The last time I took a weekend away, I made the mistake of leaving all my packing until the night before departing. I was running around in a panic, trying to get everything together without a defined plan of attack. Socks were flying across the room and toothpaste was being shoved into the side pocket of my suitcase. As I boarded my flight the next morning, I was tired, couldn't remember where I'd packed everything and kept thing I’d forgotten something. The End of Financial Year can create this same, anxious feeling for businesses that have left their EOFY preparation right until the last minute.
If you’re running multiple system, using software that relies on manual processes or using spreadsheets to track finances and expenses, getting all your data together for EOFY can be time-consuming. It’s easy to find yourself frantically chasing employee expenses and looking for paper documents which always seem to grow legs and play a game of “hide and seek” around this time of year.
To be sure you’re maximising any potential EOFY returns and starting the new financial year focused and in control, there are a few straight-forward things you can do.
Here are the top 5 tips you need to know to make this EOFY easier and head into the new financial year putting your best foot forward.
1. Write off slow-moving or obsolete stock
It’s the perfect time to take advantage of writing off stock that’s lost, damaged, obsolete or isn’t likely to sell. Start planning your stock take to get a better picture of what can be written off and how you can try to profit from your losses. For changes in the value of any trading stock from the beginning to the end of the financial period, increases are counted as part of your income, whereas decreases can qualify you for deductions. Having the right tools to help you identify slow moving and obsolete stock with reports you can run at the click of a button makes this a simplified and accelerated process.
"Start planning your stock take to get a better picture of what can be written off and how you can try to profit from your losses. For changes in the value of any trading stock from the beginning to the end of the financial period, increases are counted as part of your income, whereas decreases can qualify you for deductions."
2. Understand your COGS reporting
It’s important to understand your Cost of Goods Sold (COGS) reporting process, as it can vary depending on the type of inventory system or process you’re using. With periodical inventory, inventory updates aren’t made on a continuous basis. End of period journals need to be recorded to ensure your Profit & Loss statement is accurately reflected. If you’re using a perpetual inventory system, for each purchase of inventory and sale of goods, your inventory is updated as sales happen – rather than at the end of accounting periods. This means that your ending inventory and COGS accounts will reflect current balances at any point in time. This becomes a simple process for your EOFY reporting when you can run real-time COGS reporting.
3. Get your expenses in order
Start getting expenses organised and employees expenses logged with receipts. When everything’s being tracked through a single system which lets you upload copies of receipts, it’s easy to run a report for all your expenses. Also set yourself up for next financial year to have a good expense submission process, keeping everything in the one place and easily accessible.
4. Keeping historic expense records
It’s easy to forget about your records once your submission for the year has been done. But keep in mind that all expense records should be kept for 5 years. When I was preparing for my weekend away, I made sure all my documents were uploaded to my cloud-based Google Drive to keep them safe and accessible. It’s the same idea with a cloud ERP system that securely stores important business information and makes it accessible to you - from wherever you are.
Think about investing in a solution that’s capable of uploading and storing your receipts for business expenses and employee expenses, so you no longer have to worry about keeping your records kept safe and available should you need them.
"If you’re unsure of everything that needs to be produced, start talking to your accountant or bookkeeper, or visit the Australian Government’s Business Site."
5. Organise your records
Some of the EOFY record keeping and compliance responsibilities for business owners can include producing P&L summaries, stock-takes, AR and AP reports, PAYG and superannuation reporting. If you’re unsure of everything that needs to be produced, start talking to your accountant or bookkeeper, or visit the Australian Government’s Business Site - business.gov.au - which has helpful articles such as Essential Tasks at EOFY to get a clearer picture of what’s needed. Manually preparing all these lists can still be time-consuming and a little overwhelming, but there are business management solutions which let you run things from the one system, much more efficiently.
When it comes to your financial year reporting, it pays to start your planning early. Don’t end up running around at the last minute as though you’re packing for a weekend away.
EOFY is your opportunity to claim expenses and reduce your taxable income. Consider an investment that can be expensed in this financial year to further reduce taxable income, such as a cloud-based ERP. Having an all-in-one business management system will also help get you organised for the new financial year, make record keeping simple and provide time-saving processes that will see your business running more efficiently and profitably.
Having the right business processes in place can help you significantly reduce costs, streamline your operations and deliver an improved customer experience that drives increased customer retention. Get your free business guide below and find out what to prioritise.