When you’re running a business, especially in the early days. it is more than normal to feel overwhelmed with the number of things you’ve got to get done.
It is also normal to regularly wonder – have I done everything I should have in terms of my finances and business accounts? Have I done enough to ensure the best chance of business success / survival?
As business advisors we wanted to share 10 things you can be doing at the end of each quarter that should keep you on track in terms of your finance administration and accounts:
- First thing is to ensure your financials are up to date. Have you fully reconciled your bank and reviewed your bank reconciliation report for any outstanding items? Payments or receipts may be entered to an incorrect bank account, bank feeds occasionally have hiccups and miss entries, etc. so it is important to check the bank reconciliation report. Have you sent all your invoices and bills?
- Ensure any bills/receipts for fixed asset purchases/disposals have been scanned and attached to the appropriate transactions in Xero
- Review your outstanding debtors and creditors to ensure that all outstanding items are valid. If you decide to write off any bad debts, contact your accountant about ensuring you have the proper minutes entered to satisfy ATO requirements.
- Review your profit and loss report. Print the report with comparison to the last four (4) quarters and financial year to date. This way, you can compare the same period in the prior year, a full year (four quarters) and the current financial year to see how you are faring. Check your gross profit and net profit percentages against prior quarters and year to date.
- Review your balance sheet report. Print your balance sheet with comparatives for the last four (4) quarters. You now know how you fared on your profit and loss, now check the outcomes on your balance sheet. You may have spectacular sales for the quarter, but if you haven’t collected the money, your balance sheet will reflect that in your cash balances, accounts receivable, accounts payable. You can create custom reports in Xero so it is easy to print these reports at the end of each quarter, ask us how.
- Check your statutory obligations – GST, PAYG wages and instalments, superannuation – and ensure you know when they are due and have funds available to make your payments.
- Review your cash summary report. Print your cash summary report. Review where you have spent your cash.
- Check your drawings or shareholders loan accounts. Ensure you have not taken out more than your cash flow or profits can meet.
- Compare your current quarter results to your plan, budget or forecast, regardless of how simple your plan was. Are there areas that you need to work on? Have you done better than you planned in others? Celebrate your wins and learn from any mistakes or challenges. Then, update your plan for the next quarter. Work out a plan of action to meet your goals and break it into achievable steps. Document it and put in your calendar as a reminder to keep you on track.
- Take some time to discuss your reports with your tax accountant, they may be able to provide you with some additional insight and recommendations.
The above may seem daunting at first but we promise investing in this time and developing your understanding to complete will pay more than dividends to your business performance in the long run!