The year-end process can be a source of dread in any year, let alone for one as unconventional as 2020/21. Luckily, there are ways to ensure a smoother year-end process for you and your business.
Our Head of Agriculture, Mark Chatterton and Anne Cianchi, Product Manager at agricultural software and IT solutions supplier, Farmplan, have shared some top tips for agricultural businesses approaching year-end.
Anne: “My top recommendation is ensuring that all of your data is fully up to date. This is the foundation for a smooth year-end process. Make sure everything recorded in your software reconciles with your bank statements. Check that all purchase invoices have been entered. Are there any you’re still waiting for? Any suppliers who tend to invoice particularly late?”
Mark: “Timeliness is key: The faster we can make sure your accounts are all in order, the sooner we can provide you with useful and actionable information for your business.”
Being organised from the beginning and making sure your software reconciles with your bank statements is the biggest positive start for a seamless year-end process.
This is not just a time for getting things in order, but for taking stock of where you are. Solutions such as Farmplan’s Business Manager let you refine and drill down into your data for greater insight.
Anne: “Look at your aged suppliers, customer reports, and outstanding balances: Are they correct? Are there any negative balances or outstanding payments and why? Investigate and correct any errors before sending your books off to your accountant. This not only prevents any unforeseen issues arising for you but makes it easier for your accountant.”
Mark: “Stock valuation and fixed asset depreciation figures are the extras normally added by your accountant but if we spend less time on chasing up the base data we need, we can spend more of our time providing you with business advice. It’s a win-win.”
Whether making year-end adjustments yourself or passing them to your accountant, close examination and diligence will pay off in the long run by putting the last year in perspective.
Anne: “Business Manager is designed to hold all year-end adjustments. It’s possible to quickly search for and view them, giving you a good idea what’s necessary. For example, any private expenses that have been incurred, purchases for equipment, or prepayments.”
This is especially important for 2020, due to the numerous government grants and relief schemes in light of Covid-19. The government has confirmed these will be taxable, so must be included against the period they relate to, including any claimed insurance paperwork. Tax relief can be claimed on expenditure, but this needs to be entered into your account.
Anne: “Every business will have felt the impact from the pandemic differently. Diversified enterprises like hospitality and retail will likely have taken a hit. Others, conversely, may even have been able to secure an increase in produce pricing. This year, more than any other, it’s vital to look back at your figures and take stock of your business and see what you can learn.”
All of these steps will help quantify the impact from Covid-19 and provide you with more information on how to become more robust for 2021.
While we all hope for a return to normality soon, the future is far from certain. 2021 will be another challenging year, but there are reasons to stay optimistic. The best way to stay ahead of the curve is to make the most of the information that’s available to you so you can plan and change your plan based on the latest data you have.
Anne: “Although Covid-19 is going in the right direction, we’re not going to be back to normal this year either. It’s not a quick fix. What this has done is brought into focus how important it is for all businesses to produce detailed management reports and make fully informed decisions.”
Mark: “Now is the time to grasp the nettle. Uncertainty is dominant at the moment. Make sure your numbers are all in order and singing a bit louder than they have done in the past and please compare budgets with actuals on a regular basis to ensure your business stays on track”
Anne: “Farmers are very resilient and used to fluctuations. Luckily, the right tools and support are there to help. Farm businesses that take the time and act proactively will be in good shape to weather any storms to remain productive and profitable.”