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Reasons for Good Goverance

Hamish Pryde • August 15, 2012

Governance applies to all Company's regardless of their size.   Businesses with a more formal structure tend to develop more quickly, and with a better and more clearly defined direction than those without.

 To carry out the governance model you need Directors.   Ideally an independent Director with the necessary skills and expertise is required.   They have no financial interest in the success of the business;  therefore their objective independent advice is more valuable.

Some compelling reasons why a good governance structure is needed:

1)     It means you achieve the things you want to achieve, rather than get sidetracked on things which may not be that important.

2)     It means you can adapt quickly to change whether it be to capitalise on an opportunity or steer the ship away from adverse conditions.

3)     It is essential for a business that has a high debt ratio to ensure the business keeps that debt under control and not let the business deteriorate into a situation where the shareholders lose everything.

4)     Banks will look at a business with a good governance structure more favourably than one that doesn't  know how they are going until the Financial Statements are prepare the following year.

5)     It helps keep you within the agreed overdraft limit and can reduce your interest rates if the bank can see you follow agreed plans and show discipline.

6)     It helps enormously if you are going to have a successful succession plan.  That can mean that if anything happens to the key person, there will be a clear path to follow for those left behind.

7)     Better still good governance will address the succession issue and aid in realising the maximum value from the sale of your business, or it can become a legacy.

8)     Finally, it is likely you will make a lot more money.

The usual reasons given for not putting a good governance structure in place are that it might cost too much.

"If the cost of something is considerably less than the reward, the cost is irrelevant.
By Hamish Pryde September 11, 2024
Paper is everywhere. We spend a lot of time and money moving paperwork around. But with today’s technology it is now possible to get rid of paper entirely. Digital documents are simpler, easier to store and send, more searchable and permanent. How long does it take to post a document to somebody via the ole stamp and envelope method, that is snail mail? It is more efficient and timelier to email the document. How many times do you go to print a document at home and find that your printer has run out of ink? Why do we still hold onto printing paper documents? Sometimes it’s just because that’s what we’ve always done and let’s face it change can be difficult at first. Paper alone is cheap. But when you start paying for printers, toner, servicing and maintenance, paper starts to look more expensive. Let alone the storage cost. Paper tax records for seven years can be quite a few boxes of paper. We have embraced some paperless technology as part of a modern business practice. This includes digital signatures, digital collaboration, paperless minutes of business improvement and coaching meetings, electronic work papers and my new digital notebook which I am enjoying. We send questionnaires via email to you to gather vital information to enable us to prepare your annual financial statements. This is a PDF document. Instead of printing the questionnaires you could save the document down into a folder of your choice then edit the PDF document and return to us. How do you edit a PDF document you ask? Once you have opened the document the Adobe online editor lets you do some things for free. The online editor works in any web browser and lets you add text, sticky notes and highlights. Click on the fill & sign button to the right of the document, then in the top toolbar click Iab text button. You can add text directly on the PDF document. Have a try next time you have a PDF document open. Xero and Farm Focus users can attach invoices directly to the transaction loaded into Xero. Then if you are looking at the rates expense in the profit and loss account or farm working account, you can drill down into the rates code and see the transactions. Then attached to each transaction is the rates invoice if you use this great functionality. All invoices can now be stored in the cloud. So why paperless? Productivity - electronic documents are instantly and simultaneously available to everyone who needs them. Reduce waiting times with less risk of loss or damage. Cost savings - you will save money on printing, postage and associated costs. You could pay less rent because you won’t need all that space for your files. Security - electronic documents are more secure than printed ones. Digital records can be password protected and rendered unreadable through encryption. Printed documents are only as secure as their proximity to a copy machine. Reduced Clutter - paperwork on desks and shelves are not only untidy it’s inefficient too. The organisation of digital files is simpler and your office will look much neater. That will help you clear your mind to focus on your business. Environmentally friendly - less printing means fewer trees cut down for pulp and less energy used to make and transport paper. Disaster recovery - if there is a fire or flood, recovery from the backup is much easier with digital storage them with paper. There are great help articles available in Xero or Farm Focus if you are not attaching invoices to payments already. To find out how click on the links below: If you would like to explore ways you can go paperless we can help.
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