Our client was a builder had been operating his business from a trust structure (with corporate trustee) for a number of years. The corporate trustee was licensed with QBCC and being in the lowest turnover category had been able to use a deed of covenant to meet the strict financial requirements of licensees.
QBCC changed the legislation during 2019 resulting in licensees that were deemed to be in the smaller categories no longer being able to rely upon a deed of covenant. Our client had over $500,000 in booked contracts to complete and was now considered in breach of the new legislation.
Analysis of the legislation indicated that we could use net assets of both the Trust and the Corporate Trustee when calculating the Minimum Financial Requirements. A cost/benefit review was undertaken and this strategy was deemed to be the most cost-effective for the client. We worked closely with our client to assign certain assets over to the corporate trustee which enabled them to comfortably meet the licensing requirement and legally hold their QBCC license.
The regular contact and communication with the client over this period also highlighted some challenges in the business that the owner was facing. This included the timing of dispatching invoices, cashflow and ease of bookkeeping. A review of various software options indicated the business would benefit from cloud accounting and a trial was organised to switch the reporting over to Xero accounting software.
The client is now able to invoice directly from his phone, manage & calculate WIP (work in Progress) easily and monitor his financial requirements through the custom dashboard we designed for him.