New Financial Year – Resolution starts now
Resolution – the quality of being determined or resolute
So what are your new financial year resolutions for your business in 2016/17? Are you determined to make a change this year and move forward with confidence and fresh ways of looking at your business?
Is it my imagination or does each financial year end seem to come around quicker than the last?
Here we are once again at the start of a new financial year and, no doubt, being bombarded with “information” about what you should or should not be doing to prepare for the annual visit to your accountant. I am not going to talk to you about tax issues here – I am not qualified to do so and most of you will have received missives from all and sundry about what to do and what not to do. Rather, let’s look at some practical resolutions that you can use in your business to ensure a clean start to 2016/17.
Resolution 1 – Business Plans – Review and Update
This should be number 1 on your resolution list every year. How many of you actually have a written business plan. Contrary to popular belief, these need not be lengthy tomes with pages and pages of financial data attached. A good business plan can be a short and concise document which sets out:-
- Where am I and where do I want to go?
- How and when I am I going to get there?
- What is it going to cost to get there?
- What will be the benefits (financial and other) of getting there?
The start of the financial year is an ideal time to look at you business plan on these fronts:-
- Have I achieved what I set out to achieve? Take some time out to reflect on the last year. Look at what went
well and where reality fell short of expectation. Make sure that you know in your own mind why this was the
case. In some cases there may be reasons beyond your control; in other cases, the causes may be of your
own making (don’t forget, we’re talking positives and negatives here!).
- Update your plans for the upcoming year. If you don’t have one, consider putting a business plan together. This does not need to take weeks’ to complete but it does give you something to work with next year. Even a basic financial budget which sets out what you are and are not going to do will provide you with some sort of base model to work with.
Please bear in mind we have many years’ experience in helping clients with just these sorts of exercises. If you need some help, please don’t hesitate to let us know.
- Review your vision and mission statement and ensure your goals meet these statements and that these statements meet the needs of your business. You and your staff should live and breathe your vision and mission.
Resolution 2 – Accounting Systems – Annual Spring Clean
Irrespective of the taxation implications, this is a really good time to ensure that your accounting systems are in order. A few other resolutions which you need to look at and can make such a difference quickly:-
Clean up Debtors
Do you have old accounts receivable that constantly appear in your “To Do List” but which you know are
just never going to pay. In some instances, it may be worthwhile chasing these down through legal channels.
In others, it may well be that the time has come to accept the inevitable and just write them off. If you do
this before 30th June, you may at least be able to claim back any GST that may have already been paid. Do
you really want these old and irrecoverable amounts coming back to haunt you every day for another year?
Do a Stocktake
Consider whether or not it is worthwhile doing a stocktake. Many of us rely on accounting systems to tell us
what we have in stock but is what your system is telling you a fair reflection of what is really there? If not,
you are probably wasting time running out to your storage area every time an order comes in trying to work
out how much you’ve got. If that is the case, do a stocktake – it does not have to be difficult but it will put
your inventory file in order and make it more reliable.
Have a Sale
Are you sitting on inventory items which you just cannot shift? Ways of dealing with this may be to consider undertaking some kind of fun “fire sale” (if you’ve been sitting on this stuff for years and it’s never going to sell, at least try and generate some cash for it) or consider donating surplus stock to a worthy organisation in your local community, they will certainly appreciate your generosity. Alternatively, if it really is that bad, you may just have to bite the bullet and dispose of it. At least it will provide some space in your storage area to put something in which will sell.
Review stale information
Have you got old unreconciled cheques or even deposits sitting around in your bank accounts. This is the
ideal time to eliminate these from your system once and for all. There may also be some “accounting” stuff that you want to get to in order to clean your system up. Typically, these may involve allocations (positive and negative amounts which need to be eliminated), silly little “odd cent” balances which clutter the system and other bits and pieces which just get in the way. By eliminating them now, you won’t have to look at them for the whole of next year as well.
Resolution 3 – Review Systems
Resolution 3 should be a regular – say quarterly analysis of your systems. Are your systems outdated? Is there a better way to do that task? Is the setup of your system giving you the information you need? The essence of good financial
management starts with good financial reporting. I have seen many small businesses where everything
looks good until you see the way the system is set up. The start of a new financial year is as good a time as
any to review your software file structure and if necessary, make some changes. As with other things, this
need not take long but will provide many benefits.
Resolution 4 – The Office – Annual Spring Clean
No, as part of this resolution, we do not offer an office cleaning service! What I was alluding to here as much as anything was archiving the old paperwork to make way for the new. I don’t know about you but I feel much more comfortable working in an office which is not taken over by old paperwork. Anything which you don’t need put it away somewhere. You will need room for the current year’s paperwork which will role in soon enough!
Is this the year to go paperless? There are so many great solutions in this space now and many also integrate with accounting software and are compliant with government regulations for digital storage.
Freshening up the office can also help to invigorate you to focus and achieve more – a change is as good as holiday, so they say.
Once again, our team are only too happy to help you clean up your systems. You only have to ask! Start the new year afresh – it will ease some of the frustrations I assure you!
So this financial year, take some time to Love Your Numbers.
Remember the best way to get something done is to BEGIN