Would you rather be at the front of the queue or the end? If you’d rather be at the front, now is the time to start discussing end of financial year arrangements with both your accountant and your banker to achieve the best outcomes for your business and avoid being at the end of a very long queue.
End of financial year is a hectic time for businesses, and for accountants and bankers, this is multiplied about 100 fold. If you approach your accountant on 26 June wanting to review your position you won’t get the best service they can offer (if you can get an appointment at all). This is not your accountants’ fault. It’s because at this point they will already have a full dance card and will not have the time to address more than your basic requirements.
It’s the same story with your banker. Leave it late and the result will be that if they can accommodate your request at all, it will likely be completed exactly as asked. Now why would this be a bad thing, you ask? Because without a thorough end of financial year review, you may be asking for the wrong thing. And that could cost you a lot.
An engaged banker or accountant who has plenty of notice will be able to look at your requests based on not only the request itself but on what you are trying to achieve. And it’s when they understand your goal that they can apply their experience and knowledge to your full advantage. They can only do this, however, if you give them the time.
Factors including ATO rulings over recent years, higher levels of internal monitoring, and more rigid approval processes mean that even seemingly simple requests, such as round robins (moving funds between entities for legitimate tax purposes), are increasingly time consuming and labour intensive. Don’t make the mistake of assuming your request is a quick one that your accountant/banker can squeeze in at short notice. Some of the most common things reviewed at this time, such as working capital requirements, debt structure, equipment financing, super and trust reviews can take several weeks to be properly reviewed and the transactions processed.
Another pitfall to avoid is the set and forget mentality. Say at the beginning of the financial year you developed a great tax strategy that was going to save you a bundle. Even the best strategies are subject to external factors and unforeseen change. Failure to allow time for adjustments can leave you in a position where you are unable to complete your strategy and achieve the benefits; you will have wasted the good money spent on tax advice, likely incurred greater costs over the past year due to a more expensive investment and debt structure, and may now have a tax bill that you are not prepared for.
On the other hand, even if you haven’t been following a plan over the past year if you get in early, talk to your accountant, talk to your banker, you may find that there are actions you can take that will put you ahead of the game. It’s not over until the tax man sings.
So what should you do to make sure you aren’t left at the end of the end of financial year queue?
- Start now!
- Speak with your accountant. If you have a strategy in place review it to ensure you are on track and understand what actions need to be taken prior to 30 June. If you don’t have a strategy ask about a review to see if there are any actions that can be taken now to minimise tax obligations.
- Review your banking arrangements. This is more than just the interest rate on your business loan. Equipment finance, transactional arrangements, security structuring, repayment structuring, debt products, and cash flow products are all things that benefit from regular review, as well as basic pricing.
- Got a Trust? This is a good time of year to ensure it’s in order and compliant.
- Review super lending. This is also something you should discuss with your banker and is an area where starting a review early is critical as there is significant legislation and regulation that applies. Be sure to allow plenty of lead time for any review or changes.
The list above is not exhaustive, and each business will have unique requirements when it comes to end of financial year. I haven’t yet met a business owner who looks forward to reviewing their accounts and talking tax strategies. But it is a necessary evil and a lot of frustration can be avoided if you act now and aren’t left at the end of the queue.
In 2017 we re-branded to better reflect our services, changing our name from CAV Consulting and Analytical Services to Insight Business Plans & Analysis. This article was originally published under our previous name.