Time is flying and before we know it we will be celebrating a new year!
This means it’s time to shift your attention towards your mid-financial year review. Whether it’s your first time diving into this task, your fourth time, or your twentieth time, you likely need a refresh or have questions about what you need to look for while you do it.
Each element of your end of calendar year/mid-financial year review is important, so you won’t want to miss or skip over anything that impacts your business’s financial state. What you do now, can determine how successful you are through the remainder of the financial year.
Here are four elements you should look for during your mid-year review:
1. Ways to improve your cash flow
As you know, when it comes to the success of your business, cash flow is king. It’s the driving force behind your finances and the stronger the cash flow, the healthier the business.
At the mid-year point, you should have a pretty good idea of where your cash flow stands. If it’s strong and reaching the goals you set for it at the beginning of the year, keep doing what you’re doing. If your cash flow is not where you were expecting it to be, now is the time to make an adjustment.
Here are several ways you can improve your cash flow at the mid-financial year point:
- Tend to your accounts receivable
- If you have overdue invoices, start poking at your customers for their payments.
- Re-evaluate your prices
- A low cash flow may mean you aren’t charging enough for your products or services
- Check-in on your budget
- Ensure you are not overspending or make changes to your budget. Either way, do what you need to do to limit spending.
- Contact your vendors
- Sometimes contracts change or you missed out on a deal that would save you money. Now is a great time to check in with your vendors for any possible ways you can save.
Since you’re taking a look at your cash flow now, instead of the end of the financial year, you’ve given yourself plenty of time to implement any of these strategies and make improvements.
2. Inconsistency in your accounts
We all make mistakes, and when it comes to recording in our books, things can get complicated. This is one of the many reasons why it is important to go back and reconcile your books. You’ll have to go into more detail and pay closer attention at the end of the financial year, but taking the time to review what you have thus far will save you time later down the road.
A tip from us: don’t wait until the last minute to reconcile your accounts. It can be very time-consuming and waiting will make the process more complicated than it needs to be.
As you dig into reconciling your accounts, look for any inconsistencies. If you’re using double-entry accounting, simply go down each column and make sure both sides match.
You should also keep a lookout for outliers. This could include a monthly bill that was higher or lower than usual or maybe a charge that you didn’t make or isn’t correct. Now is a great time to figure out if there is a correction that needs to be made.
A tip from us: Automating your bookkeeping can be an excellent way to ensure there are no inconsistencies in your accounting.
3. Places to improve
Like we mentioned in the tax planning section, you will be running a lot of reports this time of the year. Make sure these reports are on your list:
- Profit and loss statement
- Cash flow statement
- Balance sheet
As you dive into analyzing these reports, look for any changes you can make to redirect you back towards reaching your goals. You still have plenty of time to make adjustments, so be sure to capitalize.
If it’s looking like you will fall short of reaching any of your goals before the end of the financial year (and an adjustment now still won’t be enough), take note and look for ways you can improve in the year ahead. Maybe you need to tighten up your budget, create a cash flow plan, or focus more on your tax strategy throughout the year instead of waiting until the mid-year point.
Review the areas where you are doing well. Can you implement any of the strategies you used for these in other areas?
If you are smashing all of your goals at the mid-year mark, consider raising the bar. However, if you do this, be sure your goals are still attainable. Don’t overshoot your success and set yourself up to fail. Stay the course, and watch your business grow.
4. Questions
As you being your mid-year review, you’ll likely run into questions. Take the opportunity to write these down and do some research. To answer your questions, you can:
- Take to the internet
- Nearly every question you have probably has an answer on the internet, just make sure you are using a trusted source.
- Rely on a fellow business owner
- Don’t take for granted the knowledge your entrepreneurial friends have. They may have run into a similar problem and know exactly how to fix it.
- Turn to a trusted accountant/advisor
- You don’t have to manage your finances all on your own. Accountants will work with you to ensure your mid-year review is set up to keep your business on the right track. If you have any questions, they’ll be quick to answer with trusted advice.
If you are interested in partnering with an accountant, contact creditte today. We provide accounting and advisory services that will bring clarity to your numbers and confidence to your business. Visit our site or contact us to learn more!
