Being 30 days into the new fiscal year, we see businesses gearing up to transition as smoothly as possible by reviewing financial records and laying the groundwork for the new cycle FY 24–25. From diligently recording incoming and outgoing expenses to navigating tax filings, every aspect of your accounting requires meticulous management for validity and compliance.
Here is a list of quick essential tips to keep in mind while you are winding up FY 23–24 and transitioning into the new financial year.
Reminders on receivables
Monitoring pending receivables may appear daunting, yet it's vital for transitioning smoothly into the new financial year. Ensure you've sent out any draft invoices and collected any outstanding payments by communicating clear deadlines to your team and customers. Prioritize the collection of overdue invoices by sending gentle and prompt reminders.
Some ways you can encourage customers to settle and recover their outstanding dues are:
Categorize the unpaid invoices based on their likelihood of payment.
Send bulk email reminders.
Possibly offer reduced settlement amounts or broader payment plans.
The goal is to maximize collections to reduce financial losses and ensure the sustainability of your accounts.
Note: Using letters, numbers, and allowed special characters and a maximum length of sixteen characters, create unique transaction number series for invoices that adhere to GST rules.
Write off bad debts
From time to time, payments might not come in on schedule, impacting your accounting procedures, resulting in what's known as bad debts. Ultimately, you're left with the responsibility of covering the outstanding invoice amount. In such instances, start by reviewing the aging details report in your accounting software to identify all overdue payments, typically those outstanding for over six months. Send final reminders to these customers, and if no response is received, you might want to consider writing those off as bad debts. In this way, that amount will be deducted from your total accounts receivable.
Manage payables
Ensure you stay ahead with your vendor bills by diligently logging each one in your records. You should also make payments on time for bills received from micro and small business vendors. This will avoid penalties and additional income tax liability. If you've made prepayments for insurance, ensure you update your accounts by transferring the portion relevant to the current year from expenses to assets. Keeping separate records for business expenses will make tax deductions a breeze.
If your business has any fixed assets, it's best to consider depreciation costs. For more guidance, reach out to your accountant on this. Lastly, stay on top of vendor advances to reclaim funds for goods or services that haven't been delivered yet.
Did you know? From the fiscal year 2024–25 onward, Indian companies must clear any outstanding payments to micro, small, or medium businesses within 45 days as per the recent mandate (Section 43B(h) of the Income-tax Act). Noncompliance could lead to increased taxes for the prior fiscal year. This regulation is designed to promote prompt payments to MSMEs and streamline commercial transactions.
Inventory valuation
Check that your inventory counts line up perfectly with your financial records for spot-on valuation. Reporting tags are used as identifiers to categorize and filter data within your reports. Without the help of these tags, tracking inventory becomes error-prone, and manual methods risk discrepancies and misplaced items.
Begin your business's inventory tracking by assigning reporting tags to your items for accuracy. If you are a business that sells goods, dispose of any unsellable items before the count to fast track the process. Remember to also count slow-moving items to fast track the overall inventory assessment.
Bank reconciliation
Bank reconciliation helps you fix errors, clear up discrepancies between your books of accounts maintained on your accounting suite and your bank statements, and catch any unrecognized transactions. It's like giving your account statement a thorough checkup.
A key area to pay attention to is canceled or uncleared checks; they may disrupt your books' closing process.
Currency adjustments
Navigating transactions made throughout the fiscal year can be a challenge, especially when dealing with transactions involving different currencies. In scenarios like this, your accounting software's ability to automatically adjust exchange rates can come in handy. It facilitates the whole process while assuring precision and uniformity in the conversion of currency. Hence, you may depend on this capability to handle currency adjustments with ease when you're wrapping up unpaid transactions for the current fiscal year. This will automatically adjust when recording payments in the next fiscal period.
Transaction locking
Once you've wrapped up all your tasks and cross-checked each report against your manual journal, it's time to send them over to your accountant. Make sure to provide the most recent information and any adjustments for proper review and organization.
Remember to lock all transactions scheduled for filing on a specific date to prevent further changes. Locking transactions maintains data integrity and protects against accidental or unauthorized alterations, ensuring the accuracy and reliability of your financial records during crucial times like tax filings or audits.
Not all accounting solutions may provide this feature, but look for one that does for smooth sailing in your accounting process.
GST filing
During tax season, businesses often struggle with GST filing, like organizing transactions and assigning correct tax rates. However, with a GST-compliant software, things get easier. It automates tasks, like compiling transactions and generating e-way bills, saving time and reducing errors, all while being compliant. Plus, features like electronic invoice authentication and detailed reporting make tax season less daunting, ensuring everything is in order for filing.
Make sure you've claimed all of your input tax credit through the GSTN portal. After that, declare on both the GSTN site and your accounting software that your returns have been submitted.
Now, stepping into the new FY 24–25, here are some effective tips to gear up and ensure a successful start to the new fiscal year.
Budgeting
In business, it's typical to set goals to anticipate how well your company will perform, aiming to boost revenue or cut costs.
Here are three forecasting methods you can apply within your accounting software.
Manual entry: Inputting targets manually into the system.
Prefilling based on the previous year's performance: Utilizing last year's actuals as a basis for setting new targets.
Autofill accounts: Automatically populating accounts with predetermined values to streamline the process.
Your business can also choose to start the new financial year right by resetting the auto-generated invoice numbers for clear tracking and organization.
Review turnover and register for e-invoicing
Experience effortless invoicing with integrated e-invoicing. This straightforward setup standardizes how you report invoices to the GST system based on your business's annual turnover (> ₹ 5 cr.) , ensuring they're submitted in a machine-readable format. If your accounting software has e-invoice functionality, you just must simply just set it up once to create e-invoices that are then automatically generated. This ensures that your invoicing process is compliant with government regulations and is streamlined.
Audit trails
Keeping an accurate record of all your actions is essential when using your accounting software. Audit trails are thorough records of all actions conducted across your firm, including the date, time, and type of action. These logs allow for thorough analysis in cases of suspected fraud and provide critical oversight.
Financial reports
For the last financial year, you can generate and schedule three essential reports using your accounting software to provide stakeholders with insights into your business's performance over the year.
Profits and losses: Evaluates business performance by comparing the profits and costs of the current year with that of the previous year.
Cash flow report: Maintains a record of money coming in and leaving, which helps with budgeting and cash flow forecasting.
Balance sheet: Gives an overview into the company's financial health, consisting of the previous year's assets, liabilities, and equity.
We hope that our thorough list of tips helps you ease you through your accounting tasks this year. It's crucial to keep your books clean by utilizing modern accounting software that ensures you are equipped with the above capabilities.If you have not explored Zoho Books yet, it's the right time to do so. It's a one-stop-solution designed to meet the needs of growing businesses worldwide.
Don't let the time-consuming and laborious process of complex or manual accounting hold you back—make the switchto Zoho Books today! Are you already using another accounting software? We have a simple process to bring you on board without any hassle.
Here's one more useful resource for you, a step-by-step guide on year-end accounting with Zoho Books in multiple languages (English & Hindi)
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