This article was contributed by Bernadine Racoma who works as a Content Manager at WorkSmartr.com.
The finance departments of businesses will often go into overdrive as the end of the financial year approaches. It can be a stressful time; mistakes can be very costly and can do the business irreparable harm.
However, it’s important to approach this process in a calm and collected way. Instead of scrambling with last-minute invoices and hastily reminding yourself of the difference between current vs non current assets, get a head start and ensure you’ve got everything prepared well in advance. Let’s find out more.
What is the End of the Financial Year?
The end of the financial year, also known as the fiscal year, is when all of a business’s financial records, such as revenues, expenses, assets, incomes, and equity, are calculated and compiled into an end-of-year financial statement, or annual report. This statement is for the purpose of external auditing and for the benefit of investors and shareholders and is stored within the business’s official records.
End of Financial Year Difficulties
As we mentioned, the end of the financial year can be a trying time. Accountants and finance teams will be working diligently to ensure everything is completed accurately and on time.
However, this is easier said than done. Even small businesses can have huge volumes of financial information. This must all be sorted through, organized, and analyzed to ensure everything is accounted for and above board. This can be a tough job, as there could be missing documents from months ago that are nearly impossible to locate, and simple human error and communication issues can result in big problems.
Despite the difficulties faced by finance teams, completing end-of-year processes is critical, as not filing things like an annual report can have severe consequences.
What is in an Annual Report?
If you are a brand-new business and you’re approaching your very first financial year-end, the thought of completing and filing an annual report is no doubt filling you with dread. However, while they can be complex, there’s nothing to be afraid of, and learning what is contained within an annual report can give you a good idea of what to expect.
An annual report will detail a business’s profits and losses, available cash and funds, earning retention, operating expenses, and the current financial state of the company. In addition, annual reports will also contain future forecasts and plans for progression.
When Should You Start Preparing Financial Documents?
When it comes to getting things ready for the end of the financial year, there’s no time like the present. This doesn’t mean you have to have everything good to go several months in advance, that would be both impractical and impossible. Instead, keep on top of your finances and ensure everything is well organized. What this will mean is that you’ll have all the relevant information to hand when you need it, and the end-of-year report will be less stressful and more accurate.
Whatever you do, don’t leave end-of-year financial reporting to the last minute. Stay on top of your finances throughout the year and you’ll make the process much more straightforward.
About the author
Bernadine Racoma is a Content Manager of WorkSmartr.com. Her long experience in an international development institution and extensive travels have provided her with a wealth of knowledge and insights to cultural diversity. She writes to inform, engage, and share the idea of the Internet being a useful platform for communicating, knowledge sharing, educating, and entertaining.