Stock (excl gst) – Complete your final stocktake for the year and prepare a listing for us.
Work In Progress (excl gst) – If you have work in progress, calculate the value of work you have in progress, but have not yet invoiced at the end of your financial year.
Livestock (excl gst) – Complete a count of all animal types you may have and identify the age and sex.
Debtors – Compile a list of customers that owe you money at the end of the financial year.
Creditors – Compile a list of suppliers that you owe money to at the end of the financial year.
Bank Statements – Loans and new Hire Purchase Agreements which show the balances as at end of the financial year (we don’t need all of your bank statements if you use accounting software).
Fixed Assets – We need copies of invoices for any purchase over $500 during the financial year.
Bad Debts – Ensure that you write off any bad debts out of your debtors system before the end of the financial year.
Save time – Do it Online!
Misplaced that questionnaire you were sent? Or need to keep a record of those creditors and debtors that the accountant needs?
Click here to head to our downloads page to find the information.
If you need to have your accounts completed at a different time, please do not hesitate to contact us.
Cashflow is king
Business owners have five key concerns:
Growth, Profit, Cash, Risk reduction and Succession. Cash is perhaps the biggest issue for business owners. “We made all that profit and we have tax to pay, but where did the money go?” is a common question.
Forecasting cash flow is one of the most difficult exercises out. And management of a tight cash position can use up valuable time which could be much better spent on improving profitability and cash flow.
CAUSES OF TIGHT CASH FLOW
Insufficient profit (making losses). This is fairly obvious. If the business isn’t making money, it will soon run out of cash.
Not enough profit to cover the drawings taken from the business by the owner. Some think they deserve an income.
Until they generate profit they can’t draw from the business without creating cash issues.
Repayment arrangements on loans which are greater than the cash generated by the profit. Business loans are often advanced over five years, but if the loan is significant this just may not be maintainable. High levels of hire purchase (rather than term debt) causes the same problem.
Poor management of accounts receivable
You may be generating profits but if your customers aren’t paying you, a portion of the profits will be tied up in debtors.
Poor stock management
The same thing applies. If you make a $100,000, profit but increase your stock by $100,000, there will be no money left to pay your groceries or repay loans.
Use of profits to purchase capital assets rather than financing them and protecting cash flow for daily running, drawings and loans.
Poor tax planning
Surprise tax bills when you have invested money in new equipment or more stock, can’t always be met immediately.
The issues are generally a combination of all these things.
Effective forecasting of both profit and cash allows you to identify issues before they arise.
Regular review of debtors, stock levels and careful planning for seasonal increases are critical to recognising cash shortfalls and approaching your bank for assistance.
Bank managers have an aversion to sudden requests for overdraft increases, especially if they occur in the week before tax payment dates. They expect that you and your accountant will be more organised than that.
The occasional call (when a major customer has had to delay their payment to you) is usually supported, especially if you generally have good management reporting and forecasting which you share with your company’s bank manager.
A bank would prefer an early call about potential problems, even if you don’t always need support. It shows good planning and creates a healthy relationship between you and your banker.
If you don’t understand where your cash has gone, ask your accountant to explain. They should be able to read your accounts and tell you.
In fact, when we review your accounts before meeting with you we’ll be looking at that particular question. It’s a good way to check that the reported profit makes sense.
Here’s a typical answer. You’ve made $500,000 profit. From this you’ve drawn $150,000, paid tax of $165,000, you’ve increased your stock by $50,000, accounts receivable have increased by $60,000 (largely related to increased sales achieved – your debtors days haven’t actually increased) and you paid off loans of $100,000. So your bank overdraft has increased by $25,000!!
Understanding your cash flow is the key to managing it. If there isn’t enough cash, something has to change. What needs to change can sometimes be fairly simple once we assess what the issues are. Cash is king. If there’s plenty of it, you’ll have the time to spend on improving your business and lifestyle.
NZCA Trial Balance Newsletter
Keeping up to date with change is often a challenge, so grab a coffee and take five minutes to find out about the following in the NZ CA Newsletter:
- How to build great teams
- Upcoming changes to employment legislation
- GST on low value items from overseas
- Distributions from a family trust
- And more…
- GST on low value items from overseas
Click here to read more
It’s tax season. Our Client Managers will soon be very busy getting tax letters sent out to our clients to advise when payments are due and how much they need to pay.
|28 March:||2nd Provisional for June Balance dates|
|07 April:||2017 Terminal tax for clients with March, May and June Balance dates|
|07 May:||3rd Provisional for March Balance Dates|
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With Easter coming up, we wanted to let you know that we will be closed Friday 30 March and Monday 2 April.