Author: Harry Hoang
During the pandemic, after putting in efforts and time to prepare for your JobKeeper or Cashflow Boost grant application, there is nothing better than receiving the news that your work has paid off; your business got the grant!
Before you can celebrate the great news, you need to make sure you are prepared to use the money well. Government grant is an essential part of every small and medium sized businesses, but effective grant management is a skill that takes time to develop. Economic support packages are managed and audited by ATO. However, there are millions of dollars were provided to businesses without any check & balancing process in place from both Government and business sides. In some cases, acquittals of government funding are relying on manual process or external audit parties.
In this article, we share some tips to manage the grant money efficiently and discuss why businesses owners need to understand the importance of an efficient and transparent grant management solution.
Understand your responsibilities
- Do not assume that the Government is giving away money means that you can do whatever you like with the cash. You should check the grant funding terms & conditions that you have agreed to make sure you have a sufficient level of diligent financial record-keeping process to comply with the terms & conditions, when it comes to audit time.
- Do not confuse purposes & objectives of one relief program with those of another grant. Each of the economic support programs has its distinctive purpose to aid your business. Make sure that you don’t try to be too creative with free money.
Treat your grant as a project
We strongly suggest that you treat each government funded programs you receive as a project. You should do a budget scoping before submitting your plan and budget projection to request for funding. It is important that you implement the proposed scope & budget to your financial system to monitor the progress closely during the grant period.
You should not wait to start working on acquittal until the deadline is approaching. Planning weeks earlier and collecting data as you go with a financial system that can provides your acquittal data in one click.
Engage with your stakeholders
You should communicate with your staff and suppliers who are working under grant-related projects so they are aware of their own budget limits and obligations. This to avoid overspending and human-made errors in your accounts. The most common mistakes that we have encountered in managing Government funding are caused unintentionally, however in the time of difficult economic conditions, it is in your best interest to prevent such mistakes to occur.
Pay attention to the advice from your auditor
Some of the current Government funding programs do not require financial statement audits so most organisations can get their accounts reviewed by a CPA/CA practitioner. However, we strongly believe that the value of auditing/accounts review is beyond compliance. Business owners should pay attention to the recommendations from auditors. You can improve your accounting practice, enabling a good business profile with the ATO in the future.
Implement an automated financial system
Financial data automation and security should be the top priorities for funding recipients. Implementing a more automated accounting process with higher security is the best preventive way to avoid frauds. Businesses are using automated system such as:
- Receipt Bank for bills management;
- Xero for bookkeeping, bank feeds, reconciliations and batch payments;
- ApprovalMax for approval automation of accounts payable and accounts receivable;
- LastTick - Our own banking audit tool to match financial data (BSB, account number, account name) before seeking online banking authorisation from our clients when processing payments on their behalf.
If you are interested in a business grant management solution such as R&D, EMDG or other business relief grants, please contact Tailored Accounts for a chat with our experts.