Preparing your cash flow for the End of the Financial Year (EOFY)
It’s crucial to begin the new financial year with a strong cash position to ensure your business’s ongoing success. This is especially important given the current economic environment, which includes high interest rates, inflation, and volatile operating conditions.
Tax considerations
As EOFY approaches, managing cash flow becomes critical, especially when considering tax-related issues. Firstly, you’ll need to plan for any additional GST and other taxes due in the new year. Secondly, you may require cash or financing to take advantage of available tax incentives. For instance, until 30 June 2024, eligible businesses can instantly deduct the full cost of selected assets costing less than $20,000 if they are used or installed by that date.
To optimize your tax position, consider pre-paying some expenses from the next financial year in this current financial year or ensuring unpaid invoices from customers are settled before EOFY.
Take control
If, like many businesses, delaying customer payments is not an option, now is the time to chase late payments to improve your EOFY cash flow. Consider offering incentives or discounts for early settlement of invoices. Additionally, you can enhance cash flow by optimizing supplier payment terms or converting slow-moving or obsolete stock into cash, such as through an EOFY sale. Monitoring debt levels and expenses closely is also crucial.
EOFY is also ideal for creating a cash flow forecast for the next 12 months and identifying potential challenges. Planning ahead for cash flow issues can help cushion financial setbacks, enabling you to navigate periods of low revenue or high expenses and invest in business growth. Remember, maintaining cash reserves can help you weather unexpected downturns.
Using external finance
Utilizing business finance is a viable way to ensure a strong start to the new financial year. In addition to traditional business loans, there are various tailored options available. For example, asset finance can help you acquire necessary assets for ongoing operations or growth without a large upfront cost. Invoice finance allows you to trade successfully without waiting for customer payments, while trade finance supports businesses trading with overseas partners.
If you are looking to finance equipment purchases to support your business growth, our team of equipment finance specialists can provide you with information and access to finance solutions.
Contact us today on 0429 494 641, So we can learn more about your needs and provide the right solution for you.
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DISCLAIMER: The above content is to provide general information and does not constitute financial, legal or other advice. This means that duties and requirements imposed on people who give financial advice do not apply to this content. For advice contact your accountant or legal advisor.