Business Conditions Continue Worsen Ever Since 1990's

The trading conditions have already been at their worst levels for about 14 years now. And this has led the business owners in believing that the economy is desperately in need of more interest rate reductions.

An appalling result in the latest survey of the Australian Chamber of Commerce and Industry (ACCI) on investor confidence showed that most businesses are stabilizing at low levels while some others are “sinking to contractionary territory”.

According to the ACCI Director of Economics and Industry Policy, Greg Evans, "Overall the survey shows that mainstream Australian business is under significant pressure."


It was during the December quarter that the sales and profitability sank. To add to that, employment and investment intentions proved poor especially in the coming months.

"Businesses' view of their own conditions are at their lowest level since the survey began some 14 years ago, in 1998. Clearly this economy needs the benefit from further reductions in interest rates, and we would expect to see that in the first half of this year," added Mr. Evans.

The next meeting of the board of the Reserve Bank of Australia has been set on February 7 wherein the financial markets are expecting them to cut rates. However, the increasing “tug of war” between businesses and Australian banks remain a major concern of businesses. This war is over the two entities’ willingness to pass on the rate reduction’s full impacts.

"It underlines the lack of real competitive pressures in the Australian banking system," continued Mr. Evans.

The same survey also revealed that the largest constraint on investment remains to be taxes and government charges. This is followed by insufficient demand in Australia.

With these difficulties being experienced by businesses in Australia, there is a need for them to utilize accounting software for businesses and engage the services of online accounting to ensure that the processes and transactions are accurate. And in today’s time, there is no more place for assumptions in the business world.

Comparing Planning and Accounting - Why is it Important?

The 1994 movie, Stargate, represented a gate that led to two dimensions. In today’s time, the stargate opens to accounting on one end and planning on the other.

Accounting starts today and goes back to records of the past with increasing detail. Planning, on the other hand, starts today and heads straight to the future with increasing summary and aggregation.

However, many find the two to have similar looking tables. The accounting system has an income statement, a balance sheet, and a Cash Flow statement. The business plan has these three statements “proforma” or projected results. Although these three statements are almost identical in form, presentation, and order of appearance, the information they carry are not the same.

This conceptual difference is important as they don’t mix well. Planning approached from an accounting point of view is not good. Accounting is done by reporting from a database of transactions.

Planning is steering the business to a future direction. Planning is concerned with decision-making, progress tracking and change management. Though accounting is also about information and management, there are legal considerations related to it. Accounting also has to go into very deep into detailing while planning requires balance between concept and detail. There are times when too much detail is not productive.

Accounting has to be accurate. There is no room for mistakes and errors. This is because taxes and dues to the government are derived from the figures. Planning, however, can be wrong. In fact, it is often wrong. There is always room and chance for corrections. This is because it deals with assumptions that aim to steer the company to a certain direction. And assumptions need constant reconstruction until the best direction is achieved by a company.

Article Source: Business Insider - Planning vs. Accounting: 2 Different Dimensions. And Why You Care »