rate (return) for their investors. It forces you to: who will not benefit from professional assistance
HOW DO I FUND Family debt funding is also a common option, 1. Predict business revenue and how this with business planning, forecasting and loan
MY BUSINESS AND especially as borrowing from banks for new will change during the year. funding applications.
MANAGE MY business is becoming more difficult. Family 2. Analyse expected business expenses
members generally charge reduced (or no)
CASH FLOW? interest to assist the business owner to get
(including loan repayments) and when
they will need to be paid.
IT'S A WRAP, SO WHAT
This is the final in a series of four articles
things up and running. Family debt is often
3. E
stimate any requirement for additional HAVE WE LEARNED?
replaced with bank funding once the business
throughout 2021 that discuss important capital expenditure.
is established and there is a proven cash flow The moral of this series of articles for a new
aspects of setting up a business for the history for third party lenders to rely on. 4. Provide for income tax to be paid on business is that planning is the key. Documenting
first time. We’ve covered the importance of business profits. your expectations is an important part of making
Loans can be “principal + interest” (P&I) or
getting professional advice early on, selecting 5. Develop a policy for personal spending sure that your new business has an appropriate
interest-only. Banks are generally reluctant to
an appropriate legal structure and (“drawings”) from the business account. structure, establishes guidelines for managing
lend on an interest-only basis for anything other
managing income tax liabilities. tax liabilities, puts sensible funding arrangements
than a short period, to provide an opportunity Of course, the actual cash flow is never the
for a business to establish its cash flow. Once in place and has a process for monitoring actual
We’re now going to look at the key issues same as the forecast. However, it has been
established, a bank will want to see a regular financial performance against expected results.
involved in funding the business and well-proven that even a “rough” forecast is
monitoring cash flow. reduction in the balance of the loan over time. much better than no forecast.
6 | DIPROSE MILLER QUARTERLY NEWSLETTER DIPROSE MILLER QUARTERLY NEWSLETTER | 7
IN THE RUNNING AGAIN Diprose Miller has again been named a
finalist for the Xero NZ Accounting Partner
of the Year in the medium-sized accounting HR & PAYROLL
NEWS
firm category. We’re up against three other
accounting firms spread throughout NZ.
Xero has postponed the judging process
because of COVID-19 restrictions, so we’re
waiting to find out when the judging and
ceremony will take place. Judging criteria
include commitment to maintaining and
increasing the level of Xero expertise among
THOSE PESKY KEEPING YOU
staff, using Xero products to gain efficiency CHRISTMAS & NEW UP TO DATE
for the benefit of the practice and its clients, YEAR HOLIDAYS
the delivery of value-added services to clients Work Papers without Papers
using the Xero platform, and raising the It’s that time of year again where many We’re about to take the final step toward
awareness of the benefits of Xero. employers struggle with the rules around converting our office systems to paperless
statutory holiday leave over the festive with the planned introduction of the Xero Work
We’re very excited to follow up on our success Papers software product. Under this system,
season. We hope the points below will put
as NZ Accounting Partner of the Year back in the documents and calculations that we retain
you on the right track but, if not, feel
2017. We like to think it proves we’re keeping to support the entries in our clients’ financial
free to phone us for advice.
our standards up! statements will no longer be printed, but held
1. A
n employee is entitled to a statutory “in the cloud” together with the accounting
(public) holiday if that day would file itself.
“otherwise be a working day”.
Join the Digital Log Book Fan Club
2. C
onfusion can arise because most Many clients are using log books to record their
E-INVOICING XERO ME calendars show the coming public business travel in vehicles that are also used for
XERO
holidays as 25,26,27,28 December 2021 private travel. By doing so, they are able to claim
and 1,2,3,4 January 2022, a total of eight a deduction for the business portion of the
Xero has recently improved Xero Me is a new app for
days. But don’t get caught out, the maximum
TIPS &
its invoicing system to add employees that combines vehicle expenses based on the evidence
number of statutory holidays any employee provided by the log book.
new features that allow for both the existing Xero
may be entitled to over the Christmas/
“e-invoicing” directly between payroll functions with Traditionally log book entries have been made
TRICKS
New Year period is four, not eight. Only the
the accounting software the addition of expense using pen and paper, but there are now a number
25/26 December and 1/2 January are days
products used by tracking. Downloading of mobile apps that can make the job
for which employees are entitled to
different organisations. the app allows employees of recording travel much easier.
statutory holiday leave.
to request leave, submit
Instead of emailing a customer An example is Vehicle Trip
timesheets, view payslips, 3. As these four statutory days fall on
with a PDF or a link to an online Logbook Tracker but there
check leave balances and Saturday and Sunday they are subject to
invoice, e-invoices are sent from are many others.
update personal details. If the Christmas/New Year “holiday transfer”
Xero directly to your customer’s
you are an employer using provisions. If Saturday and Sunday is normally
accounting software ready to These apps automatically record
the Xero payroll software, a working day for the employee, the statutory
be approved and paid. trip distance and provide a
you might like to give it a holiday will be treated as falling on the useful report that calculates the
On the other side, when you try. If you need help, Saturday and Sunday. If Saturday and Sunday is business travel percentage and
receive an invoice in Xero, it’s let us know. not normally a working day for the employee, the can be stored on your accounting
automatically pre-populated statutory holiday must be treated as falling on file to support the resulting
as a draft bill, removing the Mon 27 Dec, Tue 28 Dec, Mon 3 Jan and expense claims.
need for manually entering Tue 4 Jan.
or scanning to record your
Further useful reference information can be found
bills in Xero.
at employment.govt.nz/leave-and-holidays/
public-holidays/.
8 | DIPROSE MILLER QUARTERLY NEWSLETTER DIPROSE MILLER QUARTERLY NEWSLETTER | 9
THE CLOCK
IS TICKING STAFF NEWS
INLAND REVENUE WELCOMING SARENA
SMALL BUSINESS MELANIE STRIKES
CASH FLOW LOANS SMITH AGAIN
A reminder to clients that the Small When we acquired It’s a big
Business Cashflow Scheme (SBCS) the Auctus Advisory “congratulations”
requires loans to be repaid within two practice we were to Sarena Kung and
years to avoid interest being charged. fortunate to sign up husband George on
This limit was originally only one year, but Melanie Smith as a the safe arrival of
was extended. Businesses that received new member of the daughter Ayva. A little
the loan when it was first available will find Diprose Miller team. Mel has been with sister for Renee, Ayva weighed in at 8.15 lbs when
that the two-year limit is fast approaching. the Auctus clients for more than 10 years, she arrived on 1 October.
starting back when it was Fenneman
If the loan is not repaid with the two-year
time frame, interest is charged from Accounting, so she’s well-known to the A NEW FACE AT Sarena is currently on maternity leave and is
scheduled to return to the office in April 2022.
the date of the original loan advance. clients that we will now be working with. THE FRONT DESK
The loans must be repaid in full within Mel will continue to look after the IN TE AROHA
five years and voluntary repayments can Auctus clients to ensure that there
be made at any time. After 24 months,
payments comprising both principal
are no significant changes from
a client perspective.
It’s a warm welcome to Debbie Gorman,
our new Te Aroha receptionist. She’s on
“One of the most
and interest are required.
Mel lives in Waihou with her husband
board Mon-Wed and comes to us from the
Te Aroha Kindergarten Association where
glorious messes in
the world is the mess
Clifton and their three young boys.
she worked for 14 years as an administrator.
When not in the office, Mel is kept busy
She has a strong background in payroll and
supporting the boys’ sporting activities.
She’s also keen on spending time at the
accounting work and is familiar with the created in the living
Xero software that we use extensively in
beach, especially taking time out for
a quiet spot of fishing.
our practice. room on Christmas
Interestingly, applications
to borrow funds under the
Since moving down the road to the
She’s a local girl, married to Dennis, with
three adult children. Sitting at her desk is a
Day. Don't clean it
Diprose Miller premises, Mel tells us
SBCS are open through she has enjoyed the camaraderie of
case of déjà vu for Debbie - she used to work
in the Diprose Miller building when she was
up too quickly.”
until 31 December 2023, a larger group of workmates and
with the Hauraki Catchment Board many Andy Rooney
the additional resources “on tap”
although there are criteria years ago.
to assist with client management.
to be satisfied based on Debbie’s hobbies include dancing, singing,
the impact of COVID-19 yoga, reading and quizzing. She’s also keen
on business revenue. on spending time at their beach property in
the Bay of Plenty. It’s no surprise that she
can only work part-time!
10 | DIPROSE MILLER QUARTERLY NEWSLETTER DIPROSE MILLER QUARTERLY NEWSLETTER | 11
MORRINSVILLE
298 Thames Street
Morrinsville 3300
PO Box 323 | Morrinsville 3340
P 07 280 5519
FP 0800 888 055
TE AROHA
53-61 Whitaker Street
Te Aroha 3320
PO Box 290 | Te Aroha 3342
TRACTA64531
P 07 884 8055
Disclaimer
Every effort is made to provide accurate and complete information in this newsletter. However, Diprose Miller makes no
claims, promises or guarantees about the accuracy, completeness or adequacy of the contents of this newsletter and
expressly disclaims liability for errors and omissions in the contents.
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