That was then, this is now.   1 comment

In the last couple of weeks I’ve learnt how much more complicated things are for businesses in 2010 than they were in 1989.

When we last had a GST rate increase in 1989 businesses were given about 3 months to get ready to change from a 10% rate to a 12.5% rate. They did it and no doubt with some teething problems.

The trading world is so different now. Here are just some of the differences which will mean added complications for some businesses as they try to accommodate the new 15% GST rate from 1 October 2010:

  • 24 hour trading – this is much more prevalent, especially supermarkets. What do businesses do at midnight on 30 September/1 October? Close up for a couple of hours? I’m certain they can’t just flick a switch. In 1989 a lot of retailers put new pricing labels on shelves before the changeover date but covered them up with something like post-it notes. At midnight staff went around and removed all the post-it notes to reveal the new prices. I suppose that’s one approach.
  • Internet trading occurs 24 hours.
  • Electronic payment systems are more sophisticated and complex.
  • What about vending machines?
  • Credit terms are more common and agreements such as layby sales where payments will be made before 1 October but the goods picked up after 1 October.
  • There are all sorts of special trading arrangements such as loyalty schemes, rebates, vouchers, prepaid cards etc.
  • Barter transactions or “in kind” sponsorships are more frequent where something is provided now in return for something else over a period of time.
  • Computer based financial systems are much more complex with some businesses having separate systems for stock records, pricing, sales recording, purchasing, customer and supplier databases and accounting records.

And I could go on.

Why are these things never as simple as at first they seem and why is it better technology seems to create work rather than save time and effort?

Cheers,

Iain

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Posted June 9, 2010 by Iain Blakeley in Rate increase to 15%

One response to “That was then, this is now.

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  1. Last time GST increased, a number of retailers printed price tags in advance with both pre and post prices on the one ticket, which avoided issues on changeover with the public (provided electronic prices in tills seamlessly switched over at midnight). It also encouraged shoppers to buy before the date (although sales post changeover are likely to be better than prices beforehand, despite the GST increase!).

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