Why You Need a Financial Calender
sjsmith.com.au - blog
Save the Date
When you’re the one running the show there’s always something else to do. That’s why I keep a lot of lists and a big calendar. Otherwise I know there are things that get missed. Having to add one more thing to your busy schedule may seem like a real pain but trust me when I tell you it is worth your while.
Many years ago I stopped doing budget forecasts with sales expectations and projected expenditure. Instead, I do a running cashflow forecast that is based on actual figures at the moment. I can see that I’m going to have cash to cover my immediate expenditure for the month and the quarter and I can see any red flags that may mean there’s a looming shortfall in the next twelve months. I have an active spreadsheet that I use for this and I usually update it once or twice a month so that it remains current. The initial set up required a little time but now that its done, I find it an invaluable tool for keeping an eye on how we are going with cashflow. If there are any unexpected expenses I can add them in and make adjustments to expenditure quickly to make sure I keep our accounts in the black.
Over and above this spreadsheet, the other thing I do is to schedule in a check on our financial status once a quarter (or thereabouts). The next one would normally be done some time in March but as that when I’ve scheduled some leave I’d already done it by the end of February so I know I won’t come back from holiday to any nasty financial surprises. This is the one of the last checks I do before the end of the financial year in June. I find its a great time to make any adjustment before the prospect of the tax man looms. As an example, on our current trajectory we are slated to show a profit at the end of the year (which is great) but to minimise the amount of taxation I would need to pay, I have given myself a modest pay rise and allowed for a larger charitable donation budget. If I have any unexpected expenses between now and the end of June I can always go back to my former wage level without too much stress. These may not be the choices you’d make for your own business. Perhaps any surplus would be better spent on upgrading some equipment, hiring more staff or a hundred other choices you have to invest in your business. My point here is not what I plan to spend the money on, its that by doing a financial check at this time I have a reasonable idea about whether there is available funds to make use of before the tax man cometh. That’s the main reason for doing financial checks of your business. There’s nothing wrong with paying tax. Tax means that your business is profitable and thats great! But if you have a surplus, wouldn’t you like to know and, be able to plan what to do with it. If you don’t have available funds you also need to know that and adjust your finances accordingly.
Add a financial check to your business calendar at least twice a year (preferably four times). If you don’t feel comfortable doing it yourself ask your accountant for a regular snapshot. Taking control of your business finance and making adjustments to ensure business health is one of the smartest thing you can do to make sure that you’re still in business this time next year. Now get those dates in your calendar.
Till next time,