As we ease into the new calendar year and the flurry of the holiday period eases, now is a good time to use this downtime to get on top of your small business finances. Just a few hours invested now can ease a lot of pressure as the end of financial year creeps up on us before we know it! We’ve included a few of our top tips below.
- Ensure all holiday pay and expenses have been accounted for.
Christmas and New Year is the time that most employees will opt to take some time off to celebrate the holiday season. Whether this time off is paid or unpaid, you need to ensure that your payroll functions are aligned and updated to account for any time off taken by employees. How this is recorded will also depend on the accounting method that your small business uses, so ensure that you know how to record this time.
Depending on the nature of your business, you may also need to ensure that you account for any time-and-a-half or double-time payments to employees who work over the holiday period, especially during the upcoming public holidays.
2. Update your records and fine tune your finance strategy
- Update your records and fine tune your finance strategy
Use this time to ensure that all your records are up-to-date, including that all expenses are adequately accounted for and your cash-flow reporting is up-to-date.
This is also a good time to perform some analysis on your cash-flow to understand whether your business is having any seasonal impacts which you can better plan for in the new year. Some ways in which you can adjust for these impacts may include:
- setting up an additional bank account to easily set aside income to cover periodic payments such as taxes;
- making agreements to pay larger bills and invoices in instalments; and
- considering and seeking advice in relation to financing options that are better-suited for seasonal peaks and troughs, for instance business overdraft facilities.
3. Clear your debtors and creditors
Start the new year on a clean slate. Ensure any outstanding invoices are cleared before you take a well-deserved break.
Hopefully you don’t have a large number of outstanding debtors in your portfolio either, however if you do, now is a great time to get around to those collections calls and resolve any outstanding invoices. This will ensure a positive cash-flow as you enter the new year. This is also a great time to consider your overall collections strategy for the year. An effective collections strategy is crucial to maintaining a healthy debtors portfolio and minimising any losses.
4. Seek professional advice
As always, if you’re unsure, seek professional financial advice – oftentimes outsourcing these functions to a professional can save you a headache and a lot of time! Contact the professionals at SNS Accounting and Business Services – we’re always here to help with all your small business accounting needs!
In the meantime, have a Happy New Year! We’ll be back with some more helpful hints and tips.