Taking the stress out of financial year end

By Steven Cohen, MD of Sage Pastel.

It’s that time of year again and if you’re facing the duanting task of rummaging through dusty shoe boxes of receipts and trying to remember what goods and services you bought, then we need to have a little talk.
The task of closing the previous financial year can be stressful and time consuming. To top it all, any mistakes made in wrapping up the financial year come at a cost; whether as taxes, penalties or even a tarnished reputation.

If you don’t want to be in the same position this time next year (doing last minute preparations), you should start March 2013 off with a good piece of software. The truth is that very few entrepreneurs are natural administrators. We’re creative by nature and I understand how easy it is to get so absorbed in innovative ideas that day to day financial management is neglected until the last minute. I’m not saying that you need financial savvy to be a successful entrepreneur, but you must teach yourself good habits and you really should equip yourself with tools that do most of the work for you

I’m not saying it has to be Sage Pastel. I don’t mind what software you use, as long as you start managing your business from a position of financial strength. At its most basic I’m talking about a package that automates the collection and allocation of information. Choose a program that guides you through the process, spend one day a month doing what you’ve got to do, and then your year-end can be as simple as pushing a button. The proviso is that your basic monthly information is recorded correctly and kept up to date.

So, whether you have a software package or not, here are some top tips

Work to a system: It’s really important to work to a system and do one job at a time, finishing it completely before moving on to the next. This eliminates a lot of confusion and stress.

Back up everything: This is a lot easier if you are using a software package and online accounting is backed up automatically. Either way, you have to keep a record of all transactions before you make any adjustments because if, for any reason, your year end procedures aren’t completed correctly, you can start again. If you’re backing up to CD or external hard drive, it is advisable to keep that back up off site – the risk of fire, theft or even human error could result in the loss of that valuable information. Online backup facilities are also now available and Pastel Iron is a cost effective online data backup service for SMEs (www.pastelirontree.co.za).

Sound reporting: We also recommend that our clients print out their key reports before and after running their year end to ensure that the process has been successful. I think the most important reports to consider are the trial balance, balance sheet, income statement, detailed ledger and all age analysis reports. Having these records is also useful as supporting evidence for the auditor; in fact it is always worth asking your accountant or auditor for a comprehensive list of requirements.

Stock take: It is also critical to do a stock take to ensure that the theoretical count (stock count on the system) is the same as the physical count (the manual process of counting the stock items on hand). Should there be differences, you need to make the necessary adjustments to reflect the quantities as you capture them.

Finally, work through all account balances to ensure that they are correct – you can also write off bad debts as you go. This is where having a system is so important; work alphabetically or from smallest to largest account to ensure that none are missed or duplicated.

Of course having the right accounting software goes a long way in making these jobs considerably easier and take time to choose a program that has the right amount of technology for your needs. If you’re a fledgling business you don’t want to end up with a program that is too powerful because it will force you into processes that are unnecessarily time-consuming and then you’ll end up collecting receipts in shoe boxes again. If you’re a medium sized business, be careful not to end up with technology that requires technical or analytical skills you don’t have. You simply want to be able to automate tasks like invoicing, payments and bank recons, and you want to be able to close off every month. The time will come for applications that help with customer relationship management (CRM), business Intelligence (BI), and enterprise resource planning (ERP). I wouldn’t be doing my job right if I didn’t advise you to seriously consider an accounting solution in the cloud – this is the very near future.

For more information:

Steven Cohen, managing director, Pastel Accounting on 011 304 3101 or steven.cohen@pastel.com

Media enquiries:

Jennifer Kann, Lingo Communications 083 455 3289 or jennifer@lingocom.co.za

About Sage Pastel Accounting

Sage Pastel Accounting is South Africa's leading developer of accounting, payroll and business management software for the small, medium and large enterprise market. Since inception, Sage Pastel has developed an in-depth knowledge and understanding of the industry, establishing itself as a market leader and the preferred choice of South African business. The numbers speak for themselves as thousands of businesses use Sage Pastel Accounting to run their businesses and trust Sage Pastel to help them achieve their business ambitions.

About Sage

Softline was founded in 1988 by Ivan Epstein, Alan Osrin and Steven Cohen. The company was established during the formative years of the business software industry in South Africa, and soon became the leader in the provision of business software and services to small and medium sized companies. In 2003 Softline was acquired by UK based company The Sage Group plc. Softline officially changed to Sage in February 2013 to align with our parent company Sage Group plc. We continue to provide local expertise backed by the global Sage brand.

The Sage Group plc is a leading global provider of business management software to small and medium sized companies, creating greater freedom for them to succeed. Sage understands how and why each business is unique. We provide products and services that suit varying needs, are a pleasure to use and are secure and efficient. Formed in 1981, Sage was floated on the London Stock Exchange in 1989 and entered the FTSE 100 in 1999. Sage has over 6 million customers and more than 13,500 employees in 24 countries covering the UK & Ireland, mainland Europe, North America, South Africa, Australia, Asia and Brazil.
For further information please visit www.sagesouthafrica.co.za and www.sage.com