Compliance. Cash flow. Payroll processes. It can be the stuff of business nightmares, but digital connectivity is increasingly providing a sweet-dreams solution. Hereâ€™s how Two Bulls manage an innovative global business while streamlining local regulatory requirements, such as the ATOâ€™s Single Touch Payroll, on Xero.
Evan Davey, the chief operating officer of digital product consultancy Two Bulls, says cash flow is his companyâ€™s biggest concern. Cash is what keeps him, and his two business partners, James Kane and Noah Harlan, up at night.
Keeping cash in the bank
â€œIf you’re not getting cash into the bank, that can be a significant risk for the business, its clients and its people. As a small business, at the end of the day youâ€™ve got to make sure that youâ€™ve got your cash flow forecast up to date and active, and understand what your upcoming liabilities are. For us, in the Australian context, that includes things like BAS and super and payroll tax alongside our payroll cycles,â€� Evan says.
This allows the business to make appropriate arrangements to support cash flow, such as managing debtors.
â€œThatâ€™s really key. You have to make sure you are on top of the cycle, with the receivables and the outgoings. You can be doing really well on paper but if youâ€™re not getting cash in the bank that can be a significant risk for the business.â€�
The Two Bull story
The story of Two Bulls is remarkable. The business helps companies build digital products and take them to market, working with them from the very early stages of ideation through to design, build, execution and deployment into the world.
It has produced some amazing things, from kidsâ€™ entertainment, holographics, augmented reality and narrowband Internet of Things systems for home use. Its clients include Disney, Verizon, Microsoft, Vodafone and Sesame Street.
â€œWe work across an incredible breadth of clients and industry sectors. The common thread is that we are always pushing the boundaries of what technology can do. We are working with companies that are looking to innovate at the very edge of technology,â€� Evan says.
The company has offices in New York, Berlin, Singapore and Melbourne, with close to 100 employees.
One business, two very different set of requirements
Xero operates the accounting systems for the US and Australia offices, running across two jurisdictions with very different tax and regulatory regimes â€“ not to mention different requirements for employees, different ways of being paid, and different banking systems.
â€œOur primary concern is ensuring we are across our cash flow for the two entities. Xero allows us to keep across our accounts receivables and payables across both offices and is obviously integral to the way we run our businesses,â€� Evan says.
â€œXero provides us with the ability to keep track of our cash flow forecasts in both currencies, US dollars and Australian dollars. It helps us by dealing with currency conversions. Itâ€™s obviously very important.â€� Evans says using Xero is a critical factor behind Two Bullsâ€™ robust cash flow, making the process simpler than ever before â€“ they started using Xero in 2012.
Single Touch Payroll made simple
Xero also allows Two Bulls to comply with Single Touch Payroll, an Australian Tax Office (ATO) initiative that came into place in July 2018.
Single Touch Payroll aligns the reporting obligations of businesses with 20 or more employees with its payroll processes. It means that companies have to report to the ATO every time they pay their employees, regardless of whether thatâ€™s weekly, fortnightly or monthly.
The information sent to the ATO includes employeesâ€™ salaries and wages, allowances, deductions (eg, workplace giving) and other payments, pay-as-you-go (PAYG) withholding and superannuation information. While this could be complex and time-consuming, Xeroâ€™s Single Touch Payroll functionality allows companies to do it all in just a few clicks.
â€œThe way that Xero delivers payroll for us, the way it gives us a forecast for our super liabilities so we can see those very easily, the way it helps us complete our BAS and submit that electronically to the ATO â€“ all of these things remove levels of effort we have to go through,â€� says Evan. â€œIt simply reduces the workload on our operations and finance team.â€� Â
The importance of digitisation
Evan agrees that the digital landscape for business is evolving. There once was a time when digitisation was a choice. Now itâ€™s a necessary part of running a business.
Xeroâ€™s Single Touch Payroll service is a clear example of how digitisation changes businesses for the better.
â€œIt made the way we run the back office massively more efficient. To us, itâ€™s not a choice, itâ€™s a necessity. We wouldnâ€™t know how to function if we didnâ€™t have an online digital accounting package running behind our business.â€�
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