For many, the financial year end is just over a month away, and this can be a busy and stressful time as business owners juggle getting their financial ducks in a row along with business as usual.
Trees everywhere must be breathing a collective sigh of relief. It seems paperless systems - or ones that use less paper than in the days of old - are increasingly being embraced by business owners for handling their financial data.
That's one of the trends that's come through in the Your Business interviews I've done this week, questioning business owners about how they handle the end of financial year. For many, the financial year end is just over a month away, and this can be a busy and stressful time as business owners juggle getting their financial ducks in a row along with business as usual.
For Mark Hurley, managing director of Little Giant, March is one of the busiest months of the year at the creative digital agency as many of its clients' marketing teams push to spend the rest of their annual budgets before their own end of financial year.
"We just have to stay well organised financially throughout the year," says Hurley, "but we also bring on additional contract resource to cope with the influx and book out some solid time outside of the office - away from day-to-day distractions - to get our end of year requirements squared away."
Little Giant has a paperless finance department, relying on a mixture of some cloud-based software and office hardware like mobile phones and scanners to take care of business.
Since implementing the paperless system a couple of years ago, Hurley says the firm has seen a dramatic drop in the amount of time and resource they've needed to dedicate to end of financial year.
Another strong theme coming through - and no surprises here - is the less you put off dealing with financial matters, the easier they become. It's a point emphasised by Kerry Bradburn, owner of 16-year-old online floristry and gifting business Wild Poppies.
"The number one thing is don't wait until the end of the year. In the old days I used to wait until the end of the year and then start worrying about it, but now I'm always prepared," says Bradburn.
I think life as a business person is all about trying to do something this year better than you did it the year before, so even if you haven't been up to date this year, I'd say make a list of your pain points and come up with a process for targeting those next year.
"I think life as a business person is all about trying to do something this year better than you did it the year before, so even if you haven't been up to date this year, I'd say make a list of your pain points and come up with a process for targeting those next year."
Bradburn pays most bills by direct credit, and is a fan of making regular payments to cover costs throughout the year - including her accounting fees, which she pays monthly by direct debit.
Ali Davies, owner of the eponymous Ali Davies - The Fabric Queen business, emphasises another theme that came through strongly in the interviews: don't be afraid to call in the experts.
"If you find something difficult to do, don't walk away from it, because it won't go away! It only makes things harder," says Davies. "The IRD and your accountant are there to help and I've found the IRD to be really helpful - and they don't mind dumb questions."
Davies also uses the end of financial year period to look forward in her business, using the financial data she's gathered to set news goals and improve processes for the year ahead.
It's also worth remembering that not all businesses are working to the same end of financial year deadline. Doug Bailey is one of the founders of Hawke's Bay-based cider maker Edgebrook Cider, which opted for a different financial year end - 30 November - when the business was started in 2013.
"We did that so our financial year end is pretty much at the end of our natural cycle in the business," says Bailey. We harvest and purchase fruit in March or April to make cider in autumn. It then matures through the winter, we bottle it in spring and release it in early summer. So by 30 November we have pretty much got all of the next year's stock ready to go and have hopefully pretty much sold all of our current year's stock."
Mark Hurley, Little Giant
Can you tell me about your background in business?
I've had my own businesses for the past 13 years, starting my first company when I was 17 years old. My current business, Little Giant, is a creative digital agency that started three-and-a-half years ago, and now has 20 staff.
What are some of the things you do as a business owner to make your end of financial year period run smoothly?
We operate a paperless finance department, which really helps us to be as efficient as possible with our administration - including dealing with end of financial year. It also means all our financial documents are stored securely in the cloud.
We implemented this a couple of years ago, and since then we've seen a dramatic drop in the amount of time and resource we've had to dedicate to end of financial year. We've used a combination of cloud-based software - Xero, Google Drive and Entryless - along with some hardware like mobile phones and an office scanner to do this.
We use Google Drive to hold electronic copies of all our relevant financial documents like credit card receipts - which we upload using phone cameras - resident withholding tax certificates, bank statements, ACC invoices and company lease contracts, which we scan in using our office scanner.
Entryless is a plugin to Xero that automatically enters all bills as payables in Xero, and it cleverly scans an electronic copy of the bill against the entry for future reference from within Xero. Xero also allows us to easily reconcile bank transactions daily, code and pay expense claims as they happen, and regularly keep our financial records up to date to make sure they're well organised when it comes time to supply them to our accountants for end of financial year.
When it comes time for us to do our end of year filings, we just email our accountants, giving them access to all the relevant files in Google Drive - they have ongoing access to Xero. From there we typically get a single email of requests or clarifications from them. After that, our draft end of year financial filings are done.
One of the biggest challenges a lot of businesses face at this time of year is finding the time to get all their end of year accounts done on top of their regular workload. What's your story when it comes to that?
Our end of financial year falls during one of our busiest months, which is actually no coincidence. Our sales come from our clients' marketing budgets, so during March each year we typically get an influx of work from marketing departments that need to spend the rest of their annual budget before their own end of financial year.
So this can mean it's a really busy month here. We just have to stay well organised financially throughout the year, but we also bring on additional contract resource to cope with the influx and book out some solid time outside of the office - away from day-to-day distractions - to get our end of year requirements squared away.
What are three tips you'd like to share with other business owners about making the end of financial year process run smoothly?
I've used Xero across all my businesses and trusts for the last eight years, and I can't imagine running a business without it. If it's managed well throughout the year, Xero makes our end of financial year really easy for us and our accountants.
If you have a good cloud-based accounting software system like Xero, MYOB or Quickbooks then I think it's also important you run this software correctly month in, month out. Paying for a qualified bookkeeper for just a few hours each month helps you to organise your chart of accounts, accurately reconcile transactions, correctly apply credits and overpayments, and accurately assign assets and costs. Having your accounts well managed throughout the year will make your end of financial year pain free.
I'd also recommend using Google Drive or Dropbox - cloud-based file storage systems that allow you to store electronic copies of all your receipts, resident withholding tax certificates, bank statements, ACC invoices, lease contracts and the like. This means that they're securely stored in the cloud, can be accessed on any device at any time, and can be easily shared with your accountant at end of financial year.
