One letter saved the ATO millions – great example of a feedback loop Relating something the ATO did, to something we do.
The tax office and a specialist behavioural economical research unit within the federal government used a randomised trial to target 2000 tax agents, specifically naming individuals lodging higher than expected work-related expenses claimed in a letter.
Alongside a control group of tax agents who didn’t receive letters, the trial found individual clients identified by correspondence reduced their work place claims by $191 compared to the $2 increase in the group who received no letters.
The premise of a feedback loop is simple: Provide people with information about their actions in real time, then give them a chance to change those actions and push them towards better behaviours. You can do this with your business in working with debtors, suppliers and staff. But of course keep it simple.
Without the development of our Precis accounting service we never would have believed the power of the Cruncher. We present clients with information that can easily explain their cashflow, where the businesses money came from and where it went. In the accounting scheme of things, this is in real time as new information is produced every month. This will allow our clients to understand their business and react to improve on it.
A feedback loop involves four distinct stages. An example using our cruncher –
Many business owners never understood the profit and loss, but they certainly react to our cruncher report –
Here are the 4 stages of the cruncher report as a feedback loop
First comes the data: – This is the evidence stage
The information of the business is taken through a bank feed which provides us with raw data on what has happened in the business.
Second, the information must be relayed to the business owner in a context that makes it emotionally resonant. This is the relevance stage
Our system now processes this data so that a business owner can understand the information given to them.
Third stage: consequence. The information must illuminate one or more paths ahead.
The business owner can digest the information, ask questions and understand what has happened in their business.
And finally, the fourth stage: action. There must be a clear moment when the individual can recalibrate their behaviour, make a choice and act. The action taken by the individual is measured and the feedback loop can run once more. Every action will stimulate new behaviours that inch us closer to our goals.
The business owner can now make large to incremental changes to improve the business. These changes will be seen in the following months report – and this cruncher feedback can begin again.
Recreation and re-creation seem to be the same word. Recreation, such as swimming and fishing, are activities for enjoyment when not working. Re-creation is to form anew. Having a break and suddenly thinking of something grand for your business is the process of re-creation. It’s Christmas time and a time to slow down or stop […]
On June 30, 2021, there were 2,402,254 actively trading businesses in the Australian economy. Of these, 62% or 1,416,664 of these enterprises are single operator businesses. Most businesses in Australia are enterprises run by one person. If you are in this group you are part of a significant contributor to our economy. Do you fall within […]
Some thoughts about Finance Invoice Finance – No, it’s not factoring.
It may look like Factoring, but it’s not. And that the problem we sometimes have in explaining what the difference between invoice finance and what a factoring company does is the foremost hurdle to presenting to clients why we think Invoice finance is better. What Invoice finance does is finance one invoice. Just one, and when […]