A Guide for 30 June Tax Preparation
As businesses grind back into action following Covid-19 restrictions and a new financial year looms, it’s a good to reset the business’ vision for the future based on a thorough review of its financial position.
Understanding how your business performs goes a long way to having a successful business model, and it shouldn’t be a guessing game. Businesses must assess all the data available to know where the financials stand and how the business will perform under various scenarios.
This is where Three-Way Cash-flow Forecasting can assist. Think of it as a full financial check-up, combining three key financial reports – Profit and Loss (P&L), Balance Sheet and Cash-flow - together into one neat package. It then gives these reports greater credibility, allowing you to predict your future cash position and financial health of your business.
Louisa Andreucci, an Associate in Hood Sweeney Accounting & Business Advisory+ says it’s a good time for businesses to consider three-way forecasting because it can assist with setting a realistic budget and goals for the next 12 months.
“Reviewing financial data and resetting goals on the back of Covid-19 and the uncertainty that the global pandemic has brought for the future is really important right now,” said Louisa.
She said ”businesses need to ensure that their forward-looking strategies are aligned to their vision and to the current market outlook.”
Along with helping to predict outcomes, three-way forecasting can also assist with:
- Applying for bank or investor finance. Banks, in particular, will use three-way forecasting as a tool to gauge a business’ future performance and lending ability
- Due diligence when considering business purchases
- Considering potential new business scenarios, including the positive and/or negative results
- Negotiating payment arrangements with the Australian Tax Office or other creditors.
Hood Sweeney offers three-way forecasting incorporating quarterly reporting to suit the needs of an individual business, and a quarterly catch-up to assess the results, figure out what worked and what didn’t in the quarter, and set or reset the plan for the future.
Three-way modelling is invaluable as it gives business owners first-hand insight into the impact of decisions through forecasts that detail their future impacts. These impacts can be positive or negative, allowing you to firm or change your decision based on the anticipated outcome.
Not only can three-way cash-flow forecasting help improve the level of financial management and control within a business, but figures may also be uploaded into any bookkeeping software to give comparisons of actual to budget. Any deviation from budgeted figures will be flagged, allowing you to intervene and take action before it becomes an issue.
If your business could benefit from three-way forecasting and an overall health check and reset for the next 12 months, ring Hood Sweeney Accounting & Business Advisory+ on 1300 764 200, or email and we will be in touch.
+Hood Sweeney Accounting & Business Advisory, ABN 30 007 696 595, AFS License No. 485569