The first quarter of the new financial year is the perfect time to set up your organisation for success during the remainder of FY18 – it’s never too late to put plans in place! Here are some things to consider:
Review goals/targets
Consider revising your FY18 budget based on FY17 actual results. How have you tracked during the first quarter? If you don’t have detailed budgets, think about implementing a high level FY18 budget that includes the basics such as sales, cost of goods sold, selling expenses and employee expenses so you can arrive at a target profit before tax.
Take a fresh look at your customer and supplier relationships
Where applicable, review your customer contracts now and ensure you can meet their requirements or start negotiating revisions. Consider rebates, settlement discounts, payment terms and any pricing mechanisms.
Look again at your list of target prospects and work out a plan to build relationships with them to convert them into new customers in one-two years or more.
Review your supplier contracts and make sure you’re extracting value from your suppliers. This includes rebates, settlement discounts, freight arrangements and compliance with any key performance indicators (KPIs).
Do you need to build increased diversity into your supplier relationships so you’re not too heavily dependent on a small number of suppliers?
Working capital
All small to medium size enterprises need to convert profit to cash as fast as possible to re-invest in the business. Consider:
- reducing inventory levels: do you need to discount old inventory to move and free up working capital?
- collecting cash from your customers on a timely basis. Cashflow is frequently a problem for SMEs. How you can work more closely with your customers to ensure they pay you when you need them to?
- paying your suppliers on a reasonable time basis: if you pay suppliers early, could you still meet your obligations but pay them slightly later, to maintain good cashflow?
- don’t neglect meeting your statutory obligations (e.g. company tax, PAYE, payroll tax, FBT, GST and superannuation).
Employee management
- By now you should have met with your employees and assessed their performance – have you considered any bonus payable and pay rises?
- How will you retain your top performing employees? Good people are precious. Do you need to reassess career plans, incentives, promotions, or interesting opportunities to maintain their engagement?
- Have your staff needs for FY18 changed and how are you going to fulfil those needs?
- Do you need to manage under-performing employees to bring their performance up to the standard expected?
- Set goals for your team members that align with the overall goals/objectives/strategy of the whole organisation – try to have everyone working together to achieve the same outcomes for the business.
Shareholder management
- Do your shareholders expect a dividend?
- Is there sufficient cash to pay dividends and do you have franking credits?
- What do your shareholders expect from you in FY18 and how will you meet or exceed those expectations?
Managing statutory obligations:
- If your organisation needs an audit and you are behind in your planning, it is not too late to catch-up. Talk with your auditor and understand what they need your organisation to prepare to ensure the audit is as smooth as possible and communicate this to the relevant people in your organisation;
- Who will prepare your tax calculation and tax return and have you discussed any potential issues regarding tax treatment (e.g. tax depreciation, stock or debtor write-downs etc) with your tax adviser/agent?
Dana Bentley, Partner, KPMG Enterprise
