Habits to Keep Up to Date with your Finances
The final quarter of FY 2021 is now well underway and if you’re feeling a little out of control when it comes to looking after your finances then these tips might be perfect for you – start them now and create healthy habits ready for FY 2022!
1. Keep your receipts in one place or better yet, use a receipt processing/storage app to keep your documents securely in the cloud. If you have a Xero subscription you can use Hubdoc for free and a lot of accounting software solutions will have some level of receipt capturing features.
2. Work on your finances weekly – set up a hot bookkeeping date with yourself (wine and cheese permitted)! Pick a time each week that works best for you, if you’re a morning person then set aside time in the morning to work through your allocations – most importantly, stick to a routine and make it a non-negotiable task. It’s so much easier to keep track of income/expenses when the transactions are fresh in your mind rather than playing catch up months later.
3. Keep record of any other expenses that relate to your business that you may have paid via a personal credit card or in cash. Ideally you want to be making all payments from your biz account but hey #lifehappens so as long as you keep record of these it’s no problem to claim them. A simple spreadsheet or similar is all you need so your accountant can pick these up at tax time.
4. Review any overdue invoices (Accounts Receivable ie what your customers owe you) – cash flow is so important so don’t let funds remain trapped in people not paying you. Send reminders and regularly follow up on outstanding amounts. Similarly, review your Accounts Payable (ie what you owe your suppliers) – you don’t want to run overdue as this can cause tension in the relationship but if you have credit terms then for cash flow purposes use them if that suits.
5. Review your numbers each month; run your Profit & Loss statement which will give you a summary of what you’ve made, what you’ve spent & what’s left over. This will give you a good indication of how well your business is performing, areas you can possibly make improvement and allow you to roughly plan for your income tax liability. This leads into the final tip..
6. Set funds aside – yes physically to another bank account! Your net profit will be a good base to estimate the income tax liability you should be planning for, but also review your Balance Sheet. If you’re registered for GST and have employees this report will help you see your current GST, PAYG and super liabilities so you can put the money aside and not scramble for it, come the due date. We’re huge advocates at FUEL for having a great understanding of your financials, but we know you didn’t start your business to become an amazing bookkeeper/accountant!
Thanks to Marlaina Young of Fuel Business Consulting for writing these fabulous tips, they certainly serve as a great reminder to everyone. If you’d like to reach out to Marlaina of Fuel Business Consulting then please click the link.