Ease your end of financial year pain
Key points in this article
- Keeping your financials up to date
- Planning for succession
- Regular cash flow forecasts
The end of the financial year can be a stressful time that requires some smart budgeting. Put a few regular steps in place so your business stays on top of its performance and compliance obligations throughout the year.
Get a checklist together
Avoid an end of financial year frenzy to get your paperwork in order. CPA Australia has a checklist suggesting some important ongoing actions to help get you on the right track.
Stay ahead of the regulations
Make sure you keep up-to-date with regulatory lodgements and payments. Diarise due dates that you need to remember, including for:
- Income tax returns.
- Payroll tax.
- WorkCover for insurance.
Get organised throughout the year so you just need to finalise your paperwork before lodging your end of financial year income tax return.
Have your financial statements in order
Ensure you enter all financial data promptly with accurate transaction dates. If you don’t have financial software, consider installing Xero, MYOB or a similar package. Frequently:
- Review working capital items.
- Reconcile stock.
- Consolidate debtors.
Be sure that your major bank accounts are reconciled monthly and that depreciation on fixed assets is recorded correctly.
Ensure your financial statements are up to date
Budget and prepare your forecasts
Prepare cash flow forecasts at least annually, set sales targets regularly, and prepare a profit and loss budget each year.
Setting targets for financial performance is great, but a wasted task if you don’t review and analyse your financial statements regularly. Review your actual performance against your budget.
Plan for succession
You want to set your business up for the challenges and opportunities it will face in the future – which includes how and when you’ll exit. Keeping your books immaculate from your business’s inception will prove fruitful when it comes time to plan for succession.
If your record keeping hasn’t been up to scratch, it’s never too late to go over your paperwork from prior years and organise it in a way that’ll be an asset when it’s time to exit your business.
Planning for succession is part of running a business – as some point you will want to exit
Compare your results to industry standards
Make sure you know the competitors in your industry. You need something to compare your business’s results against – and the standards for your industry are important figures to compare to.
By knowing what your competitors’ prices are, you’ll have a clearer idea of where you need to be to achieve success in your industry.
Regularly forecast cash flow
Conduct forecasts at least annually. Your cash flow forecast should project the next 12 months of cash flows. You may need to update this forecast each month to reflect actual events.
Use your forecast to address any future cash shortages and to alter your budget if need be. For example, focus on encouraging cash sales to reduce the number of debtors.