A new financial year is a time for taking opportunities. For you it may bring the chance to wipe the 2021-2022 slate clean and prepare for the year ahead.
With rising cost of living pressures and continual delays in supply chains, now is an important time to review your finances and make savings where possible.
Below are some tips for making this new financial year the best it can be.
Businesses
- CASH FLOW – Are profits translated into cash in a timely manner? If not, have you reviewed your debtor collections? Slow debtor collections have a knock-on effect to cash flow and need reviewing regularly. Technology exists to assist with debt collection management and can make a worthwhile difference to the collectability of your debtors.
- SUPPLY CHAIN DELAYS – If you are encountering supply chain delays, have you investigated alternative suppliers closer to home?
- FINANCING – Have you reviewed your current financing arrangements to determine if existing debts can be consolidated or whether better terms are available?
- INTEREST RATES – Have you locked in the lowest terms possible for your business funding requirements, given the current interest rate increases that are expected over the next 2-3 years.
- REVIEW OF MARGINS – It is unlikely that businesses can absorb all the cost increases that are currently being seen. Consequently you will need to review your pricing to determine whether your invoicing needs to increase.
- BUDGETS – Have you reviewed your financials for the 2021-2022 financial year and prepared a budget for the 2023 year ahead? These budgets should take into account the increased costs of doing business that are expected to continue for the next 12 months – costs regarding fuel, building materials, electricity etc. Preparing a budget will greatly assist in determining whether your pricing for customers needs to change for the year ahead.
Individuals
As with any business, families are also experiencing the current cost of living squeeze. Below are some tips that could assist with your home finances.
- INTEREST RATES – If you are currently on a variable rate home loan, you may like to investigate switching or partly switching to a fixed rate loan, if the interest rates are still reasonable. Where possible on a variable home loan, continue to make more than the minimum repayments to keep a buffer in hand for future expected interest rate rises.
- LOAN CONSOLIDATION – If you have personal loans or multiple credit cards, you may like to look at consolidating these debts into one facility in order to reduce the monthly repayments that may be required from multiple facilities.
- BUDGETS – It is prudent to sit down and prepare your household budget to obtain a better idea of what is coming in and going out each month. Budgets allow you to see where areas of spending could be reduced in order to alleviate some of the pressures pushing in on your household. Although budgets are considered ‘boring’, they are fundamental to family finances. They can also bring to light where any excess funds could be directed in order to build wealth. For example, this may involve a savings plan or extra contributions to superannuation.
As with anything that is worth doing, it takes time and effort to review your business and personal finances, however the outcome is always worth it in the long run. There are lots of tools available to assist with budget preparation and cash flow forecasting, so please speak to your local Accru advisor to discuss your specific needs.
