Is it my imagination or does each financial year end seem to come around quicker than the last? Here we are once again in the final week of the financial year and you are, no doubt, being bombarded with “information” about what you should or should not be doing to before 30^th June. 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 initiatives that you can use in your business to ensure a clean start to 2011/12.

Business Plans – Review and Update

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 end of the financial year is an ideal time to look at you business plan on two 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 that Leanne and I 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.

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 things which you may need to look at:-

• 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 30^th 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?

• 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.

• Are you sitting on inventory items which you just cannot shift? One way of dealing with this is to consider an end of year “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. 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.

• 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.

• 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.

• 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.

Once again, Leanne and I 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!

The Office – Annual Spring Clean

No, Leanne and I 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!

Paid Parental Leave

Just a final word about Paid Parental Leave! Employer obligations come into full force from 1^st July. I have heard many people say, “that does not apply to me!” Maybe not today but who knows about tomorrow? Leanne has created a very detailed E-Book on the subject which goes into the detail not only on what it involves but also how to make this work in your accounting system. It only costs $19.95 and is available here – a must for all employers and bookkeepers alike!

Have a happy end of financial year everybody. Hopefully I have provided a few practical tips on things to look at for the end of the financial year. Please remember that Leanne and I are able to help with business planning, stocktakes, cleaning up your accounting systems and a whole range of other aspects of what we have talked about here. Please feel free to give us a call at any time.

I look forward to receiving lots of comments and suggestions on this topic. If there is anything else which you feel deserves a mention, please feel free to post it up.

Love your work!

Ian