Case Study – How we helped one business turn their cash flow around

The Problem

A clothing retailer had been trading for 4 years. It recently opened a second store to achieve growth and profitability. Their revenue was $800k p/a with a profit of $65k p/a and a creditor balance of $214k with 3 of their major clothing lines that generated 78% of their revenue. Due to their poor payment history, the 3 suppliers were threatening to put them on stop credit until they got their balance back to zero. They had already borrowed $400k from family members to open the business and keep it alive. They were unable to pay any of the monthly instalments, were stressed to the max and working over 90 hours a week.

The Solution

We created a 12 month rolling cash flow for the business, as they did not have one in place. This was extremely difficult as their Point of Sale (POS) system did not interact with their financial Software, Quicken. By requiring the data for the cash flow, we solved the problem of the lack of integration between the POS and the financial software. Six strategies were implemented as a result of what we NOW discovered in the cash flow;

  • We designed our own tees, hats and shorts (for public holiday events coming up), got them manufactured overseas and sold them at a 135% margin – sold out with 2 weeks of delivery each time
  • We sold 65% of old stock through packaging them up with newer stock people wanted
  • We negotiated with 3 stores interstate to buy some of the remaining stock with cash paid in advance for it
  • We closed the second store immediately and modified the shifts of the workers
  • We prioritised creditors into 3 categories and then stuck to the 3 tiered payment terms that 100% of them agreed to with a written agreement coming from us
  • We did a makeover of the original store for better turnover of stock

The Result

The owners realised from their cash flow that the business model would not work without serious volume and more clout with the larger and well-known brands their clients wanted. They decided to move into manufacturing as there was a better margin, less risk for them and they had established some amazing relationships oversees with 2 companies that made the clothing they designed while giving them a huge margin. The retail business was sold to a competitor for an amount that left the owners with a $50k debt left to pay their family members. In the transition period (the following 6 months) of realising the position of the business through the cash flow to selling it;

  • The profit went up 305% (and the sale eventuated)
  • The 3 main creditors were paid 75% of their bills within 6 months and opened up their lines to the owners again
  • $350k of the $400k debt to the family members was paid back upon the sale completion
  • The owners went from working 90 hours a week to 43 hours a week
  • Stress levels dropped “a million %” and their original dream of designing their own clothing came to life

If you would like to learn more about how we can help you achieve your cash flow goal please contact Lynda n (03) 9744 7144 or email


Employee or Independent Contractor: Don’t get caught out!

Businesses that engage workers as an “independent contractor” when they are really an “employee” can face serious consequences and it can be costly.

The distinction between who is a contractor and who is an employee can be a very grey area at times, however it is extremely important that the right distinction is made as different legal and tax obligations apply.  Do you know if you are liable for?

  • Payroll Tax
  • Superannuation Guarantee Payment
  • WorkCover Obligations
  • Long Service Leave
  • Award Obligations

How do you determine the difference?

There are a number of factors to consider when determining whether a worker is an employee or an independent contractor.  Generally a worker is an employee if they:

  • Are paid for time worked
  • Receive paid leave (annual, sick or long service leave)
  • Are not responsible for providing the materials or equipment required to do their job
  • Must perform the duties of their position
  • Agree to provide their personal services
  • Work hours set by an agreement or award
  • Are recognised as part of the payer’s business
  • Take no commercial risks and cannot make a profit or los from the work performed.

In most cases an independent contractor:

  • Is paid for results
  • Provides all or most of the necessary materials and equipment to complete the work
  • Is free to delegate work to other entities
  • Has freedom in the way the work is done
  • Provides services to the general public and other businesses
  • Is free to accept or refuse work
  • Is in a position to make a profit or loss

At times even if the worker is deemed an independent contractor, you may still be liable to pay the 9% super guarantee payments, especially if it is a contract job is labour only.  WorkCover obligations may also apply in this situation.

McMahon Osborne Group and Baguley and Associates in conjunction with Gallagher Basset are running a special breakfast seminar focusing on Contractor v Employee guidelines.  Limited space is available, don’t miss out!


When: 7:00am, Thursday 21st February 2013

Where: Sunbury Football Social Club, Riddell Road, Sunbury

To register contact Lynda or Kristie on 03 9744 7144 or email

Schoolkids Bonus

The beginning of February marks a significant yet costly time for families with children, as parents busy themselves with the purchasing of school textbooks, stationary and uniforms amongst numerous other items.

If school expenses are weighing you down, the Schoolkids Bonus can help lighten the load. It replaces the old Education Tax Refund and it is simple: there’s no need to collect receipts or claim it through your tax, this is one of the significant benefits of the Schoolkids Bonus.

Each year, eligible families and students will receive:

  • $410 a year for each primary student ($205 paid in January and $205 paid in July)
  • $820 a year for each secondary student ($410 paid in January and $410 paid in July).

To get the Schoolkids Bonus you need to be receiving an eligible payment from Centrelink or a Department of Veterans’ Affairs Education Allowance  either for yourself or on behalf of your child on the 1 January and/or 30 June test dates and you or your child must be undertaking primary or secondary studies and under 20 years of age. If you receive an eligible payment from Centrelink, you just need to let them know:

  • when you or your child starts primary school to start receiving the payment
  • when you or your child changes from primary to secondary school to start receiving the secondary school payment and
  • when you or your child complete secondary school to receive the final secondary school payment.

I have more than one child. Will I receive the Schoolkids Bonus for each child?

Yes, if you have more than one child in primary and/or secondary study and meet the eligibility requirements, you will receive the Schoolkids Bonus for each child in primary and/or secondary study. For example, if you have a child in primary school and a child in secondary school in January you will receive $205 for your child in primary school and $410 for your child in secondary school. That’s a total of $615 to help with back-to-school costs for your children’s education.

When will I receive it?

Payments are made in January and July every year unless you claim your Family Tax Benefit Part A as a lump sum. You must be receiving one of the eligible payments on 1 January to receive the January payment. Similarly, you must be receiving one of the eligible payments on 30 June to receive the July payment. If you have deferred your Family Tax Benefit Part A, you will still receive the Schoolkids Bonus.

The above information has been obtained from the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs.  For further information please visit