With another financial year slowly drawing to a close, now is the time to get your business financially ‘ship-shape’ and ready for an even better year to come. So we’ve prepared a 6-step checklist that’ll ensure your EOFY ready:
1. Update your Business Cashflow, P&L and Balance Sheet
- Talk to your accountant about what you need to do to close out the year in detail: The first common task is to review of all invoices and chase up any outstanding payments from clients. Where you have slow payers or bad debts, consider offering a discount or incentive to pay before June 30th otherwise you may have to refer the bad payers to a collection agency.
- Check your payments and outgoings records match with your purchase orders as well as stock levels (where appropriate), consider buying and selling inventory where needed. NOTE: It’s important to have at least two people reconcile payments and receipts. This dramatically minimises chance of error, theft and fraud.
- Review and pay any GST, PAYG and Payroll tax, leave entitlements and superannuation contributions required.
2. Review, update and invest in business equipment
The government provides businesses with turnover of <$2m with significant accelerated depreciation benefits for business equipment investment such as business vehicles up to the value of $20,000.
3. Updated client data and contact details
Contact your clients to say ‘Hi’ and thank them for their business over the past year. This is also a good chance to check their phone and mobile numbers, postal and email addresses are correct at the same time. Ask them how their year went and what their plans are for the coming year. You may also find clients are looking to place some last minute orders or need your services before the financial year end too!
4. The new financial year plan
Once your numbers are up to date and you’ve spoken with your clients, run some analysis and benchmarking reports to see how you went in the last financial year in relation to your original goals and budgets, you’ll need to make sure you have the following ready to go in your new plan:
- Will you maintain your existing turnover and cost structure for the coming year or is it time to turn it up a notch?
- Is it time to review your existing supplier agreements and distribution agreements to make sure the terms are still commercially suitable?
- Would a joint venture help you find some new clients at minimal cost?
- Or, Is it time to develop a new product your existing clients have been screaming for?
- Perhaps you just want to manage your costs to make a little more margin?
Whatever it may be, double-check you’ve put some thought into what went right and wrong last financial year and how you could improve in the next financial year. This might just make it your most stellar business year yet!
5. Pre-pay property loan interest
If you own or are purchasing an investment or commercial property, some lenders will offer you a slight discount to pay the interest on the loans for the coming financial year in advance. Not only is the lender is happy to offer a ‘sweetener’ for getting the payment upfront (as this reduces the risk of non-payment), but if the payment is made before June 30th 2016, the interest deduction for the coming financial year is now being ‘brought forward’ or paid in this year and therefore can often offset potential tax payable in the current financial year.
6. The Succession Plan review
Most business owners don’t consider a succession planning until they are nearing retirement, however having the correct succession plan in place not only ensures you potentially get the right sale value for your business when it is time to move on. certain succession planning tools (such as staged payments, buy/sell agreement and Keyman Insurance) also help you manage risk of loss and can often also provide significant financial and taxation benefits.
Certain succession planning tools (such as staged payments, buy/sell agreement and Keyman Insurance) also help you manage risk of loss and can often also provide significant financial and taxation benefits.
Grow Capital are offering a FREE succession plan review until 15th July 2016. To book your free review please email us on [email protected].
So there you are, your 6 action steps to prepare your business for end of financial year.
On a personal note, from all of us at Grow Capital, we sincerely thank you for a brilliant financial year this year, for your generous support of our business and more importantly for all your hard work running your business
Without your ‘pioneering spirit’, Australia would be a very different space – you are the lifeblood of the Australian economy and we salute you.
Happy New (Financial) Year!