The start of a new year is a chance to reflect on the successes and failures of the preceding twelve months and an opportunity to think about what could be done better. Regardless of how your company performed in 2018, it’s essential to kick off the new year with a clear business plan.

Now is the time to align your actions to your strategic objectives and review your processes – before the stresses and pressures of the new year bury your good intentions. If you’re still dusting off the beach sand and are not sure where to start, here are five key areas to focus on.

Call your debtors
That’s right – call them. Emails are easily ignored or forgotten; phone calls, less so. Start by making a list of your debtors and what they owe your business. Call them to let them know in the friendliest possible terms that you are counting on their prompt payment to keep providing the excellent services they’re accustomed to.

Aim to start the year with a clean set of accounts, collecting all money still owed, while simultaneously paying all creditors. This is important because most small businesses use the accrual method of accounting, where the expense is incurred or the revenue booked on the date of the transaction, instead of the cash method, where the transaction only takes effect when money leaves or enters the account. If you don’t manage your debtors, you might have to pay income tax and VAT before you receive your money.

Review your cash flow
As far as cash flow is concerned, January can be a hard month. As the expression goes, ‘Cash is King’ and financial constraints are often responsible for closing down a business. Whatever the month or time of year, without adequate money management, you can’t pay suppliers and creditors on time.

More often than not, cash flow problems are a symptom of underlying structural and systemic issues. If growth is not adequately planned, you will find it hard to meet growing expenses. It’s necessary to take time to analyse your inflows and outflows per cycle – with the goal of ensuring adequate cash flow over the entire period.

Review your inventory

If you’re selling physical products or hold stock, count your inventory to ensure that everything’s in order. Particular attention should be paid to the quantity of each item in stock, the value of each item, and the cost of all inventory purchased during the year. This way you’ll be able to identify any gaps on your shelves that need refilling and order replacement stock in time to meet customer demand.

Stay up to date with tax laws and filing deadlines

Tax laws and regulations change frequently, so it’s important to stay up to date with them from year to year. If you can understand how these laws affect your business, you’ll be better able to manage your financial affairs.

Work out when you need to file and pay taxes for the year ahead and set up your 2019 calendar with appropriate alerts.

Set goals – and learn from your past mistakes

Learning from past mistakes and inefficiencies – and aiming to do better – is what the new year is all about. Even if you had a great 2018, you may not have achieved everything you set out to do. That’s fine as long as you work out where you fell short and how to avoid making the same mistakes again. Setting goals and sticking to them can keep you on track and help you steer clear from falling into last year’s traps.

To set goals for 2019, start by comparing your performance to date against your predictions and budgets in 2018. Review all your income statements, cash flow statements, and balance sheets from last year to chart a course for the year ahead. That way you’ll be able to set definite objectives for improving your financial processes – and hopefully you will have a good idea of how to do so.

Don’t be disheartened if 2018 didn’t meet your expectations. A new year offers a clean slate and a chance to make important changes with renewed vigour. This could involve tightening up your existing accounting methodology, incorporating new technology to make data more accessible and up to date, or simply staying on top of things that slipped through the cracks last year.

New year, new business!

By Colin Timmis, General Country Manager, Xero SA