According to ScotPac CEO Jon Sutton, SMEs should be conscious of how they go about this EOFY. He said certain measures implemented, such as the temporary full expensing extension, are to businesses’ benefit; however, they need to have stable cash flow to take advantage.
“It’s no good using the instant asset write-off measures to buy a piece of equipment if making that purchase puts a severe dent in your cash flow,” Mr Sutton said.
“Embedding cash flow forecasting into the business and securing funding that ensures good cash flow will help SMEs navigate any risks around their EOFY and new financial year initiatives.
“Putting in place a flexible capital structure, offered by funding options such as invoice finance, means a business can act when opportunities arise.”
To make the most of this EOFY, ScotPac has shared three of its top tips.
1. Understand the exact cash needs of your business
“Having a clear idea of how much cash you need to maintain your business-as-usual activities allows you to: identify if you have excess cash which may be better invested or even used to take advantage of available incentives such as the instant asset write-off; or identify if there’s a shortfall which will impact your ability to meet obligations as they fall due,” ScotPac said.
“This is particularly important when considering outstanding ATO liabilities.”
2. Think about what fixed assets, if any, your business needs now and into the future
“Providing you meet the eligibility criteria, your business should be entitled to an immediate tax deduction for the cost of the asset,” ScotPac said.
“Remember, for this to hit your FY21 tax position, the asset must be installed and ready for use BEFORE 30 June.”
3. If you haven’t already done so, book in with you adviser and chat through your business ambitions for the next 12 months
“Partnering with a trusted adviser such as an accountant, bookkeeper or broker now will help give you the best chance to position your business for success in FY2022,” ScotPac said.