5 min read
The Financial Year in Review (Part 2) – Assessing Your Practices
While you can't change what happened in the past, you can influence the future. The preceding year (FY14-15) may have been tough on SMEs, with tight economic conditions putting a squeeze on companies' cash flows and keeping sales lower. But that doesn't mean businesses have to sit there and take it.
This is especially true since the 2015-16 federal budget announced a suite of measures aimed at shoring up small business strength. Among the benefits that SMEs can look forward to in the 2015-16 financial year are:
- Additional tax deductions for business with annual turnover of $2 million
- Changes to the fringe benefits and capital gains taxes
- Support for jobseekers, as well as employers hoping to take on these workers
- A 1.5 per cent cut in the tax rate for businesses with an annual turnover of $2 million
The latter will be particularly significant. According to Peter Strong, the CEO of the Council of Small Business of Australia, small enterprises will see their lowest tax rate since 1967 as a result of the budget. All of this should do much to improve flagging business confidence around the country.
With these changes poised to give a boost to businesses in the new financial year, it may be worth looking at how business owners can build on this themselves to improve their operations and set themselves up for success. After all, the start of the new financial year doesn't just mark the date at which a host of government measure take effect – it also represents a clean slate, the opportunity to break from the past and set a new course.
Businesses should take this opportunity to assess their practices and see where improvements can be made.
It's Time to Improve Efficiency
The end of each financial year should be an occasion on which to review your financial performance against your previous budget, and set new targets for the coming 12 months. These goals should toe the line between ambition and realism.You might find that you had fallen short of your previous year's goals, or find that your business underperformed compared to previous years. In the case of a lean year, there's not much you can do to turn around your fortunes.
However, finding ways to improve efficiency can help offset a fall in revenue. Meet with your employees and see where processes could be tightened up. Demolish barriers and partitions between departments and make communication more streamlined. Cut your administration costs by implementing paperless direct debits, which will also prevent you from being snowed under with piles of paper.
Clean Up Out Of Date Procedures
A new financial year signals an inexorable march into the future, so why not take this moment to get rid of or update procedures that are obsolete for the modern age? Out of date processes can be found in every layer of a business, and this is your chance to do a bit of spring cleaning.
For instance, consider facilitating easier communication between employees by making use of technology. Smart devices like phones and tablets make it easier for staff to stay in contact with the office remotely, while also allowing them to make changes to presentations or reports while on the fly.
Consider also how automated technology can help slash the time spent manually processing certain things. Kimberly Middlemis, partner at Adrians Chartered Accountants, offered some insight into what ecommerce payment solutions can do for a business.
"From my perspective, I want to be able to do something to your business to automate processes that are currently soaking up labour hours and put them through into technology to give you hours back in your day," she said.
"You waste time constantly on all sorts of things … the processing of bank statements and the authorising of payments, stuff that software can now do for you. So if you can find a solution to something you are doing manually that can happen in one tenth of the time it takes, then you should do it."
The result, says Ms Middlemis, is more time you can put to growing your business or even spend with your family. CPA Australia also recommends checking in with a software provider to see if there are any updates you could use.
Increase Performance Without Increasing Spend
Just like their customers, business owners are bargain hunters. After all, there's a universal urge to try and get as much as you can from putting in as little as possible. For business owners, not only does it mean getting a greater amount of value for the time, resources and capital they put into a venture, it also means improved cash flow management.
This can be a critical issue. A 2014 Invoice Market Survey found that cash flow problems led business owners to dip into their personal savings or equity in their family homes, and in rare cases, think about closing their businesses.
With time-saving technology like direct debit software, you're killing two birds with one stone. On the one hand, you'll be helping along your cash flow and making payment more convenient for customers. On the other, the efficiency gains mean the software pays for itself, thus improving the performance of your business without putting added pressure on your pocketbook.
If you evaluate your processes with these three points in mind now, you'll be better prepared for what awaits Australian companies just over the horizon – something that looks set to shake up the business world further.