Whatever shape your financial year took in 2020-21, the end of the financial year (#eofy) gives businesses a chance to reshape and finish the year on a positive note. But there are only few days to go.
There are numerous things you can do before 30 June to reshape the close of 2020-21. Here are seven things you can do.
- Consider your cash flow. For many small businesses, end of year steps will require an outlay of cash. A weak cash flow limits what you can do between now and 30 June. Assess your cash flow position now, so you know your capacity to take action before 30 June.
- Review your receivables. Follow up with customers who owe you and remind them to pay now. Offer early payment discounts to customers with significant balances. If you lack the resources or time to follow up, hand over your receivables to an external collection agency. Remind your customers that they may be able to claim the expense and receive a tax benefit.
- Review inventory. If you are a business that holds inventory, you must carry stocks that sell. For example, if you are a clothing retailer, keeping summer stock in winter won’t be the best use of your storage space. Year-end might be a good time to do whatever it takes to sell out of season products. Conduct an #eofy sale and offer these products at a discount. You can also offer bundles including these products.
- Review your assets register. Sometimes we hold assets that are no longer useful. Carrying assets that are broken or with outdated technology in the business doesn’t help business operations. Identify items for write off and consider disposing or replacing outdated with new assets that will improve efficiency and productivity in the new financial year. Remember to write off any items that are no longer with you, broken or not of use.
- Consider your taxation position. If you haven’t done so already, it is time to undertake tax planning urgently to determine what your tax position for 2020-21 could be. Knowing your tax position now will help you take whatever action you need to close the financial year the way you planned. Be aware that you may need cash to achieve a more favourable tax result. Contact your tax professional for advice if you have not done so already.
- Know your obligations. For example, some businesses may benefit from paying staff superannuation in June without waiting for the standard payment date. Others may consider paying their suppliers early or pre-paying some expenses.
- Review your books. Now is the time to make sure that your books and records are complete, up to date and reflect the accurate financial position of your business. The last thing you want is to find out is that your end of year actions were based on incorrect numbers.
Whatever you choose to do in preparation for #eofy, review your position now and have a strategy you can implement in the next few days. This will allow you to finish the year on your terms and help you plan for an even better 2021-22.
If you need help with
- Reviewing your books to confirm that they are complete and accurate,
- Ensuring your receivables and payables are under control,
- Understanding your obligations,
- Preparing a cash flow or
- working out what strategies might best help you finish the financial year on a positive note, reach us on [email protected] or contact us via bit.ly/Books21