A tip for this End of Financial Year
The End of the Financial Year (EOFY) can create timing issues that come back to bite years later—this year, it’s tomorrow.
The Perils of EOFY
Here's the potential snag: some businesses close their books on Tuesday night, while others finalise them the next morning. This creates timing differences, where the same transaction can be recorded in different financial years by different organisations.
This means invoices, credit notes, and payments may not align. Add Australia Post delays or processing delays, and important documents might not appear in your records until after EOFY. As a result, your figures may not match those of your suppliers or customers.
This may become a problem during an ATO audit. The ATO may compare your records with other businesses and ask why the figures differ. Since audits often occur years after the fact, it can be difficult to explain what caused the discrepancy. You end up trying to reconstruct events you barely remember.
We experienced this firsthand. A supplier issued a credit note to us just before EOFY, but we didn’t receive it until a few days later. During an ATO review, that timing difference worked against us, and it ended up costing us. The ATO argued that we should have known about the credit note in the previous financial year.
Taking Control
You can reduce the risk of these issues with a few simple steps:
- Ensure your POS and accounting systems can clearly explain your figures if needed. Putting notes in can be a big help.
- Contact suppliers now if there are large or outstanding amounts.
- Start chasing missing invoices and credit notes.
- If timing cannot be resolved, get written confirmation (email is ideal).
- Where possible, delay closing your EOFY slightly to allow final documents to come in.
One advantage of our POS system is that it allows adjustments after EOFY, so you can continue processing and correcting entries as information arrives.
Written by:
Bernard Zimmermann is the founding director of POS Solutions, a leading point-of-sale system company with 45 years of industry experience, now retired and seeking new opportunities. He consults with various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.
