There are only 10 more sleeps until the End of Financial Year – are you prepared?
For many the 31st of March feels like a huge milestone on the calendar. It can be a busy and frenetic time, and can feel even more stressful for business owners. Add to that Easter and it feels overwhelming! However the end of financial year process need not be a painful one! Read on to find out how.
A recent US study found 69% of adults attribute their stress to “money-related” issues and, as the End of the Financial Year (EOFY) draws near, it is typical for thoughts of money and dreaded taxes to dominate our mental space and drive us to despair.
To help take some of the pressure off GoFi8ure has prepared some simple steps for you to follow in your accounting software so that EOFY feels more manageable:
Step 1: Gather your paperwork aka “source documents”
The more information/paperwork you give to your Accountant, the less time they need to spend chasing you (which costs time and money). Late April GoFi8ure will be running a webinar on how to prepare your Xero EOFY file for your Accountant. Click here to register your interest for this webinar.
Go through your files and emails and collate your source documents (Statements, Invoices, Receipts etc) for your accounts.
Paperwork includes at a minimum bank, credit card, loan statements as at the 31.3.2018, copies of all fixed asset invoices purchased during the last financial year, GST work papers and returns/receipts to IR, year to date payroll records, ACC invoices, insurances and premiums, legal, repairs and maintenance, lease expenses, finance agreements, use of home office, out of pocket expenses and year to date personal tax information if you are a shareholder. Depending on the complexity of your accounts you may need to provide more examples of source documents. Your Accountant will ask for these so be prepared.
Tip: Use Xero’s File Library to upload all of your paperwork/source documents as PDFs. It is really easy to do and your Accountant will love you for it.
- On the top banner (right side) of your Xero account click on the file icon (below)
- Create a new folder called EOFY2018 (below)
- Label each file with a clear name. For example: 00 Savings Bank Statement 31.3.2018 or ACC Levy Invoice etc
- Upload labelled files into the electronic folder – it is that easy! This will keep everything your Accountant needs in one easy to view/access location in the cloud
Step 2: Complete a Stock Take / Stock Valuation
If you are carrying stock, you are required to do a stock take to record how much and the “value” you have on hand as at the 31st of March 2018. The figures should be at cost, excluding GST. It is important when you are dealing with stock that you use the best tools available. Whatever tracking system you use, make sure you have the right software to support it. If you are currently using Excel spreadsheets to manage your inventory, you may want to consider moving to a cloud based inventory system like Unleashed.
An effective, easy-to-use inventory system eliminates human error that can occur whilst using Excel. Inventory software gives you real-time inventory control and reporting. It also helps you to understand your product margins and provides you with important information to help you make better decisions based on real-time, accurate profit reporting.
Step 3: Round up those overdue invoices and debt collect
Review your Aged Receivables detail report and identify all invoices that are 30+ days overdue. Once this has been done make one final determined effort to collect the debt before the 31st of March. If you have exhausted all avenues for collecting unpaid invoices and do not envisage collecting them at any point in the future, you can write off the outstanding invoices to a bad debt expense. Contact us to find out how.
Tip: If you are going to write off any outstanding invoices; make sure to apply a credit note against the invoice owing. We do not recommend using the “void” option in your accounting software.
Step 4: Review Creditors entered and reconcile to Supplier Statements
Do you have outstanding supplier invoices showing on your ledger? Are you confident that these are correct? GoFi8ure recommends that you reconcile all creditors to supplier statements and balances before the 31st of March to ensure any missing invoices are received and entered into Xero. You may find that some suppliers have in fact been paid, however, the payment was not allocated against the supplier invoice. If this has happened it is important to correct it soon as possible.
Need help actioning a creditors reconciliation? Join GoFi8ure’s webinar in April or send us an email to book in some customised Xero training.
Tip: If you are disputing an account or are no longer paying an invoice then you should apply to the supplier for a credit note and once received reconcile the credit note to the invoice in your ledger (creditors reconciliation). If you would like accounting support please contact us.
As March draws to an end, make the conscious decision to take action with steps 1-4. If you would like GoFi8ure to take your end of year stress away and do these steps for you, get in touch with us today via email or call us on 0800 463 488 and quote EOFY Help.