We’re knee-deep in the fourth quarter, and business owners and their bookkeepers are busy wrapping up their corporate accounting matters. This is also the perfect time to do some advance planning for next year with some bookkeeping tasks that will help put your business on the track for a strong year ahead. After all, you can’t get where you want to be if you don’t know where you’re going. Here are four steps to take now for the upcoming year.


1. Do a yearly budget and financial forecast.

What do you foresee in terms of revenue and business expenses? If you’ve been keeping good records all along, look back at the past few years and develop a reasonable budget based on prior years’ sales, cost of goods sold, controllable expenses and other line items that affect your bottom line.  For example: 

● Is there something unusual coming up that will affect your business, perhaps a seasonal trend (upward or downward) or a trade expo that only comes around every few years?  

● Is there a capital improvement or major purchase or lease you plan to make?  

● Is your rent going up but your sales projection looks stagnant?  

● Is your company in a growth pattern such that you’ll be adding employees (and payroll)? 

● Don’t forget to include your planned marketing spend. 

A clear forecast for all relevant income and expenses will serve as your financial road map and enable you to make nimble course corrections depending on actual sales.

2. Run a cash flow projection.

This is directly related to your financial forecast. Work with your bookkeeper or accountant to lay out a cash flow calendar, if you will, by month or quarter, to avoid nasty financial surprises and be better prepared to ride out the low points. It’s all in the planning. Things to consider when creating a cash flow projection (some noted above) are: 

● Projected sales – how much are you planning to bring in at various times throughout the year? 

● Payment terms for accounts receivable – do you have set terms with your customers to pay you for your goods or services within a reasonable time frame? Do you have a policy around deposits and payment in full?  

● What are your fixed costs and variable costs? Take into account rent, utilities, payroll, equipment financing or purchases, supplies, marketing … the list goes on and will vary depending on the type of business you operate. A restaurant’s costs will differ greatly from a law firm’s. 

Remember, the cash flow projection is an estimate—albeit, a very informed one—that will be adjusted according to your actual revenue throughout the coming year.

3. Implement internal controls.

Who’s minding the store at your company? Does your bookkeeper or manager have total control over everything related to your business accounting and cash? Of course, you trust your staff … but it is a wise business owner who puts procedures into place to identify fraud and make it more difficult for anyone to fudge the numbers or walk off with the goods.  

● Run sales reports on a regular basis (daily, weekly, monthly).  

● Reconcile your bank and credit card statements. 

● Do a thorough physical inventory periodically (and compare goods on hand against your sales and purchases). Check invoices being paid and orders being placed.  

With so much on the line, it’s vital that you safeguard your assets.

4. Set and measure your KPIs.

Every business and business owner have different key performance indicators (KPIs) that help inform the company’s success in reaching stated financial goals. Think about the KPIs for your particular business that you’ll be measuring and share these with your team. These may include: 

● Number of sales conversions from incoming sales calls – it’s important to track these all the time to know if your revenues will be in line with your budget and cash flow projections. These figures are a good indicator of how your year is going and you’ll be able to modify your budget (up or down) accordingly.  

● Gross profit and net profit margins – are you hitting these? Do you need to adjust pricing or address controllable expenses? 

● Aging accounts receivables – this goes back to your cash flow projection. Are you hitting your “pay by” dates with every customer? 

● Debt-to-income ratio – your current assets and your current liabilities will determine this.

Here’s a fifth step to take as you head into the new year: have a CFO review your books to ensure everything is correctly entered, that your financial reports are prepared properly for your tax accountant, and that you understand all the various pieces of your company’s financial puzzle. CFO Your Way can work with you or your bookkeeper to ensure your financial paperwork is organized, that your accounting software is set up correctly, and help you determine a smart budget for next calendar year based on your actual sales history. And, as a virtual CFO practice, you don’t need to take on another employee to have your corporate finances put in good order. 

Schedule a Complimentary Consultation to discuss your needs.