The end of the financial year is fast approaching, and businesses across Australia are preparing for the daunting task of closing their books for the year. This period can be stressful, particularly for those who are unfamiliar with the process. However, with proper planning and attention to detail, it can also be an opportunity to streamline processes and improve financials for the coming year.
To help make this process a little easier, we’ve identified the top 5 mistakes to avoid during the end of the financial year.
1. Failing to reconcile bank accounts
Reconciling bank accounts is critical to the accuracy of your financial records. It ensures that your records match the balances reported by your bank. Failure to reconcile your accounts can lead to discrepancies, which can create costly errors in your financial statements. Take the time to ensure that all bank accounts are reconciled before closing the books.
2. Ignoring inventory adjustments
Inventory adjustments are essential for businesses that carry physical stock. They ensure that the value of your inventory is accurate and up-to-date, which is necessary for accurate financial statements. Failing to adjust inventory can throw off your financial statements and lead to costly errors. Take the time to ensure that all inventory adjustments are made before closing the books.
3. Not reviewing outstanding invoices and receipts
Outstanding invoices and receipts can be a major headache for businesses. They can skew financial statements and throw off cash flow projections. It’s essential to review outstanding invoices and receipts and chase them up before closing the books. This will ensure that your financial statements are accurate and your cash flow projections are realistic.
4. Failing to review employee expense claims
Employee expense claims are another area that can create discrepancies in financial statements. It’s essential to review all expense claims and ensure that they are properly recorded before closing the books. Failure to do this can create inaccurate financial statements and may lead to compliance issues with the Australian Taxation Office.
5. Not backing up financial data
Backing up financial data is essential to ensure that it is not lost in the event of a disaster or system failure. Failing to back up financial data can create significant issues for businesses, including compliance issues and lost revenue. Make sure that all financial data is backed up regularly and stored in a secure location.
In conclusion, the end of the financial year can be a stressful time for businesses. However, by avoiding these common mistakes, businesses can streamline their processes, improve their financials, and set themselves up for success in the coming year. Remember to reconcile bank accounts, adjust inventory, review outstanding invoices and receipts, review employee expense claims, and back up financial data. By taking these steps, you can ensure a smooth end of financial year process and position your business for success.
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