As we approach the end of the financial year, the calls to our support centre are starting to increase and the atmosphere of mass-panic in trying to close this year’s books can be clearly felt. It’s at this time every year that I wonder why business owners and managers often overlook the day-to-day administrative requirements that result in this major managerial load at the end of February.
It seems apparent that the monthly bookkeeping and accounting obligations of small businesses lags, resulting in a last minute dash when, for example, VAT returns are due. No wonder SMEs constantly refer to their administration as a burden.
Sure, I understand that turning a profit is essential and admin ranks very low on the list of priorities. But I do ask myself; isn’t it easier to take one day a month to send your invoices, pay your creditors, do a bank recon and close that month’s books than sit with a confusing pile of paper once a year? Particularly when any mistakes made in wrapping up the financial year can come at a cost; whether as taxes, penalties or even a tarnished reputation.
What surprises me about this sluggish approach to accounts management is the fact that timeous record keeping allows both business owners and managers to stay informed on the current state of their business. In today’s competitive knowledge-based economy, a detailed understanding of one’s accounts can provide valuable information to support the decision making process. The ability to analyse the state of a business and understand its strengths and challenges can provide that much needed competitive edge.
Of course having the right business systems goes a long way in making these jobs easier. Because software automates most processes, your Year End can be completed by simply pushing a button. Of course this means that your basic monthly information has to be recorded correctly and kept up to date.
And if you haven’t kept good records, or found that your current system is confusing and difficult to operate, now is the time to re-assess your processes and consider buying a professional accounting program.
Please don’t get me wrong, I am not saying that all SMEs are admin offenders or that bad bookkeeping hinders growth. But I am saying to business owners that although your house is small, it should still be kept in order. So, as you prepare to embark on the new financial year, do so with the right accounting software; it could be the best investment you make all year.
Five Pastel pointers for a stress-free Year End