Many Australian small and medium-sized businesses (SMBs) have just completed one of the most challenging financial years on record.
They are now working their way through the end of financial year process and looking toward both the challenges and opportunities that the new financial year will bring.
During the past financial year, many SMBs faced the shock of needing to shut down operations for a period or realign their business models to adapt during COVID-19 restrictions. As restrictions eased, most SMBs have experienced permanent changes to some degree in their business while continuing to operate in a highly volatile economic environment. This is in addition to navigating the complexities of JobKeeper and JobMaker as well as other government business support initiatives that were deployed during the 2020-21 financial year.
For these reasons, the 2020-21 end-of-financial-year accounting process is likely to be much more time consuming and complex for many SMBs than previous financial years.
SAP Concur has developed a checklist to help Australian SMBs more easily navigate the end of the 2020-21 financial year and gain a strong start to the new financial year.
1. Review recordkeeping tasks
Businesses should check their financial records closely against what is required by the Australian Taxation Office (ATO). For example, as a minimum, all businesses need a summary of income and expenses including employee travel and expense payments. Businesses also need to conduct a stocktake to show current assets, and provide goods and services tax (GST), superannuation, and pay as you go (PAYG) tax withholding statements. SMBs that claimed JobKeeper during the financial year will need to clearly demonstrate how these payments were applied within the business.
2. Ensure financial information complies with current tax requirements
Business owners and managers are responsible for ensuring their end-of-year financial statements comply with current tax requirements including changes that may have occurred within the financial year. SMBs that have automated recordkeeping systems should have the latest ATO requirements built into the system. If they use manual accounting processes or outdated systems, it can take SMBs significant time and cost to update their records to comply.
3. Be aware of tax-time scams that target SMBs
With more people now working from home, organisations are increasingly targeted by telephone and online scams through means such as phishing emails. SMBs are particularly vulnerable to tax-refund or tax-owed scams. If a business receives a suspected scam email or phone call, it’s important to check with the ATO before acting. Recent scams targeting SMBs have focused on areas such as myGov, tax file numbers and JobKeeper.
4. Review the business’s overall financial and business position
The end of financial year is the perfect time to review the business’s financial position and reset finances for the coming year. It’s also a good time to reset the business and marketing plans, business structure, and insurances so they remain relevant in the new financial year. This is particularly crucial as Australia enters a year of continued business disruption, which means ideally plans should focus on supporting ongoing business resilience and agility.
5. Determine where automation can improve efficiencies and business security
Automation can improve efficiencies, reduce cost, support regulatory compliance, and improve the security of business data, particularly when it comes to employee expenditure. For example, automated invoicing, travel, and expense management tools can improve data security while reducing the cost and time it takes the business to complete its end-of-financial-year reporting and business activity statements.
Government agencies and large enterprises have recognised the cost efficiencies, compliance, and security benefits that automation provides. These same automated tools are also now available to SMBs. For example, government agencies are now adopting automated processes such as e-invoicing, which is beneficial for SMBs that regularly do business with government because it speeds up invoice processing times for faster invoice payments.
Secure, cloud-based automation in key business areas such as invoicing and travel and expense management are increasingly helping businesses of all sizes improve the time and cost it takes for expense processing and financial reporting, including automating compliance, so the business stays up to date with tax and other regulatory changes.
At the same time, automation provides the security, scalability, and agility that SMBs need to operate in the new business environment. In addition to streamlining financial reporting, automated financial tools are delivering accurate, real-time data insights that let SMBs react to rapid market changes faster. These tools are available and affordable for any business regardless of size.
Cloud-based tools are flexible enough to cater for many different business and industry needs, so it’s not a question of whether a business should adopt automation but where automation can be applied to improve business performance. In the digital world, moving to automated financial processes simply makes sound business sense.