Projecting your cashflow pipeline forwards is vital.
To be able to navigate the future path of your cashflow, you need to start forecasting – so you can map out your financial position over the coming months and can take the appropriate action to safeguard your cash position.
Plus, when you have access to detailed forecasts you can scenario-plan, search for cost-savings and look for strategies that will preserve your cashflow position.
Forecasting your future cash pipeline
Remaining in control of the cash coming into (and going out of) the business is the real focus, so you can accurately predict your financial position and can resolve any issues.
Key ways to get more from your forecasting
Run regular forecasts – The financial landscape is changing on a daily basis at present. A cashflow forecast is not a document that remains static. Variables and external drivers are literally changing each day, so it’s vital that you run frequent forecasts and react swiftly to any projected cash issues as they become apparent.
Use the latest cashflow forecasting apps – cashflow forecasting apps, like Fluidly, Float, Futrli Predict or Fathom integrate with your accounting software. They give a drilled-down view of how your cash inflows and outflows will pan out over the coming months – information that will inform and justify the decisions you make during these extremely challenging times.
Explore the right revenue streams – most sectors will have seen their sales change over the last 18 months. To overcome this, there’s a real imperative to explore revenue streams and new opportunities for income. This could be offering a new product or service, or working with a new partner. The idea is to find ways to increase the money that’s coming in the door and balance out your unavoidable expenses.
Get proactive with cost-cutting – if you can reduce cash outflows to a minimum, that will have a real impact on the health of your future cashflow. Pare back your operations and aim to reduce things like unnecessary software subscriptions, or over-ordering of basic supplies. Negotiating cheaper rates with suppliers, if possible, will also help.
Review your staffing needs – it’s never great to make anyone redundant, but you can also look at ways to reduce the costs of staffing and resourcing without getting rid of staff completely. Reducing working hours or redeploying staff in different roles are all options that reduce payroll costs, while also looking after your staff.
Run a variety of scenarios – changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan once conditions improve. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.
Look at various ways to access funding – if forecasts show a giant cashflow hole coming up, you’re going to need additional funding to get through this crisis. We can assist your business to investigate funding opportunities from grants, banks, loan providers, alternative lenders and crowd-sourcing funders.
Talk to us about setting up cashflow forecasting
Forecasting is an important step to give you the business intelligence to support your decision making.
Get in touch to improve your control over cashflow.
The new financial year is already in full swing, meaning most of you are still finalising your general ledger accounts in order to get the necessary information to us to prepare your final 2024 accounts and tax returns. Others have already got us your information and are looking ahead.
Either way, it can be a time when we forget our current tax obligations, due in relation to the beginning of the 2025 financial year.
In order for you to be across your tax obligations, below are the key compliance dates that are coming up. Make sure these lodgments are up to date to avoid any interest or penalties.
KEY TAX DATES – SEPTEMBER/OCTOBER 2024
21 September 2024 – GST – Monthly Activity Statement and payment for August 2024
21 September 2024 – PAYG withheld – Monthly activity statement and payment for August 2024
21 September 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for August 2024
30 September 2024 – TFN withholding report – Annual TFN withholding report for closely held trusts where a trustee has been required to withhold amounts from payments to beneficiaries during the 2024 income year
30 September 2024 – PAYG withholding payment summary – 2024 income year annual report due if lodged by us
21 October 2024 – GST – Monthly Activity Statement and payment for September 2024
21 October 2024 – PAYG withheld – Monthly activity statement and payment for September 2024
21 October 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for September 2024
21 October 2024 – Annual PAYG instalment – Payment of annual PAYG instalment for 2023–24. Lodge only if instalment amount varied or the rate method to calculate the instalment is used
28 October 2024 – GST – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us
28 October 2024 – PAYG withheld, FBT instalment and PAYG instalment – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us
28 October 2024 – Superannuation guarantee – Due date for superannuation guarantee contributions for July to September 2024
31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for individuals, trusts and partnerships if you do not lodge with us
31 October 2024 – GST – Lodgment of annual 2023–24 GST return for instalment payers who are required to lodge tax returns by 31 October 2024
31 October 2024 – Companies – To provide distribution statements to shareholders for 2023–24 for most companies
31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for an entity that has one or more prior year tax returns outstanding as at 30 June 2024
31 October 2024 – SMSFs – Annual return for new registrant SMSF if the ATO has provided this due date
We’re here to help if you’re facing operational issues, tackling people challenges, or have health and safety questions, give us a call, email us or text us.
It can feel challenging to chase up payment of invoices when the economy has been down, but it is important to keep cash flowing into your business so you can cover expenses and meet your obligations to others. As with all dealings in more difficult times, some empathy and a lot of open communication can go a long way.
The following tips are useful to keep in mind when asking for payment.
Communication – Connecting with your customers is important. Try to make it personal to their situation rather than a one-size-fits-all email. Connecting on a more personal level shows you value them and are conscious of the impacts that the current situation may be having on them. The empathy you show now will also be remembered when the economy recovers. Be proactive – early communication will help you stay on top of cash flow and will also alert you if you need to account for late payments.
Offer flexible payment options – for customers who can’t pay in full, consider breaking invoices into multiple payments with payment terms moved to a longer timeframe. Set up a credit card facility to give customers other options for payment. After all, the easier you can make it for them to pay you, the quicker you will get paid. If you don’t have payment services set up in your accounting software, we can help you do this. Offering a discount for early payment might provide the incentive, for customers who can settle, to pay your invoice before others.
Total Outstanding – Make sure you keep track of how much customers are in arrears. While you can continue to allow credit, you want to make sure you’re not creating too much risk. Allowing continual extensions to payment while also letting more to be added to their total amount outstanding can create a cashflow crunch. Get in touch if you want help to better track your cash flow.
With the 2023/24 financial year now wound up, it’s time to think about submitting your tax return and making sure you have the cash reserves put aside to pay the company’s tax bill.
This short guide to getting your small business tax in order gives you the lowdown on which end-of-financial-year (EOFY) taxes you’re liable for and what returns must be submitted.
We’ve also got some guidance on making EOFY less of a pain next time around.
What EOFY taxes must my business pay?
The taxes you pay and the returns you must submit will be defined by the type of trading business you are. To give you a broad idea, these are the main categories you’re likely to fall into as a small or medium-sized business:
Sole traders – if you’re set up as sole trader, you’ll need to lodge one individual tax return that covers both your business income and your personal income. Once submitted, the Australian Taxation Office (ATO) will work out how much tax you’re liable to pay and when it’s due.
Companies – if you’ve been incorporated as a company, you must lodge a company tax return and pay tax on the company’s income. If you’re a director in the company, you’ll still need to lodge your own individual tax return as well.
Partnerships – if you’re a partner in a partnership, the business will have its own tax file number (TFN) but won’t pay income tax on the profit it earns. Each partner must report their share of the partnership income in their own tax return. Your partnership must also lodge a separate partnership return under its own TFN.Trusts – a trust has its own TFN and must lodge a trust income tax return.
Gathering all the necessary information and documents for your tax return can be a pain. But with a little pre-planning and investment in the latest accounting and bookkeeping technology, you can make the whole process much less of a headache.
Here are five sensible ways to make your EOFY tax easier:
Keep good records and invest in an automated bookkeeping platform, like Dext.
Use a document management system to easily locate every invoice and receipt.
Use cloud accounting and the built-in tax templates in platforms like Xero and MYOB.
Plan for your annual tax costs and put cash away so you can cover your tax expenses.Work closely with your accountant to create the most efficient accounting procedures.
Talk to us about improving your tax processes
If your EOFY tax was a mess this time around, it’s never too early to start planning for next year and getting your records, documents and accounts in order.
We can work with you to set up the most effective accounting systems, with clear processes, great record-keeping and easy access to all your documents.
For centuries, accounting was all about reviewing historic information – but that only told you about the past, not what was going to happen in the future.
If you’re only looking back at past periods and historic numbers, this limits the insights you can achieve for your business. With a backward-looking ideology, it becomes difficult to plan, run through different scenarios or understand the path of the business going forwards.
Forecasting changes this. With the right data analysis and forecasting tools, you can project sales, cash, revenue and profits into the future – and get in control of your business.
A forward-looking view of your business journey
Forecasting switches the focus of your financial management. By moving to a forward-looking view of your business journey, you can see further down the road – and that helps to spot any opportunities and avoid common business pitfalls.
Forecasting adds value by:
Highlighting the data patterns – a forecasting tool takes your historic data and projects it forward in time. This helps you and your advisers spot patterns, trends, gaps and opportunities, revealing the true ‘story’ behind your business accounts. For example, forecasting may reveal a predicted seasonal slump in the next quarter, allowing you to plan ahead and proactively take action to minimise negative impacts.
Giving you a future view of your business – instinctively, business owners will look back at prior periods to assess performance. There’s value to reviewing your historic actuals, of course, but using forecasting helps you to look forward, rather than just backwards. Forecasting is the satnav, showing you the road ahead, rather than the rear-view mirror showing you the road you’ve already travelled.
Helping you scenario-plan – with a financial model of your key drivers, combined with accurate forecasting, you can quick answer your burning ‘What if…?’ questions. Forecasting lets you run different scenarios, with different drivers, to see how business decisions may pan out over time. If option B performs better than option A, that’s invaluable information when defining your next strategic move.
Making informed, evidence-based decisions – having ‘the full picture’ of combined historic numbers, forecasts and longer-term projections aides your business decision-making. Forecasting gives you solid evidence on which to base your strategy, and helps to red flag any threats that are looming on the horizon – giving you the best possible information to keep your executive team informed and on the ball.
A deeper relationship with your accountant – forecasting also helps us to get a far more granular view of your business. This helps to spot potential areas of performance improvement, and to give you the best possible strategic advice, all backed up by solid, empirical data and management information.
Talk to us about the benefits of forecasting
If you want to get in control of the destiny and results of your company, come and talk to us. Forecasting helps you highlight your future threats and opportunities – and create a proactive strategy to improve the performance of your business.
