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Three areas to focus on for EOFY

Yes, it’s that time again.  30 June is racing up on us and business owners are flat chat.  Here are three key tips to help you make the end of the financial year easier (or less taxing).

The books!

Yes, the first is going to be the most obvious – get the books in shape.

End of Financial YearIf your data entry and monthly reconciliations are up to date now, great job!  When 30 June arrives you’ll have just one month to reconcile before you wrap up the year.

If you’re not that up-to-date, don’t stress as it’s not too late to get your house in order.  If you spend some time now, you’ll still be able to get your books in shape for the end of the financial year.

In the coming weeks, before 30 June, ensure all your bookkeeping and outstanding reconciliations are up-to-date, including overdue invoices, outstanding bills and super contributions.  Then when 30 June passes you won’t have a deluge of bookkeeping to do – you’ll just have one month to reconcile and can ease into your June BAS, reconciling your payroll and preparing your end of financial year reports.  Don’t forget your stock take and remember that preparing all your records and reports before visiting your accountant will save you time.

Don’t worry if you’re having trouble with these tasks (you’re not alone).  Your accountant or bookkeeper can help or alternatively a range of online resources have helpful information about completing these activities.

Remember it’s important to backup all your data.  And you’ll also need to keep copies of your accounting records for at least five years (this is an ATO requirement).

Make business life easier!  If you  have not  kept your books up-to-date this financial year and are rushing now to catch up – think about what work processes you could implement or improve next year to keep up-to-date and reduce future stress.   Remember, having up-to-date books means you always have an accurate view of how you’re tracking financially, are better able to manage debtors and can stay on top of cash flow.  Also, without an accurate understanding of your business’ financial position you cannot accurately plan ahead.

[Next: Review your business]

Review your business

Yearly financial review

When you meet with your accountant, it’s important to review the past year.  This will yield priceless information to assist with planning for the next financial year.  For example – Have you met your targets?  Have you met your financial goals?  Did your business run as effectively as it could?   Is your business financially on track to succeed in the following year?  Are there financial issues you need to address?  What needs to change?  How can you improve things?

Don’t forget – Cash flow is king – it’s your business’ fuel-gauge.

In fact it’s the number one business discipline, no matter how big or successful you are.  Think of it as the ‘keystone’ of business success – get this right and everything else follows. Good cash flow requires focus on 3 things: clients, debtors and suppliers.

Review your cash flow for the last financial year and establish what changes you need to make to ensure you don’t face cash flow shortages.  This review will help you put a budget in place for the next financial year and understand key areas you may need to improve (such as debtor management).

If you don’t have them, get the right tools and advice you need for successful cash flow management.  For example, if you have accounting software and keep it up-to-date and accurate you’ll have an understanding of your cash flow position.

Research from the MYOB Business Monitor indicates that 14% of business owners admit they don’t track cash flow as well as they should, and 32% only referred to their bank statement for cash flow in their business.  Tracking cash flow effectively is vital for a business, as poor cash flow management impacts the capacity to make the right business decisions.

[Next: Review your business and marketing plans]

Review your business and marketing plans

A business plan charts the course for your business and, through measurement and review, keeps you on track.

While it’s recommended that you review your business plan regularly throughout the year, now is the optimal time to review and revise this plan for the new financial year.  Consider things like…

  • Have you met your business goals?  Were they realistic?
  • Have you met your budget?
  • Did the year take a turn you weren’t expecting and has this impacted meeting goals?  If so, how do you need to adjust your plan for the next financial year?
  • Did you end the year with an optimal number of employees?
  • How is your current relationship with your customers and suppliers?
  • Did your business experience growth?
  • What is your market position in your industry?

It’s also important to review your marketing plan.  It’s about ensuring you’re still focusing on the right markets, evaluating your objectives, updating key market research and drivers, ensuring your marketing activities are supporting your business goals and having sound sales and promotional strategies in place to best suit your situation now and in the coming year.  For example, now might be a great time to win market share if your competitors wound back their marketing activity last year and are yet to pick it up again.

[Next: Plan ahead]

Plan ahead

Update your business plan based on the outcomes from your review of the previous financial year and your understanding of the market in the coming year.

When updating your business plan consider…

  • Your new goals and budget.
  • What skills and people do you need to meet your goals in the new financial year?
  • How could you better manage relationships with customers and suppliers to maintain consistent cash flow?
  • How will you optimise your relationships up and down the supply chain?
  • Does your business plan include future growth plans, and if so is there enough capital to finance this growth?
  • Do you have an understanding of the economic impacts on your industry in the coming year and how this may affect your business?
  • Do you need to make changes to your product/service to meet a changing market need?
  • What, if any, changes do you need to make to your marketing plan?
  • How will you track and measure your plan and goals?

If you don’t have a business plan, now is the perfect time to put one in place – one that outlines what you’re aiming to achieve over the next 12-24 months, how you’ll track goals and how you’ll meet and beat any challenges that may arise.  It’s all about setting yourself up for success.

If you don’t know how to write a business plan, don’t worry.  There’s a range of online resources and government websites that have free templates you can use.

Further research from the MYOB Business Monitor reveals that 35% of business owners surveyed don’t ask for information or advice about improving business performance.

If you need it – don’t be afraid to ask.  Your accountant will not only be able to help with your tax, but with your business planning.  Good accountants are mindful of delivering value for money, and should be happy to explain how their advice can deliver a return on investment.

If you don’t share your business plan and goals with your team, consider doing so (or you may even involve your team in business plan development).  This will help focus your team towards achieving success.  It’s all about everyone in the team kicking the ball in the right direction.

We hope these tips make the end of the financial year easier and help set you and your business up for success.

Here’s to a successful year ahead!

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Julian T Smith

Julian T Smith

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