How prepared are you for the new financial year? Have you been frantically trying to get your paperwork in order for tax time? Trying to remember where those receipts are? Making promises to yourself that you will be more organized this year?
Whatever your hopes are for the new financial year, here are five resolutions to get it off to a great start.
1. Keep cash flowing
One of the simplest and most effective ways to manage cash flow is to spend a few minutes on your financials each day. Web-based tools and mobile devices enable owners and managers to carry out financial management on the go or at their convenience. Accessing your accounting system from a mobile device means you can be on top of your cash flow, anywhere, anytime. Having bank transactions uploaded automatically into your accounting system means you can perform bank reconciliations daily, providing you with a real-time view of your cash flow.
2. Embrace online accounting tools
Online accounting tools are an excellent way to manage cash flow. Systems can be configured to send alerts when outgoing payments are due, automatically invoice customers, and check if payments have been made. They can create and update cash flow forecasts based on real-time figures from daily bank feeds.
3. Forget the shoebox
Have you ever been asked to find the original copy of an invoice or expense receipt and spent hours trawling through filing cabinets and boxes of paper? Or struggled to find that one invoice that was attached to an email somewhere in your bloated inbox? Documents like these are a core part of your business and like any financial record, they need to be easily accessible.
Try scanning your receipts, so they can be put directly into your online accounting system and they’re in one place, never to be lost again.
4. Check your finances
In uncertain economic times, it pays to have a cash reserve ready in case of emergencies. Start saving some of your excess cash flow, or talk to your bank about an overdraft or line of credit.
Consider the time-saving benefits offered by a business charge card. Some cards can provide a monthly breakdown of expenses on a single statement with ATO-approved, GST-compliant itemization. This data can be easily and quickly downloaded into online accounting systems which eliminates the need for manual data entry and receipt itemization.
5. Develop regular processes
Accurate cash flow depends on having the right information. It’s worthwhile developing good habits or even a formal process around inputting your company’s financial data such as bills, invoices, and relevant due dates. Include this information in your daily accounts housekeeping.
Review your accounts receivables process. Make sure that you are invoicing in a timely manner and follow up on overdue accounts. Make it easy for your customers to pay electronically – by BPAY, direct debit, funds transfer, or card.
6. Speak to an expert
When it comes to administration and entering data into your accounting software system, you need to determine if the most efficient way to go is to do it yourself or outsource it to a bookkeeper. If you are starting out in business, it’s best to have a go at the bookkeeping yourself so that you understand what is involved before you outsource it.
Find an accountant who specializes in your industry. Ideally, you should look for someone who can give you advice on optimizing your tax position and structuring your business.
Running a small business can be tough but by seeking the help of experts, staying organized, and using online accounting tools, tax time next year should be a whole lot easier.
Chris Ridd is managing director for Xero Australia.