by Malcolm Simister
Most of us want to get 2020 over with as quickly as possible and so it should be with your business’s financial year end. Close the year fast and move on, don’t dwell on the past.
Whether your business’s year end is 31 December or any other date (in Australia it’s usually 30 June), last year is gone, finished, done with, there’s nothing more you can do about it, so finish it off and concentrate on the new year.
Smart businesses do this. Within a few days of their year end they’ve closed their books, completed their annual report and focus wholly on the future. It astonishes me that some businesses take weeks, months even, to wrap things up. It usually means they’re not very well organised and that costs.
It costs in finance people’s time stuffing around with the past instead of helping business managers look forward; it costs in diverting managers’ attention, not least wondering whether they’ll get their bonuses; and it costs in making decisions about last year’s results, which in the end is window dressing, instead of deciding about this year’s real money.
It’s not that difficult to close fast. It requires efficient processes, reasonable systems to run them and business managers and finance people being on the ball, things every business should have anyway. Often, how fast a business can produce its annual report is a sign of how well managed it is overall.
Reputedly, the best listed companies close their year end in one week, annual report done and dusted. If they can do it, so can you.
So, get the old financial year over with and move on. Just like most of us want to do with calendar 2020.
Happy New Year. Here’s hoping for a good 2021.