You’ve come to the start of a brand new financial year. You’ve done the taxes for last year, and now it’s time to start planning for the next year ahead. This is the ideal time to focus on your SME, getting a head-start on accounting, IT and other administrative tasks. This not only helps you start the new fiscal year on the right foot but also helps you stay better prepared for the challenges thrown your way, in the upcoming year.
5 Small Business Practices to Adopt at the Beginning of the Financial Year to Start the Year on the Right Note
- Analyse Cash Flow Patterns of Last Year
Cash flow is the best way to identify the health of your business finances in the last year. Here are three factors to consider:
● Cash flow from your regular operations — expenses and revenue
● Cash flow from financial activities — loans and repayments
● Cash flow from investments — assets purchased and assets sold
This helps you to identify gaps in your cash flow. You can easily find out what went wrong and where your funds were locked up. To avoid similar cash crunches in the New Year, you can set up a line of credit from digital lending platforms like Indifi. A line of credit is a great way to avoid cash flow issues, and continue growing your business, irrespective of changes in cash flow patterns.
2. Follow up on Receivables
As a small business owner, it’s essential that you maintain a real-time list of invoices that are unpaid. The start of the financial year is a good time to chase outstanding bills and collect them. This way, your cash flow gets a boost, and you can start the New Year on a positive note.
3. Get your Financial Books in Order
Some small businesses find this extremely easy, while others have a hard time navigating their complex financial statements. Before you start the fiscal year, ensure that you have entered all receipts, invoices, bills and other payments in your books. If you are having a hard time managing day-to-day finances, on top of your other operations, you can consider hiring an account. If not, you can consider investing in financial software to help you with various calculations and reports.
4. Evaluate Current Taxes and Look for Ways to Reduce Your Tax Burden
The end of the financial year is a busy period, where you are rushing to get your taxes in order. Now that you’ve started the new fiscal year don’t wait till the end of the year to do your taxes. Start by evaluating the current taxes you have paid, and investigate different tax strategies to reduce your tax burden. Take with your accountant/auditor to find the right tax strategies for your business.
5. Finally, Set Goals and Plan for the Year Ahead
Now, that you’ve done the heavy lifting, it’s time to plan for the coming year. Start by setting goals you want your business to accomplish in the New Year. Then, you have to prepare action plans and figure out how to achieve your goals. For example, if it’s your goal to upgrade your business equipment this year, then explore the range of available business loans and try to get your finances sorted, so that you can quickly achieve your goal.
That’s it: You’re all Set for the New Financial Year Ahead
You would have heard this saying countless times, “Failing to Plan is like planning to fail.” Use the start of the fiscal year, to get you in the groove and prepare your business for new growth in the upcoming year.