As we approach the end of this financial year, you will have started, preferably well before this time, taking action to achieve the best possible figures for the end of the current financial year. Too many businesses unfortunately start far too late to make any material difference to the end result, by only acting in this last month.
A good example of late actioning is contacting customers in June for outstanding invoices and expecting them to drop everything and pay your business prior to June 30th. It rarely happens that payment is made as sought.
The fact of life is, to achieve the best financial results for the current financial year, you needed to start almost immediately after the previous financial year ends, or as soon as the figures for the previous financial year were produced.
The same situation applies for other businesses with a different financial year end.
The matters for consideration for your review, may include, but are not limited to the following factors.
Budgets need to be reviewed. For instance,
- were they realistic for your business in these current times,
- was there any capacity to amend these budgets downwards if results were not being achieved,
- were they made up to achieve a particular result, rather than being a realistic one for your business, etc.
Market and economic reviews are essential in this time of change may not be completed adequately because management:
- is biased, arrogant, naïve, or inexperienced,
- does not make the time to read papers and view media stories properly,
- does not visit customers and suppliers, and/or engage professionally with their peers,
- do not leave the office with “eyes wide open” and therefore miss out on seeing the real world around them,
- are too busy working in the business and not on the business, etc.
Is your credit and/or accounts receivable department operating to best practice? Too often, even today, many in management fail to understand the importance of having adequate numbers of professional employees, with the right tools to complete their work in a timely manner.
When seeking payment, time is of the essence, plus having those employees which can resolve issues quickly so that factors which prevent prompt payment are eliminated. Knowing why and when to contact your customer and whether by email or telephone is equally important. It this knowledge which helps to ensue payment is received within agreed terms.
Understanding the negative impact on future results by manipulating current figures. Often results are manipulated for the current needs of managers and employees, rather than for the needs of the trading entity which employs them.
If figures have been manipulated in the past, has it negatively impacted on current and/or future performance outcomes. At some stage this admission will be required to explain:
- why the best results were not achieved as expected, or
- if you are seeking finance, or
- when trying to sell your business.
At the end of the day, the current figures will always expose the inappropriate actions of the past.
It may sound strange to talk about reviewing your financial year end results before knowing what they might be. It is however, a valid exercise and is one of those tasks categorised as “…working ON your business and not just IN it”
The fact of life is that, to achieve the best financial results for the current financial year, you need to start almost immediately after the previous financial year ended, or as soon as the figures are produced. Waiting until the last month before the month end, will rarely achieve the best result for the long-term viability of the business. The truth is, that you can never start too early in the new financial year to protect and produce the best results for that new financial year.
Want to know more about this topic, contact Kim at kim@creditmatters.com.au, or on Mobile 0411 649 261. Alternatively, have a look at what we offer via our website at www.creditmatters.com.au
