December year end? Well, Happy New Financial Year!
If you’re one of those organisations that closed off your 2018 financial year at the end of December, no doubt right now you’ll be busy checking your data, perhaps finalising a stocktake, reconciling your accounts and preparing your financial year end reports, ensuring employee entitlements are up to date and the Balance Sheet reflects your position correctly.
You’ll also be making any final adjustments to your budgets for the year ahead.
There’s an awful lot to be done at year-end and while you might have a very long to do list, keep in mind that this is a good time to check on the overall financial health of your organisation.
Financial health check
With all of the numbers finalised and prepared for the annual statements, it’s a perfect opportunity to look in detail at the overall annual snapshot and compare it to past years to help you to identify trends, areas of risk or other significant business issues.
You might identify that you have too many suppliers across the board or in particular categories, or that you have had only one for a long time – are they still competitive?
You might see that growth in employment costs has outstripped growth in income – have you reviewed the structure recently or just added people to fill gaps? How has income been trending – increasing, remaining static or declining over time? If it hasn’t been growing, what can you do to reverse that?
This groundwork is good preparation for your forecasting for the year ahead and a double-check that new year budgets are as accurate as possible.
Look at your funding sources versus your cost to deliver. Is your income adequate for your needs? Funding from trusts and grants, government contracts and even private benefactors is often not only finite, but restrictive. It’s helpful to look at these and any tied obligations annually, as well as consider whether there’s room to potentially renegotiate, or whether you need to consider finding other, more flexible funding sources.
While many organisations are just grateful to have funding and don’t particularly want to tamper with it, it’s important to conduct an impartial review from time to time. Sponsorship contracts that have been in place for several years might no longer suit your needs. Are you, for example, contracted to produce fundraising merchandise with sponsor logos? Does this still suit your purpose? Is it a worthwhile revenue stream?
Alternatively, is there a specific upcoming organisational project that could do with a fiscal boost? These are all good questions to ask while you have the full annual data in front of you to work with.
How’s the annual report looking?
When the detailed financial reporting is finalised, it’s time to think about the annual report – not just the numbers, but the story they tell and how you communicate this story to your stakeholders. While there are clear requirements for the presentation of the annual financial statements, there are no rules on how you present your story in your annual report document. This is your chance to showcase your strong, responsible financial management, giving your donors, funders, members and clients confidence that you are sensible fiscal custodians.
You may have new activities or information requirements for the new year, so it may be worthwhile talking to your leadership team and budget-holders about what type of reporting they want and need as the new financial year starts.
It’s important to strike a balance between transparency, without overloading people with data that they don’t understand (or read!). Program managers and budget holders need to know how what they do is impacting the bottom line, but too much information can overwhelm, with the important information hidden amongst the detail.
Simplicity and clarity is the aim, and customised reporting and online access to it allows everyone access to the right information at the right time, so they can manage their financial responsibilities to contribute to the organisation’s overall success.
Always de-brief the process
Finally, when everything is done, get the team together and work through the whole process of your year-end close, audit and FYE reporting. How long did it take? What went well, what didn’t? What can you do better next year?
If you haven’t already made the shift to cloud-based accounting software, it might be a worthwhile time to consider it – it takes a lot of the time and effort out of bookkeeping, and really streamlines reporting at any time – you don’t want to be fighting with spreadsheet reports when you have deadline pressures.
If we can help, then contact us.