Well the 2025 financial year end is almost with us... that went quick!
Theres one month to go and so much to do and remember so I thought I would quickly recap some stuff you probably already know and maybe some new things I learnt this year.
EOFY is a time to review your financials and ensure you are up to date and compliant but that's really just the basics. To be honest... that should be done each month at least! With good systems in place the accuracy and compliance sould just be a given and happen every day. At this time of year we should focus on maximising tax benefits and dealing with exceptions. Here are some key things to look out for:
Banking and Reconciling
Begin by reconciling all accounts, including bank statements, to identify and rectify discrepancies. Reconciliations should include your sub ledgers (Accounts Receivable, Accounts Payable, Inventory, Projects WIP, Prepayments, etc) match with the GL.
Bank Accounts should be reconciled as at the 30th June and this may mean a special reconciliation outside your statement period (login to internet banking and get the correct balance).
If you are using Bank Feeds you would be doing this daily anyway so it's a non issue. If you DON'T use bank feeds... why not??
the accountants will also no doubs ask you to confirm the AR and AP is actually correct and review bad debts. It's crucial to assess outstanding invoices and follow up on overdue payments to improve cash flow but also write off the ones you know have done dead. You can always still re-open and apply payment if the customer pays.
Inventory Review
I heard from several customers in the last month that they were planning on doing an "EOFY Stocktake" as close as possible to 30 June - but this was annoying as it's a busy time.
This is noted in the ATO guidelines here but is probably a bit misleading. The ruling is about calculating your closing stock and opening stock but for those using an ERP with good warehouse management that is redundant.
Check with your accountant if the stocktake is an issue because it's much more efficient to do sycle counts and adjust as you go throughout the year. This will ensure you are always compliant but also help with your supply chain, inventory planning and fulfilment and more.
Additionally, evaluate your inventory levels and write off any obsolete stock to reflect true asset values.
Taxes and Debt
This is also an opportune time to review your tax obligations and consult with a financial advisor to optimize your tax position. Many accountants will invite you to a planning session to discuss strategies for minimising tax (legally 😀).
This is also a good time to review any debts and loans - and this year especially any ATO debt. From income years starting on or after 1 July 2025, deductions for the General Interest Charge (GIC) and the Shortfall Interest Charge (SIC) will no longer be allowed.
If you must carry a balance, consider alternative funding (for example, a bank loan) and note that genuine borrowing costs may remain deductible under section 8-1 ITAA 1997.
By taking these proactive steps, businesses can streamline their EOFY processes, minimize errors, and set a solid foundation for the upcoming financial year.
More Help
Stratus will be sending out the EOFY guides for your specific ERP system soon so look out for those in your inbox (or junk folder!) and go through the guides carefully. If you need any more help please reach out to out support team at any time.
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