Many small businesses and advisors have just made it through tax time, a milestone with extra weight after one of the toughest years in memory.
However, small businesses can’t afford to take too lengthy an EOFY breather. Planning for a new financial year is a prime opportunity to recalibrate and think beyond immediate stages of recovery. Plus, with many federal support programs ending in September and interest still accruing on deferred payments, it’s more crucial than ever for small businesses to plan meticulously for the new financial year.
To help you, we’ve pulled together five tips so you can get on the front foot.
Get an advisor for more than your tax return
In research we conducted, profitable small businesses are about 10 per cent more likely to use an advisor (58 per cent) than those not using one (48 per cent)*. If you aren’t already leveraging a financial advisor for more than your tax return, it might be time to reconsider.
The hard-to-predict nature of a public health crisis means that financial management is already more complex and fast-moving than ever before – a situation that’s unlikely to change in the immediate future. On top of reducing your day-to-day admin, a financial advisor can actively stay on top of assistance programs and regulatory changes to put your business in the best position possible. Find an accounting advisor near you here.
Digitise, digitise, digitise
Experts continue to stress digitisation as a key recovery strategy for small businesses, and plenty of Australian businesses have already turned to digital offerings to keep serving and communicating with customers through lockdown restrictions. But technology has a big role to play in financial management and maximising back-office processes.
From accounting software to electronic invoicing to apps that help with rostering, digital tools can automate time-consuming manual tasks, freeing you to focus more on your business, customers and staff. It can also lower your risk of the type of errors that can be especially painful for a recovering business, like invoicing problems or delayed payments. Explore digital options now so that you can factor them into your forecasts for the coming financial year.
Prioritise cash flow planning
Cash flow was already a tricky issue for small businesses before the pandemic. Today, it’s critical to survival. It’s important to develop a plan that helps you maintain an accurate picture of your cash flow position, and part of that should include tools to make it easier – and more precise.
QuickBooks’ new Cash Flow Planner tool uses machine learning to provide real-time cash flow predictions over a 90-day period based on patterns in users’ data and bank history. This can give you a clearer picture of where you stand and how to manage expenses. And since it automatically uses your bank history to make predictions, there’s no need for tedious data input on your end. Another great example of technology making your job easier.
Prepare for the end of government support and other assistance
Initial pandemic responses saw small business support in the form of a major federal stimulus package, assistance programs from state governments and deferment options across banking, rent and even the Australian Taxation Office (ATO). As a result, many small businesses’ finances look nothing like those of a typical year. And because much of this assistance is only temporary, small businesses will need a plan that factors in these irregularities.
Federal assistance programs like JobKeeper are poised to end this September, while state-based programs will vary. Businesses also need to plan carefully around deferred payments that may still be accruing interest. Keep a close eye on when your deferred payments are due so that you’re not hit with a sudden influx of expenses all at once. Open communication with your landlord or bank can also help avoid surprises.
Overhaul your business plan to reflect new, more uncertain economic conditions
It’s probably not enough to tweak previous years’ business plans. Owners will need to step back and take full stock of their finances and broader industry impacts, as well as whether previous goals or time frames are still realistic. Make sure to update forecasts with a significant bit of fat built in for ongoing economic uncertainty or new waves of pandemic-related restrictions.
Try to build a flexible plan that allows you to revisit at least once a quarter or, ideally, even more frequently. The past year has taught us that agility and responsiveness are key, and governments are likely to continue revising rules as the situation evolves.