Preparing to Review for Your Tax Year

Apr 21, 2016 | Knowing Your Numbers

Preparing to Review for Your Tax Year

Good business practice adds value to any business. Identifying tasks that must be done to keep a business in good shape, and ensuring those tasks are carried out consistently and regularly will be a huge help when the end of the financial year comes around. If you regularly undertake these tasks, you will be in a better position to manage and grow your business whatever conditions you face.

Further, regularly undertaking these activities will reduce the pressure you may face at the end of financial year. A business that follows good practice benefits in many ways, including:

· the business is more likely to be profitable, have better cash flow and operate with less financial risk
· the business may be easier to sell in the future, and possibly at a better price
· the business may find it easier to access external finance, including bank finance, if needed
· the business may be better placed to respond to future challenges and opportunities. The business operation will flow and work better as improvements are identified and adjusted over time. A checklist like this cannot be definitive. It is more of a guide to get your businesses thinking about the specific actions needed to put you on the right track and stay there. Below are some suggested ways to build this checklist into your business practices:

· incorporate the activities from the checklist below you believe are relevant

· require regular reports on the implementation of each activity

· incorporate due dates for relevant activities and tasks into your calendar
· incorporate activities from the checklist into the job descriptions and key performance indicators of relevant staff

FINANCIAL TASKS CHECKLIST

Task	Regularity
Install and or update financial software · Undertake a full review of your accounting software every few years. You may end up with a better software package that can help improve your business. · If considering moving to new software, enter real data from your business into your preferred software and play around before making a decision.	With new updates
Enter all data promptly, and with accurate transaction dates · Regularly check data entry for quality	Ongoing
Review debtors: · Invoice as soon as your good or service is delivered. · Consider referring bad debts to collection agents. · Renegotiate trading terms with consistently slow payers. · Contact slow payers early. · Reconcile payments promptly and regularly to identify and resolve discrepancies.	Monthly
Prepare profit and loss statement, balance sheet and cash flow statement · The profit and loss statement, balance sheet and cash flow statement can if prepared regularly, show emerging problems in time for corrective actions. · Use financial software to produce regular financial statements and ‘dashboard’ reports.	Monthly or Quarterly

STRATEGIC FINANCIAL TASKS Financial tasks do not end with the balance sheet.

There are other financial actions that are critical to the future direction of your business.

Task	Regularity
Set targets for financial performance · Consider where you want your business to be in the next year and set targets in line with that. . · Incorporate targets into your strategic plan, key performance indicators and budgets. · To help set targets for performance, look at how other businesses in your industry perform through industry benchmarks.	Annually
Review and analyse financial statements · Compare key ratios from your financial statements, such as working capital ratio, stock turnover ratio or profit per employee to averages in your industry. You can get some basic industry benchmarks through SBIS who will help you get access to more detailed industry averages. · Compare performance against financial targets and past performance.	At least Annually preferably quarterly or monthly
Review actual performance against budget · Ask yourself what caused any gap between budget and actual? · Consider how best to overcome any problems that may arrise.	Monthly
Undertake “What If’s” · Ask yourself, what if sales dropped 10 or 20 per cent? Or you lost a major customer? Or a major supplier stopped selling to you? What if your best sales staff resigned? Factor answers to such questions into your budget forecasts .	Annually

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