Preparing for EOFY – step 1

To minimise the stress the end of the financial year can bring, this week we will focus on reconciling our receivables and payables.

1. Receivables – ensure all invoicing is up to date. Collect any outstanding payments from customers. Make a plan for those that are overdue and if you can’t recover some debts and then are able to write them off as bad debts, you will be able to claim a tax deduction.

2. Payables – ensure all supplier invoicing is imputed. Pay any overdue supplier invoices as well as any BAS and payroll liabilities that are due by 30/6/17.

3. Reconcile your receivables and payables. Do this by running the payable and receivable reports and cross checking the total amounts with your ledger totals found on your balance sheet. Locate and fix any discrepancies.

4. Calculate your DSO ratio to evaluate your collection methods and compare to previous years.

In accountancy, days sales outstanding (also called DSO and days receivables) is a calculation used by a company to estimate their average collection period. It is a financial ratio that illustrates how well a company’s accounts receivables are being managed. The ratio is calculated by dividing the ending accounts receivable by the total credit sales for the period and multiplying it by the number of days in the period. Most often this ratio is calculated at year-end and multiplied by 365 days.

Contact me on 0412 072 192 or kkbls5@bigpond.com if you have further queries.

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