If there’s one thing which can fill even the most unflappable executive with fear and loathing, it’s the End of Financial Year. For many, this inevitability is accompanied by anxiety and dread. But here’s the thing. It doesn’t have to be like that. With the right systems in place, along with a good dose of planning (remember the adage of ‘those who fail to plan, plan to fail? Trite, yes, but also true). The real trick for EOFY is to get started on it long before it actually is EOFY. Check out these tips to make your next EOFY ‘business as usual’.
1. Standardise systems
Now, while we are all too aware that achieving standardised systems across your business isn’t exactly a matter of waving a wand ‘et viola’, the nub of the matter is this: if you have multiple systems, spreadsheets all over the show and a ton of manual processes to be carried out by multiple people, well, your EOFY will be tough. Every time.
When it’s tough, it’s expensive, too. And hard on everyone. Stress levels along with added costs can help build a business case for an integrated ERP solution (along with, of course, all the other advantages which should go into that business case, like improved efficiency and performance, better visibility and control, and the ability to scale). EOFY isn’t the be-all and end-all…but it is an inexorability which can be rendered a lot less unpleasant with the right tools for the job.
2. Keep the COGS turning smoothly
Not just the mental ones, which should be seeing the point of making EOFY bearable, but also the Cost of Goods Sold (COGS). Getting this reporting process sorted is an essential component of making year end a breeze rather than a hurricane. Note that COGS varies according to the type of inventory system or process; a periodical inventory, as the name implies, is updated only from time to time and so it is necessary to record end of period journals for an accurate Profit & Loss statement. On the other hand, a perpetual inventory system updates constantly in line with sales. This is arguably the better system: ending inventory and COGS accounts reflect current balances at any point in time. And that, in turn, makes for a simpler EOFY process.
3. Get stock in order
If it wasn’t for the last minute, nothing would ever get done…but you know very well that this approach isn’t exactly optimal. It’s a common EOFY challenge: obsolete, lost, damaged or ‘shrinkaged’ stock. The last minute is still a good way away, so get on top of that now; with the write offs written off, it’s one less nerve to jangle when the time to close off the books rolls around. With time in hand, you also have an opportunity to do something with old stock – something which can cut the losses, in other words. Managing stock effectively, of course, is a lot easier with a good ERP system – particularly when it’s set up to deliver reports at the click of a button.
4. Rack up the expenses
I say ‘expenses’, you frown and sigh. Another tricky item come year end, and another tricky item that doesn’t have to be the cause of the next migraine. There are better, automated ways of handling expenses these days and when you have such a system integrated into your ERP solution, it means expenses are entered and updated practically in real time, when the expenses are incurred. Doesn’t that already sound a lot better than scrambling around (in the second last minute?) to get a handle on companywide expenses? Along with easy reporting, this traditional bugbear can be squared away with ease. And, because everything is digitised in a modern expense system (where your employees use their smartphone to take a picture of the invoice, and submit that), storing expense records for prescribed time periods is another automated doddle.
5. Nail down compliance
One of the ‘big deals’ with EOFY is that this is the point at which a lot of your compliance obligations need to be met. If compliance is a massive pain and overhead, chances are your systems aren’t up to scratch.
Compliance obligations span both industry-specific and general regulations and can include things like profit and loss summaries, stock takes, accounts receivable and payable reports, tax schedules and more; industries like medical or banking have additional regulations specific to these occupations.
Whatever the compliance requirements are, this really should be a ‘set and forget’ situation – but only if you have a suitable ERP system in place and appropriately configured. Did I mention a business case for ERP earlier? Add compliance to it; if this task requires manual data collection, spreadsheets and a lot of profanity, it’s not being done right.
Currently using MYOB Greentree?
It’s almost the end of the financial year for most companies. In MYOB Greentree, if you haven’t done it already, you need to ensure that you have created the calendars for the next year.
To avoid performance issues we advise that you should do this outside of the times of day where the Greentree system is being heavily used.