Tips for the New Financial Year
While many businesses are still in the process of finalising EOFY 2020 they are also trying to stay on top of the latest COVID-19 updates, JobKeeper Payments, etc. so we thought it would be helpful to provide some guidance to business owners for the new Financial Year. It's been a tough few months and we know that many businesses have been struggling - we get it. Nevertheless, it is time to move forward, get back into a routine and set goals for the next 12 months.
Here are our 5 tips to get your business back on track in the new financial year:
1. Get your Paperwork & Stock organised
Now is the time to do a stock-take, organise your warehouse and get your paperwork sorted. After 12 months, the warehouses of many businesses look very different compared to the first day of the financial year. If you need to re-organise your stock or renovate your warehouse, do it now. It will help you through the year, especially during the busier periods. And while you're at it: Clean-up your office and archive anything from the previous financial year. Once your EOFY is finalised, there should be no more lose dockets, statements or receipts. Do not hang on to old papers! Archive everything that's no longer needed and create space for the new year to come. Trust us, it's worth it and it will make you feel much more organised.
2. Implement Changes that allow you to work more efficiently
EOFY can be stressful and messy but with the new financial year approaching, the perfect opportunity for change arises. Now is the perfect time to review the software you are using, the quality of your customer service and any other business expenses. Are the programs you are currently using efficient enough? Could you cut down any costs? Are you providing the best quality customer service to your clients or could you offer more value?
Here is one simple example: We deal with clients who end up with over 100 receipts per week. Instead of scanning every single one of them and then manually transferring them into our Accounting Software we use the Receipt Bank App which can be downloaded to your phone and desktop. Through the App, we take photos of the receipts which will then be read and pre-coded by the system. From there, they can be automatically published into our Account Software. It's a massive time-saver for us and allows us to process any receipts in the most efficient way possible.
Have a think. There is always something that could be done in a more efficient way. If you are unsure where that applies in your business, feel free to contact one of our experienced Bookkeepers for assistance.
3. Review your Aged Receivables
For many small businesses this may not always be a priority but it is very important to stay on top of your outstanding customer payments. If you do not check your Aged Receivables on a regular basis, we cannot stress enough how important it is for small to medium sized business owners to review their debtors balances at the end of each financial year.
Our Tip: If you have to write-off any of your Invoices (e.g. you waited too long and now your supplier has gone into liquidation), make sure to finalise any write-offs before the 30th of June. By doing that, you will reduce your taxable income which will then automatically reduce the tax you have to pay to the ATO.
It's more optimal to not let it come to that stage. Our Accounting Programs make it easy for us to set-up Payment Reminders that can be sent automatically and hassle-free by only a few clicks.
4. Ban the Shoe Box
Please answer the next question honestly:
Do you still have boxes filled with dockets, receipts and other miscellaneous papers?
If you answered yes, we appreciate your honesty but we need to remind you that we are living in 2020. You could be saving a lot of time and money (and trees!) by making the switch to digital processing. We can recommend many wonderful Software and Apps that let you process your Invoices, Receipts and Statements in next to no time and the best thing is yet to come: they are all cloud-based! That means:
You will never run out of storage or have to pay for external storage ever again,
You can access any documents regardless of their age super quick and easy and
You can ban the heavy old lever files that are probably taking-up most of the space in your office which will also save you money that you can spend on your business instead
Thanks to automated Bookkeeping Software and Add-ons, getting your Bookkeeping up-to-date doesn't have to be painful. We know that it is so easy to say: "I'll get the Bookkeeping done eventually" and then completely forget about it until it is June again. Don't fall into that trap. Ask your Bookkeeper (or hire one) to do a Health-Check on your business and see what processes can be optimised to save you time, effort and money in the new year.
5. Hire a Bookkeeper to assist with your Forecasting or Budgeting
Especially in uncertain times like these, it is so important to do realistic Forecasts more often than usual and to calculate your budget wisely. JobKeeper Payments are going to stop eventually and you want to make sure that you make smart decisions from the start of the new Financial Year to prepare yourself and your business for any possible scenarios. We understand that the given uncertainty makes it very difficult for many business owners to focus on budgets and forecasting but at the moment it is probably more important than it ever has been.
We urge business owners to think about the following questions before making any big financial decisions this year:
What are you going to do if another Covid-breakout occurs and restrictions will be tightened-up again (think of another lock-down)?
If you have accessed deferral of tax payments or any other loan re-payments (e.g. bank loans or commercial lease), are you able to pay them back in the given timeline?
If you have accessed JobKeeper payments, what are your plans once they finish? Will your business be able to make profit without them or are you currently just "surviving"?
Have you got any contingency plans in place for unforeseen cashflow-issues, e.g. if some of your main customers are unable to pay your bills within agreed terms?
What can you do to increase your revenue in these times? Have you developed any new Marketing/ Business strategies?
Have you set up agreements with your suppliers in case you won't be able to pay their bills on time due to cash-flow difficulties? Do you require assistance negotiating payment plans if that scenario happens?
If you struggle to find the answers to one or more of the above questions, try not to panic. Our team is currently working very closely with our clients to find suitable solutions that work for all of these questions. Just because the times are currently tough doesn't mean that there is no way forward. It is possible for businesses to push through this with the right planning and support.
We hope that this article has been helpful to you. Let us know in the comments if you have any feedback or questions you would like to share.
Stay safe and take good care of yourself.
The Three Bookkeeping & Admin Services