8 simple steps to take before End of Financial YearAre you ready for the End of Financial Year?
Editor’s Note: This article was originally published in May 2014 and has been reviewed and updated in order to provide the most relevant and accurate information. You will notice the renewed version now has 11 steps to take before EOFY.
Unlike many important things throughout 2021, the End of Financial Year is an unchangeable phenomenon that will continue as expected. At Kilimanjaro, we understand how important it is for your business to be prepared and how critical it is to take the right steps in approaching this important time. Below are 10 simple things you can be doing to ease this process and enter the new year as a stronger business.
1. Read Kilimanjaro’s COVID-19 Updates page
We have dedicated ourselves to keeping our clients up-to-date with the latest news and support to help you manage your business processes during this time. On this page, you will find important guides on government schemes that will affect your business this EOFY, such as the JobKeeper Payments and STP, as well as the official MYOB Business Preparedness Reports and other useful information that can help your business navigate smoothly through this busy time. Find this insightful page here.
2. Forecast your Profits
If you are forecasting a profit for this Financial Year, be sure to plan well in advance to make purchases that could potentially reduce your tax liability. Speak to your accountant as there might be a chance to take advantage of write-offs, rebates and deductions.
3. Plan for your stocktake
Many businesses try to will avoid the annual stocktake because of the hassle involved. However, the stocktake is incredibly important to verify that your accounting systems are operating correctly. Think of it with the same importance as reconciling your bank accounts. If your system shows an inventory of $1mil, and the actual stock count is $800000, you have some investigating to do. What looks like a profit in your accounts may suddenly turn into a loss (or vice-versa), as you adjust your Cost of Goods account. Think about using a hand-held scanning system such as BLUE ECHIDNA to ease the pain of stocktaking. To understand more about the metrics that really matter, read how NETSTOCK can take key metrics to indicate a company’s inventory health.
4. Make a backup of your system before rolling the month/year and take a second backup immediately after rolling.
This gives you a “recovery point”. Additionally, it gives you the ability to print out historical reports at any point in time. For example, when your accountant asks you in December for a stock valuation report as of 30th June, you are able to do this from your backup. Bear in mind that retrospective stock valuation reports are usually inaccurate unless you are running a FIFO system. The backup copy should also be provided to your accountant to complete your tax returns. This is a good way to evaluate the backup data to ensure it is readable.
5. Consider other areas requiring End of Year attention
While the actual process of rolling MYOB Exo Business will set up a new financial year, the Analytics module requires a calendar to be set up independently. A separate year-end is also required if utilising the Assets (1) module. It is also a good time to consider establishing and loading new budgets for the coming year.
(1) Assets now roll the end of the year automatically as part of the 2018 product release.
6. Print Reports.
It is a good idea to create a folder on your file server called something like “2020/21 Financial Reports”. Most systems have a built-in PDF writer, so instead of printing your reports to paper, be kind to the environment and print to PDF. Save your suite of reports in the folder. This will save you hours over the next year or two when you are asked by your financial institutions for copies of Profit and Loss statements and Balance Sheets. Simply attach to an e-mail and send them off when required.
7. Pay your super obligations by 30th June
Even if the due date is July, you won’t be able to claim this unless it has actually been paid.
8. Review your Chart of Accounts
If you are going to make any changes to your Chart of Accounts, the end of financial year is a good time to do it. Speak to your ERP implementation partner to discuss the implications on comparative reports, such as “This Year / Last Year”.
9. Ensure that you are across Single Touch Payroll
From July 1, 2019, all businesses were expected to report payments such as salaries, wages, pay as you go (PAYG) and superannuation information to the ATO through their STP software. As this policy has been in place for a full year, it is important to be across the processes behind STP and ensure that you are processing this information correctly. Any questions? Visit our page here – Frequently Asked Questions. Additionally, ensure that you are across the JobKeeper and STP procedures implemented this year, by reading our useful guide, as mentioned above, at the bottom of our COVID-19 Updates Page.
10. Review your business processes
This is the ideal time to review your business processes and to look at replacing your ERP system if you have been thinking about it for a few years. It is always easier to start with a set of accounts that have been reconciled. Don’t go through another year with your old system if you can improve efficiency with a new one. You will be surprised at the rate of development in new software and how much it can help your business grow. When choosing the right ERP system for your business, remember to start by defining your requirements. With technology rapidly advancing, you have the choice of on-premise, a hosted version or Software as a Service (SaaS). To find out which one is more suitable for your business, read our article here.
11. Prepare a checklist
The end of the financial year is a busy period for most team members in your company. It is easy to forget about a step or procedure that will later cause issues.
Being prepared for the End of Financial Year will allow your business to run efficiently through to the new financial year. If you have any question or need support, feel free to call us on 1300 857 464 or simply fill out the contact form below and we will get in contact with you. Alternatively, save yourself time and download our EOFY checklists. Whether you are an MYOB Exo or MYOB Advanced user, we have got you covered. Register or sign up through the Training Portal to access your checklist now!