Head of Accounting, Xero
Once the hangover from 'end of financial year' parties has cleared, many accountants will enjoy a lull before the storm. Businesses have closed their books, and individual taxpayers are waiting to receive their payment summaries by July 14. When they do, a huge wave of tax returns will hit.
Of course, bookkeepers and accountants who offer payroll services will remain busy straight through mid-July. They’re the ones generating the payment summaries. For them, we have step-by-step advice on closing out payroll for the financial year in Xero.
But for partners with a moment to catch their breath, here are few suggestions on how to use the new financial year wisely.
Engage with your client
Now is the time when most small businesses say, ‘Last year is out of the way. I want to think about the new year and how I can improve my business.’ It’s a great moment to catch them in the mindset for a new financial year resolution, and to tout your advisory services.
Some of their financial data is still quite fresh. If you're doing their tax returns for FY17, it’s only a few months old. Use the tax meeting as an opportunity to talk about the business going forward, not just the past.
Have the small-business owner look at how his business performed over the past 12 months, and how he can take the business to the next level in 2017-18. Targets are an important and sometimes overlooked aspect of running a small business. Setting them is a great way of giving the clients a reality check on operations and helping them stay focused and take control of the business’s direction for the year and beyond.
Be strategic in creating these targets. A vague goal like ‘increase my turnover’ is unlikely to yield results. Set smart, measurable and attainable goals, so the client can hold himself accountable, such as ‘grow my customer base by 20% in the next six months’.
Get your client acquainted with other key performance indicators that Xero can track. If it can be measured, it can be improved. Here are some of the most important financial metrics clients can monitor in Xero:
Net profit percentage
Show the client how to follow these monthly, check how they’re tracking against target and make required adjustments to help meet them.
And while you’re at it, reacquaint yourself with what your customers like about your service, and what areas they think can be improved. Arguably no one knows this better than regular customers who interact with you.
The new financial year is also a great time to tighten up your own accounting or bookkeeping practice.
Perhaps you want to branch out into higher-value clients. It might be that your skillset is actually better suited to a different type of customer than the ones you’re serving.
That’s where the Explorer feature in Xero HQ comes in. It can drill down into your client list, revealing which types of customers and industries are your mainstay -- and which ones should be. Do you have the right skillset for your existing and prospective clients? Are you connecting them to the best technology in Xero? Do you promote your services to this industry?
Say for example you have 10 retail clients. Three of them are using Deputy, a cloud-based rostering and timesheet app that integrates with Xero. It saves your clients hours in payroll processing each week by syncing staff, pay rates and time off, and it takes care of payroll and time billing. Perhaps you should get the other seven clients on Deputy as well, and get the efficiencies across all 10. The remaining seven will likely have a good experience and be grateful to you as an advisor. Explorer can help you spot those opportunities.
Maybe a large number of your higher-value clients are in a particular industry, for example hospitality. Consider tailoring your website to attract those clients. Any social media posts, links and content should be relevant to those audiences. There may be significant value in upskilling on that industry and understanding the trends, changes and small details that affect those customers. Again, Explorer within Xero HQ can help you identify and seize these opportunities.
While our industry never slows down for long, this is an opportune time to examine your business and make new resolutions. Even if you can’t implement them until October, draw up a list now, and put it where you can see it and remind you. When the next financial year-end rolls around, you’ll likely be glad you did.