The new financial year has arrived, but the effects and financial difficulties of covid-19 are unfortunately likely to continue for a while longer. With that in mind, today we are discussing the best tips and strategies for leaders in terms of the best financial practices going forward.
Now more than ever, it’s important to get to grips with the new year changes quickly and make a positive start with your accounts and finances. There are likely going to be many learnings from the last financial year that can inform your strategy going forward.
Today’s experts share their opinion and advice on how to best look after the bottom line in this new financial year.
Mark Bartels, CFO, Invoice2go
Today officially marks the first day of the new financial year, which makes it the perfect time to set your new financial year’s resolutions. If, when tackling your tax over the past few weeks, you found yourself trawling through boxes of old, faded receipts, it’s time to ditch the paper trail and embrace accounting and invoicing technology to save yourself time and money in the new financial year. Technology not only makes it easy to store relevant business information and streamline your tax and accounting processes, but they provide reports to help you understand your finances all year round.
With access to technology literally at our fingertips, it’s also never been easier to capture, save and organise expenses the moment they’re incurred. Take a photo of each receipt on your phone while you’re out, and save it alongside important project details such as the date and client. Developing good reporting habits now will not only help you complete and lodge your tax return by the time the October deadline rolls around, but will help you manage cash flow and understand how your business is performing in real-time.
Helen Baker, founder of On Your Own Two Feet
What Covid-19 has shown is that people/businesses do not have enough put away for a rainy day. We have been on a growth trajectory for many years, so the expectation that you can accumulate a lot of cheap debt and money will be in there in the future to pay for it, has been challenged. Some businesses won’t be able to survive so the big issues now are cashflow, have you made “sales” but haven’t actually been paid? Will your clients survive? Will your suppliers be able to keep with your demands? Cashflow is key. Revisit your emergency fund, expenses, debt commitments and whether you really need that big property.
Colin Birney, Head of Business Development for Square Australia
As our economy begins to gently reopen, businesses must identify the competitive advantages that can help them work smarter this financial year. Under the cloud of a looming economic crisis, businesses should prioritise technology that enables them to streamline their operations and adapt to the new ways consumers are spending.
Neil Luo, Head of Growth, Airwallex
2020 has been a really hard year for small businesses. The good news is there are a few simple ways to better manage costs and outgoings without resorting to stock-cutting or downsizing.
- Create a cashflow forecast: Use historical data to estimate your projected incomings and outgoings, so you can be better prepared for the highs and lows that come with running a business.
- Take more control over your payment cycles: Simple tips and tricks can have a profound impact on your cashflow. For example – paying your invoices on the due date, rather than date supplied, will enable you to keep funds in your account for longer.
- Watch out for overpriced international transaction fees: As the world becomes more borderless, more businesses will be making international transactions. However, banks still charge significant fees on these transactions. Explore modern fintech platforms to reduce unnecessary fees and improve cashflow.
James Haslam, Chief Financial Officer, ELMO Cloud HR & Payroll
It is key for businesses to have processes in place to continuously model and monitor cash flow. The better a company understands their cash flows the more agile they can be, not only to manage the finances but also to take advantage of opportunities as they arise. A lack of planning or adopting a ‘set and forget’ mindset is likely to result in poor decision making and missed opportunities.
Unfortunately, in tough economic situations there will be businesses that are going to struggle. For businesses approaching dire straits, it can be easy to start cutting headcount as the first step in reducing costs. While this might appear to be the right move at the time, it’s important to have run through all scenarios to have the best data and information behind your decision to make sure roles are not lost which impair the ability to grow again once the situation passes.
The old adage of cash is king always applies – no more so in today’s environment where COVID-19 has stretched a number of organisations.
Max Bluvband, CEO, AppsVillage
Despite the many challenges small businesses have faced this year, there are a few things they can implement to ensure a ‘smoother’ sailing end of the financial year. My top five tips are:
- Get into the details of your challenges from the past year, to assist with predicting what could happen in your next financial year. By identifying your challenges, whether it be sales, delivery, cashflow or launching new products, getting into the details will better prepare you for the future.
- Don’t neglect your problems or challenges, but don’t get too comfortable with them either. Use this time before the start of a new financial year to your advantage, and think about how you can make tweaks to your current business offering to become more productive, starting with the product/services of your business that has the highest ROI in the first instance. The formula for me has always been: creativity plus patience equals growth.
- Identify where you can reduce your spending. During difficult times, it’s important to save on costs that could in turn increase your cashflow later when you need to spend it on an emergency (hypothetically).
- Do something good that you don’t have to. The universe will reward you back!
- Believe in yourself and in the idea that every positive and smart change you make will bring something better into your life.
Dan Pollard, founder, Fergus
Whatever business you’re in, the end of a financial year is a busy time. But if you manage it right, tax time is more than just a series of administrative tasks. It’s an opportunity to get a detailed picture of your business and set a firm direction for the year ahead.
This might be the time when you’re regretting not keeping on top of your documentation, receipts or even budget! Investing in help, whether that be an accountant or job management software, can end up saving you days worth of time when EOFY rolls around – worth every penny!
With this year being extremely difficult and different for many, we have new things to consider like stimulus packages and JobKeeper. If you’ve received any of these, you need to claim them as taxable income. As always, if you’re not completely certain about your tax return and to avoid making any mistakes, it’s best to consult an accountant.
Dace Harris, Director and National Head of Business Advisory, RSM Australia
Budgeting is essential for well-managed finances, both personal and organisational. Budgeting includes calculating income and expenditure, separating expenditure into fixed and variable expenses, reviewing spending, and breaking down outgoing funds into spending needs, wants and savings.
Commitment to the budget is critical in getting this right. This means cutting out unnecessary expenses, automating savings, paying off credit cards every month, paying bills on time and planning to pay off debt.
A financial app can help track income and expenses, and there are some great free budgeting apps on the market.
If you have struggled in the past with staying on top of your business finances, don’t be afraid to ask for help. Whether you ask a friend or family member that is financially savvy, or a qualified professional, reach out and be proactive to stay on top of your finances.