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5 ways to help prepare your business for the financial year-end

It is that time of the year again when most organisations need to look at balancing the books. File Image: IOL

It is that time of the year again when most organisations need to look at balancing the books. File Image: IOL

Published Feb 22, 2022

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It is that time of the year again when most organisations need to look at balancing the books. Financial year end procedures can be stressful, and it usually sends staff members in a panic. It is important for companies to measure profitability over set period. But if it is not done correctly then there can be frustrations and challenges when the information is being captured at the close of books.

A financial year end also allows for companies and each department to prepare for the year ahead. The financial year end is a time when accountants focus on reviewing the ledgers to prepare the financial reports to share with the directors.

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Whether you are a small business or a division of a large enterprise the process is the same. Stock take and inventory must be checked and listed to ensure all invoices are accounted for.

There are no room for mistakes and even the smallest errors can have repercussions.

Let us look at how we can ensure the process is done smoothly:

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  • Preparation is key. A financial year-end should not happen without staff being aware well in advance about the process. An email must be sent out to all staff indicating that this is the date when stock take will happen and when the invoices need to be in for the departments to ensure finance department can capture the relevant information. If the employees are informed in advance, then arrangements can be made by other department members to assist in the stock take.
  • Ensure that all money coming in and out of the business is accounted for. If any employee has used business funds to do tasks for the business, they should be given a deadline as to when the information must be given to the finance department for capturing. This way the finance department can ensure their deadlines are met in terms of report completion.
  • When planning the stock take try to get it done before the financial year-end. This will have an impact on accuracy for your balance sheets. Make sure you are doing checks on your expiry dates, take shrinkage into account and also ensure that the current stock levels match the stock on hand. Doing the inventory check ahead can give you time to locate missing stock or assets and prevent writing off large amounts of stock.

We know that each department has to ensure that they are meeting the relevant deadlines for balancing the books. And each department might have been doing this correctly. It would be a good time now to get ahead of things and double check that the reports from all departments are accurate and balanced. Doing this can also be a great way to hold departments who are slacking accountable for their delay or lack of accuracy.

The end of the financial year is also a time to analyse the performance of your business. It gives business managers an opportunity to see which business decision have been showing results and what still needs to be worked on. This can show us business trends and even allow departments to forecast the year ahead.

As much as the financial year-end brings along stress and pressure, it can also bring about new opportunities. This financial year-end look at creative ways to get the process done digitised. This way it can take less employees working till late. If systems can be improved and reporting systems better managed before year end, it would prevent time wastage when financial year-end needs to take place.

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Devan Moonsamy is the CEO of ICHAF Training Institute

BUSINESS REPORT

Related Topics:

Free Market Economy

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