We know that EOFY is a hectic time for founders and finance teams. Between reporting, reconciliations and prepping for tax returns, many teams can lose sight of the bigger picture.
But thinking strategically and planning ahead are key to making smarter, proactive decisions about your business.
To help you avoid the most common EOFY mistakes, beat the ‘too busy’ narrative and prioritise innovation in FY 2023, we’ve called on our Customer Operations Manager, Matt Rowan to share his cheat sheet for a seamless, stress-free EOFY.
The biggest EOFY mistake to avoid
Are you guilty of saying you’re ‘too busy’ to work on your business during the busy EOFY season? You’re not alone. In fact, Matt points to this as the biggest mistake founders and finance teams make ahead of June 30.
“The biggest risk at this time of year is we just kind of accept that this is how it has always been, and this is how it's always going to be. I think that's kind of like the biggest mistake that tends to be made,” reveals Matt.
Obviously, there’s a stack of tasks that need to be done, from tax reporting to navigating new changes from the ATO. But Matt cautions against falling into the ‘too busy’ narrative, which can convince us that we’ll never have time to step back and see the bigger picture.
Instead, Matt encourages teams to dedicate even just 10-20% of their time to work on how they’re doing things, not just doing the actual work of expense management, reports and reconciliations.
How to increase your visibility through tech
This leads to Matt’s next tip for finance teams and founders ahead of EOFY: make sure you’ve got the right tech stack in place to help you make informed decisions.
“You need visibility to make good decisions,” reveals Matt. “If you haven't got the systems or tech in place that allows you to have visibility, then you'll always be at the mercy of wondering, ‘would I have made a different choice if I'd had more visibility?”.
By having the right tools and leveraging tech to the fullest extent, you’ll be able to save time and ultimately money in the year ahead. But, Matt is quick to warn against buying every tech solution out there, as you want to avoid buying reductant subscriptions that never get implemented.
Instead, it’s important to pinpoint what tools will add the most value based on your business’s needs. That starts by reviewing your processes and identifying which solutions will solve your problems or help your team work more efficiently.
As a starting point, your finance tech stack should include solutions across these four pillars:
💸 Accountants payable
💰 Accounts receivable
📝 A general ledger
📊 Reporting
“It’s about finding what applications and platforms are going to fit your business best. Once you’ve got these foundational elements sorted, you can start laying on top with additional tech that gives you better visibility and control over certain areas in your business,” Matt explains.
Why resilience planning needs to be a non-negotiable
As we look ahead to FY 2023, we know economic uncertainty is going to feature heavily in business decision-making. That’s why Matt points to resilience planning as one of the most powerful areas of investment for founders and finance teams.
Over the past few years, we’ve seen what can happen if we don’t build a reserve into our business. When lockdowns first hit in 2020, those businesses that didn’t have enough cash in the bank to withstand a month or more without trade likely went into scarcity mode (a fight or flight response).
“We can make really good short term decisions, but we don’t tend to make the best long-term decisions in scarcity mode,” explains Matt.
That means knowing how much cash you’ve got in reserve, how much cash you need to operate and having access to functional credit to capitalise on new opportunities. Plus, you need to know what expenses you can cut down at short notice to ride out periods of uncertainty.
The other tension Matt highlights are the need for a cash reserve and the potential opportunity cost for every dollar you’re not spending on the business. Matt often sees businesses not wanting to have money in the bank because they want to invest it back into the business.
“But what they’re not realising is by having a bit of a cash reserve, you can prevent your business from getting into a scarcity mindset,” reveals Matt.
It’s all about giving your business a longer runway to make smart long-term decisions (without immediate financial pressure). Matt’s tip? Aim for three months of operating expenses in your cash reserve.
When it comes to setting your business up for success in FY 2023, having the tech and cash reserve in place to make informed, proactive decisions is what will enable your business to be financially resilient. By putting the work in now to review your processes, automate what you can and save up a cash buffer, you can put your business in the best position to succeed and innovate in the year to come.
