The fourth quarter is an important time to tie up loose ends and wrap up your financials while beginning to think about what the upcoming year might bring for you and your business.
“Regular reviews of your finances are vital to ensuring continued success and to avoid unpleasant surprises in the first quarter and come tax time,” says Lisa Carey, senior vice president and district manager at Northwest Bank.
“By keeping your financials up to date and regularly reviewing them with your banking partner, you can be prepared for whatever comes your way and stay the course to financial success.
Smart Business spoke with Carey about how businesses can wrap up their last quarter and plan for future success in the coming year.
What are some key things a business should be thinking about as it prepares for the final quarter of the year?
It’s important to know where you stand now, rather than after the first of the year. Take a holistic look at your finances for the year to assess what went well and identify problem areas that you could improve upon.
Touch base with your tax adviser to ensure you’re on track for the upcoming tax season. If you’ve had a successful year, you may want to increase your contribution to avoid tax penalties. If your fiscal year coincides with the calendar year, you should start creating your budget for the upcoming year and also plan to meet with your leadership team, board of directors, advisory council, consultants, advisers and staff to begin your strategic plan.
How does the company’s performance for the year thus far affect the strategy going into the fourth quarter?
The first thing you should do is look back at what your business has accomplished over the past three quarters to understand what worked and what didn’t. If you’ve had a good year, you may want to consider acquiring capital equipment to take advantage of accelerated depreciation.
In other words, it’s a method where you invest in an asset that loses value at a faster rate than traditional assets to minimize your overall taxable income for the year. The third quarter is also a good time to evaluate your overall line expenditures like personnel, marketing and operational budget to see where you need to make reductions or increase your spending in the upcoming year.
Although you may be tempted to focus only on successes, failures are just as important to evaluate. It can be tough to swallow, but they need to be evaluated so you and your team can avoid making the same mistakes in the future.
What are key things you can do during the final quarter to set your company up for success in the first quarter of the new year?
In order to set your business up for success in the new year, you should do a thorough review of your company’s year-to-date progress — what are you doing well and what can be improved upon? You should also have an understanding of the global economy and how it may affect your industry.
If, for example, you work in the tourism industry and the price of oil is expected to skyrocket, you may want to consider planning for a downturn in your industry as people cut back on traveling. As technology continues to evolve, you should also review your IT budget to see where you can improve processes to elevate your overall efficiency and cut back on unnecessary spending.
Information security is also an important expense to consider investing in as we see data breaches and cybercrime continue to rise.
How can a bank help the assessment of your company’s performance through the first three quarters?
Conduct a regular review of your financials with your bank throughout the year to ensure you’re on track to meeting your financial goals. Your banking partner should be available to review your financial statements and see where your business is at and how you can improve. Work collaboratively with your bank to set your business up for success in 2018.
Insights Banking & Finance is brought to you by Northwest Bank