Whether your business’s fiscal year aligns with the calendar year or not, bringing it to a close can be stressful.
Depending on your industry and company structure, you may feel unprepared to tackle every component required to pull off a successful fiscal year closeout. Let’s look at some strategies to help you navigate this period while avoiding overwhelm.
We’ll review:
Whether you have a full accounting department or just one team member who takes care of bookkeeping, there are several things they won’t want to forget as you wrap up the fiscal year for your service business.
✳️ Create a system for recording expenses. Scattered receipts or endless photos saved on various phones won’t suffice when it’s time to reconcile accounts. Instead, build an efficient expense submission workflow that applies to your entire team. You may want to use an app that connects with your accounting software.
✳️ Send invoice reminders. When you’re getting close to the end of the year, you need every outstanding invoice paid. Set up automated email reminders to go out to clients whose payments are overdue. It also helps to ensure you’re writing thorough invoices that clients understand and will be more apt to pay right away.
✳️ Anticipate and pay any bills that overlap with year-end dates. For the same reason you want your clients to be paid up, it’s critical to make sure you don’t have any unpaid bills floating around. Your accounting team should check that every vendor, consultant or software account will be current at the time of a fiscal closeout. That means reviewing due dates two to three months in advance to ensure you’ll have the cash flow to satisfy any debts.
✳️ Consider additional labor costs that could arise before the end of the year. Will you be issuing any raises or bonuses to current employees or onboarding any new hires before your year ends? What’s changing next year? These items are easy to overlook, although labor costs account for up to 70% of business costs. Be sure your accounting team is aware of upcoming changes to your core employee pay and benefits.
✳️ Keep a centralized tally of business assets. Assets are just as important as expenses when it comes to the overall financial health of your business, but many people forget to keep track of them until a tax deadline pops up. Depending on your country, state and industry, tax laws regarding assets could vary. You won’t want to complicate your tax return process any further by waiting until the last minute to determine what counts as an asset this fiscal year.
As obvious as this advice may seem, it’s tempting to put off the accounting fundamentals until your year is coming to a close and you’re scrambling to gather all the paperwork your team needs. Thinking about the monotonous financial tasks far in advance, and finding ways to make them more efficient, can decrease the amount of time your employees spend on non-billable work.
While accounting may be your primary concern during a year-end review, it shouldn’t be the only area of focus for you and your leadership team.
Especially if the end of your fiscal year coincides with the holidays, business may naturally slow down. But that doesn’t mean your team’s productivity has to suffer. This period of time marked by more administrative work, and potentially less client work, can be an opportunity to step back and strategize about new and better ways of getting things done.
Why not:
A more productive team is often a happier team — as long as they’re equipped with the tools and support they need to prevent burnout. Making tweaks to your systems at the end of the year can give everyone the motivational boost they need to do higher-quality work with less effort.
A high-level review of operational decisions is also helpful at this time of year. Not only can aligning with your business strategy help you close out this year, but focusing on operations can help ensure that the next fiscal year end will be even more smooth.
The first operations-related category you’re likely to think about is budget. Certainly, there will be numbers that stand out in your annual reports and inspire you to cut costs or invest in something new. However, those decisions may not increase profits if you aren’t focused on one major factor in a modern-day business’s budget: technology.
You can’t make smart decisions about digital tool consolidation until you know where you stand with your current tech stack. Start by doing a thorough review of your unused or underutilized software. We recommend making this part of your annual fiscal closeout tasks, although it’s wise to perform a tech stack review even more often.
Setting your business up for a more profitable year could mean getting your team ready to adopt new tech, or it could mean paring down what you already have and tightening up workflows to match your streamlined platforms.
Despite your best planning, surprises could crop up during the fiscal year closeout period. Every business will encounter hard lessons, and perhaps that happened to your business this past year. But with the new aggregate data your team compiles during year-end accounting, you’ll be supported in pursuing a fresh start.
Once the books have been closed, use these new insights to revisit your business goals and stretch your leadership team’s creativity to solve problems.
The decisions you make now to stay on top of your business’s financial health, improve employee productivity and seek the best smart tech stack can do much more than just up your profits. They can improve employee retention and strengthen client relationships, too.
Closing out your fiscal year is much easier if you’ve stayed organized and efficient all year. Prep for the upcoming year with these cost and expense management strategies.
