Episode 26: New Financial Year, new you!
July 5, 2021
It’s a new financial year in Australia! That makes it a great time of year to review your business and prepare for the new financial year. Sarah and Trudi, in this episode, discuss all the things you should be thinking about and preparing as we start a new financial year.
They talk through closing off the old financial year in terms of obligations – tax/Bas/year end wages. They will also take you through reviewing your FY21 performance and considering where did it go wrong or right, why and how can you leverage that into the new year. They also discuss the importance of reviewing and updating your FY22 budget and business plans and setting new goals as well as looking after your staff and making sure recently superannuation and wage rises have been considered.
Podcast Transcript Available Here
Duration: 17:59
Sarah Eifermann: So do I just start singing the song again? Trudi Cowan: Please don't. No. Sarah Eifermann: No? Not this time. Okay. Welcome back God that was hard. Welcome back everyone you are listening to the Financial FOFU Podcast. Trudi Cowan: We're a little bit crazy today. It is the last week of the financial year and we're recording this for you to listen to next week in the first week of the new financial year because. Sarah Eifermann: You know, in Australia, we have a 30 June year-end. Sarah Eifermann: Yes, and new financial year, new you. Trudi Cowan: So today we want to have a talk about well, what is the financial year, and what are some of the things you should be doing at the beginning of the end of a financial year. Sarah Eifermann: Yeah, I thought today. Yeah, you know, end of the financial year sale or EOFS. Yeah, We're going to do it at the end of the financial year Soiree. Trudi Cowan: Well, I promise you, Sarah hasn't been drinking. Sarah Eifermann: Yet yet. Trudi Cowan: So some of the things, let’s get the boring stuff out of the way. Sarah Eifermann: Yes. Trudi Cowan: What are we going to check off as we check over the other financial year? Sarah Eifermann: Obligatory requirements. Trudi Cowan: Yeah, so close your financial books off. Yeah, get all your bookkeeping done and up to date. Sarah Eifermann: Yes, so that's your ledger, your profit, and loss, your balance sheet, just to get it done, and formally in the software. Yeah, you have to close it off right. Get it all, Trudi has to close mine off. Trudi Cowan: Get all reconciled and up to date. Okay, get your June BAS Lodge. Sarah Eifermann: Yes, even though it's not due until the end of July. Trudi Cowan: Yeah, but get it done. Why do you have to wait? Sarah Eifermann: I love it when people say that. Why wait? The payments not due still Trudi Cowan: Even if you lodge early payment isn't due straight away, get it done, get it off your list. And then once you've done that, get all your information into your accountant so they can do your financials and tax. And look, I'm not saying your accountant is going to get it done straight away because it's not physically possible for me to do all of my clients at once in one month. Sarah Eifermann: Why not you're Superwoman? Trudi Cowan: But get into your accountant, then they have it ready when your name when you're the next one on the list, they can get it started, get it done. Sarah Eifermann: And then it's out of the way. And when it's done early from a lending point of view in case you ever need it. Trudi Cowan: Exactly right, Sarah Eifermann: Because life changes. Trudi Cowan: Exactly right. A few other things to think about as we hit your end. You do need to report if you have employees, you do need to just do year-end finalization of those wages and report them into the ATO. You will need to report to your relevant state Workcover the amount of wages that you've paid through the financial year. It might have gone up it might have gone down, and a couple of things to keep in mind, Fair Work Australia has just announced a 2.5% increase to the minimum wage, and that is rolling out to most of the work agreements, not all from one July but definitely go back and check, make sure you're still paying your employees, at least that minimum rate of pay. And the Superannuation Guarantee has also increased from nine and a half to 10%. Sarah Eifermann: Yes. And another thing to be aware of that as well is that some employers pay on salary, not on Trudi Cowan: Salary, inclusive of super Sarah Eifermann: Correct so in those instances, the employee, his or her net pay will decrease, Trudi Cowan: Unless you choose to increase packages Sarah Eifermann: Unless you choose to increase the package so just have a look at your documentation and how you employed people and whether what's fair and also keeps good staff happy because it's important. And if not, if your business simply can't afford it communicate that, yeah, don't let them get their first payslips for the new year and get paid less than what they were getting. Trudi Cowan: They are not going to have happy employees, it comes as a surprise to them. Sarah Eifermann: I'd be furious. Trudi Cowan: I think most people would. You lost any income when it changes you kind of want to know that. So, we've got all those obligations out of the way, and we're all done. The next thing that we should be doing is reflecting back on our performance. Sarah Eifermann: Damn straight. Trudi Cowan: If you haven't already. Yeah, and you may have already, and I applaud you if you have, but if you haven't reflected back on your performance, have a look at your financials, how did you go, how did that compare to plan. Sarah Eifermann: One of the things I love about doing your financials and closing them all off means, you know, some people say but they're not due until May. With my accountants, I'm not doing them until March. How do you plan for a new financial year, if you haven't worked out what the old one did, and wait until you're nine months into the next financial year before you can just Trudi Cowan: It kind of becomes a report that sits on a shelf. Sarah Eifermann: Yeah, but how do you even track your growth, how do you plan for your habit that's why you're not succeeding at the rate you want to succeed. So at the end of the financial year go back and have a look at it. Where did you go wrong? How do you fix that? Trudi Cowan: Were your expenses, a lot higher in certain categories that they shouldn't have been? Sarah Eifermann: Were you spending a ton of money on stationery, yeah. Trudi Cowan: Exactly right, Sarah Eifermann: Some people do. Trudi Cowan: Was your income exactly the same as a previous financial year? But then you're paying a lot more in labor costs. And to me that doesn't make sense because you're paying people, a lot more to do the same amount of work. Sarah Eifermann: Yep. Right productivity is dropped. Trudi Cowan: Yeah, so start having a look at some of these things in your financials and looking at what areas did things do not go as you were expecting them to or didn't go as well as they did in the previous year. And look, we acknowledge that it's been a COVID year, it's been a super weird year and people's financials are probably going to look a little bit different. Sarah Eifermann: This will be the second year of different financials that are right so if you need those financials to do things like borrow money. You need to be having a look at this stuff. Trudi Cowan: Yeah. On the flip side, did your year go well, Sarah Eifermann: 100 percent, always got to celebrate the wins. Trudi Cowan: Yes, it's been a COVID you, but you might have still done some good things right, you might have taken on your first employee, okay well how is that reflected in your financials and how has that impacted your performance? Sarah Eifermann: How is it going to impact you moving forward. Trudi Cowan: Yep. And your revenue may have increased. Yes, but maybe it wasn't as much as you thought, but if it's increased that still wins, winning, right. Or maybe there have been other things throughout the year that aren't necessarily just financial so have you launched a new product, or a new offering, and has that done really well or being well received. Sarah Eifermann: So have you changed the behavior within your staff, your culture, or yourself. Trudi Cowan: Yeah, so do more of that stuff. Sarah Eifermann: So it's really important to reflect back on the year gone, and consider all of those things financial and non-financial that happened within your business the good the bad Sarah Eifermann: And the ugly. Trudi Cowan: And why did those things happen and if there were negative things how do we fix it, and if there are positive things, how do we do more, yeah so make that even better in the coming year? Sarah Eifermann: Completely, so important. Trudi Cowan: Really, really important. Sarah Eifermann: Don't leave it till March next year to do it do it this month, this week. Trudi Cowan: Do it now. So once we've got a handle on what happened in the past, let's look to the future. I'm an accountant so I like to do a financial budget. What do I think my revenue is going to be for the year. Can I forecast and increase and if so, how much and when is that likely to occur. And what are my expenses going to look like? Again Have things changed in your business, have you just taken a loan. Later in the year so let's forecast those payments into your budget, Sarah Eifermann: Because they may not be in your current or finished year yes exactly what I'm looking for. Trudi Cowan: Last financial year. Sarah Eifermann: You know figures. If you've just bought a new car at the end of the financial year to get your depreciation, the lease repayments or the loan repayments on that will not be demonstrated in the previous year, so you got to factor those things in. Trudi Cowan: Are you going to have staffing changes, we just spoke about the fact that minimum wages have gone up as high as a super, so those costs are going to increase for a lot of people so that needs to be reflected in your financial budget, as well as if you do have plans to put on a new employee, and maybe you don't have plans to put them on until January, but you can still reflect that in your budget, and as part of factoring that in. Sarah Eifermann: You've also got to factor the cost into all their other, leave entitlements, as well, it's not just their pay their annual wages Trudi Cowan: The long service leaves, all those sorts of things as well. So, financial budget for me is important, and getting that in, into my software so that I can compare it on a real-time basis with my current figures. Sarah Eifermann: Yes, because a lot of the systems now allow you to do that they have, they put both in there and see how you’re tracking, which makes you more accountable. Trudi Cowan: Exactly right. We love accountability here Sarah Eifermann: Yes, so important, Trudi Cowan: Look at their financials, we then do well Sarah's favorite things. Look at our business plan. And as we've discussed before, this doesn't have to be a physical written document. Sarah Eifermann: I don't do one every year. Do one every couple of years and in my head, at this time of year I'm crunching the numbers, probably, and working out what move I have to make and how am I going to make that work, and are you I'm going to do that so I'm going to do this about factoring that, so it doesn't have to be formally on paper. Trudi Cowan: No but let's review, what's the plan for the year what are things that we need to look at for the year, have we looked at expiration dates on our loans or debt financing. Yeah, are the contracts still current they go expire this year and we need to factor in that. By January, we need to have to refinance Sarah Eifermann: Or paid out the balloon seeing you don’t have cash available to do that. Look at, do we need to buy new assets so therefore got new funding that we need to be looking at. And look, if you do want to do this on paper, and you, really prefer that method but you don't know where to start, I have a business success map and an action plan that you can download off my website, it's not very expensive, but I think it's $29 or you can buy the bundle for 69 $59, which has all of the three it has the traditional business plan in it, and my cash flow as well so if you're not using software that gives you the cash flow projections, they're all there, and I really recommend for the once-off price just go and get it and you can just use it every year. Yep, to keep yourself accountable keep yourself on track and make sure you're driving to Sydney, not Adelaide. Trudi Cowan: But also, when we're looking at the business plan and reviewing your plan for the coming year, it's it really is that brought up the pace, around, are we launching any new products or services this year are our staffing levels currently appropriate or like too high or too low, and how do we fix that within the next coming period. Is my website now five years old and out of date and really needs, what needs maintenance or refresh what needs some maintenance where it's not strictly about how much profit are you making on one of those strict expenses, have a look at that broader picture of your business, Sarah Eifermann: And whether it needs any Botox Trudi Cowan: Does it need some Botox, what do we want it to look like in 12 months. And why do you want to be able to sit there in 12 months and say, yep, I did? I've done this and I’ve done this. Sarah Eifermann: Who doesn’t like a list that they can tick [crosstalking11:17] boxes or swipe it off. Trudi Cowan: So have a look at that take a step back and have a look at that broader picture and build that all into the business plan for the coming year. Sarah Eifermann: Yeah, FY 22 geez it came around quick, didn’t it? Trudi Cowan: I'm still writing the FY 20, struggle getting to 22. Sarah Eifermann: Well you lost a year in the COVID. COVID-19 and we're talking about the financial year 22 Wow. And then finally, this one sounds pretty good. Trudi Cowan: Employee performance, Sarah Eifermann: No we already talked about that. Trudi Cowan: No we didn’t. Sarah Eifermann: Well, I just want to plan the Christmas party. Trudi Cowan: I know you want to plan the Christmas party. But before we get to the Christmas party. If you've got employees. Have you thought about their performance, do you do regular performance reviews? Do you have a process for pay raises or bonuses? Sarah Eifermann: We know in the corporate world, this just kind of happened and built into their systems and processes, but in the smaller business space, unless it's been, by design created it's not going to happen so it's so important. You have the biggest commodity crisis as we have of our age is keeping and maintaining good staff. This is one of the things that you can do as a business owner to facilitate that within your own business, for your own benefit because the hiring process is cumbersome and clunky, and expensive. So, what are the grass on your side of the fence? Now, by ensuring that you're paying your employees the right, pay for what they're doing. Yep. And it's commensurate for the time and energy and work that's involved, moving forward, depending on what your business is doing moving forward. So if you're projecting a stellar year, and you have the capacity within your cash flow office and bonuses, yet based on performance, they don't need to be huge. Maybe it's $1,000 paid at the end of each quarter. Maybe it's $250 paid at the end of each quarter, whatever works for you within your business. Yeah. Have a look at your options. Trudi Cowan: And most employees like to have some knowledge around how they are performing and tracking, and do they have a set of KPIs or set criteria that they meant to achieve, and education standards, right. Are there any is there any work that they need to do to upskill. Has anyone ever sat them down and told them that yes, you're doing a good job or you're doing a really great job, but we'd really love it if you also could work on these things now, you know if you don't tell your staff that they don't know how they're tracking and they probably just assuming that they're doing fine. Yeah, so it is important to have those conversations about the good and the bad. Yeah. To ensure your staff knows how they’re doing. Sarah Eifermann: Now can we plan the Christmas party. Trudi Cowan: Now you can plan the Christmas party. Sarah Eifermann: That doesn't even need to be a Christmas party guys if you had not done anything with your team to build team cohesion. Well, develop the culture of your organization. Trudi Cowan: And it's been a really difficult year to get out. So I'm willing to bet that a lot of people haven't really had team lunches and things in the same way that they used to. Sarah Eifermann: But even the team activity, whether it's a, maybe not a panic room. Given the year we've had, but I don't know do something as a team go and do an adventure, build the teamwork skills up, build the cohesion between groups, especially because in a lot of instances now we're working from home and we're not getting that warm fuzzy vibe of working together and feeling like they're part of something. Make them feel like they're part of something, and that they're valued. And it also Trudi Cowan: Besides who doesn’t love a free lunch. Sarah Eifermann: Everyone, I actually don't know, a person that doesn't love a free lunch would be a strange person. I don't know if we could be friends. Trudi Cowan: Now I'm going to challenge your memory, Sarah. Sarah Eifermann: Oh-oh, Trudi Cowan: So another thing that's worthwhile doing on the new financial year, six months ago we did an episode about your Word of the Year. Do you remember what it was? Sarah Eifermann: My word of the year was communication/ Trudi Cowan: And how are you tracking to that? Sarah Eifermann: Conscious communication I know I think about it quite regularly. Yes, I do. Trudi Cowan: And do you think you're working well towards that word. Sarah Eifermann: I think I am whether other people around me think I am. Is a completely different issue, right? Trudi Cowan: My point is though that if you did pick a word of the year or you did set a goal around the first of January. 30 June is a great time to, Sarah Eifermann: Yeah, we're halfway there. Trudi Cowan: Yeah, we're halfway through the calendar year so pull those goals, and words and things back out and check in to them. Sarah Eifermann: What was yours? Trudi Cowan: I'm pretty sure it was balanced, Sarah Eifermann: It was balanced. Clearly, my memory is better than yours. Trudi Cowan: And I'm doing better. Sarah Eifermann: You are actually doing a lot better. Yeah, absolutely. Yeah, what was your Word of the Year people listening to? Did you have one? Trudi Cowan: Can you remember what it is? Sarah Eifermann: Conscious communication for me. Trudi Cowan: So, hopefully, you did have a little celebration at the end of the financial year, even if it was just yourself and a glass of champagne. Sarah Eifermann: I was being felicitous before. The reason that I think especially in the financial services industries is that we try and celebrate the end of financial years because the lead-in is so stressful and full-on and crazy that you just had to take a couple of hours out. Trudi Cowan: Hours? A couple of days. Sarah Eifermann: Okay, well, a soiree is only a couple of hours. And truly just lunch FYI. Trudi Cowan: So, I’ll have a couple of days to myself before the new financial year kicks in. Sarah Eifermann: Yes, you will, you will, I usually take holidays at this time of the year. For that reason, just to sit and decompress and reset for the year ahead. Yeah, I have taken holidays assuming that I made it into New South Wales for the recording time of this podcast. Trudi Cowan: I’ll let you know. So hopefully this has been useful for you to reflect on. Sarah Eifermann: Yeah, it's a great topic for this time of the year. Trudi Cowan: Do some planning for the new financial year. And if you're willing to share what some of your plans or goals or highlights for the coming year or even some of your highlights of the year gone by. Yeah, has been, we'd love to hear. Sarah Eifermann: Tag us on Insta, we'd love to hear. Absolutely, absolutely. Already, well, happy financial year 2022. Trudi Cowan: Happy end of the financial year, Sarah Eifermann: 2021. It’s the new financial year of 2022. Trudi Cowan: It is the new financial year. Looking forward to it. Sarah Eifermann: It should be a good one. Trudi Cowan: It will be a good one. Sarah Eifermann: And we'll leave it at that. You've been listening to Financial FOFU with Sarah Eifermann. Trudi Cowan: And Trudi Cowan.———————-
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