The New Financial Year’s Changes and Challenges – and How We Can Help

Nov 06 2023 Financial Management

Every new financial year brings opportunities and challenges for businesses. FY23/24 is no exception. The question is, is your business prepared for them? Do you know what you should be planning and budgeting for, and do you have a Finance Director (FD) leading and overseeing the process? 

If the answer to either question is “no”, now’s a critical time for you to consider putting in place a part-time, outsourced, pay-as-you-go FD who can give you as much or as little help guiding your business finances through the new business year as you need – without the associated salary costs. 

Here are some of the critical considerations our team of outsourced Finance professionals are currently helping businesses to plan and budget for in the new financial year. 

Understanding the impact of cost and tax increases 

The Spring 2023 Budget heralded important changes in the new financial year, and new minimum wage increases are an example of just such a change. 

Adding to the squeeze is the change in Corporation Tax, which has increased to 25% for profits over £250,000, although it remains at 19% for profits under £50,000, with a sliding scale of “marginal relief” for profits between £50,000 and £250,000. 

Pour into that mix some volatile interest rates and additional wage inflation (stoked by employees’ rising living costs), and a decrease in headline R&D relief, and it becomes critical to understand what the cocktail effect of these changes will be on your business’s cash flow, reserves, budgeting parameters, and, ultimately, bottom line. 

Mitigating risk – a constant priority 

Change tends to compound risk, but risk is ever-present anyway and can strike from almost any quarter, so it makes sense to have risk management as a central theme in your Finance strategy in the new financial year. 

Where’s your funding coming from, for example? An FCA-regulated, trusted UK institution that’ll deliver on its promise because it’ll still be here tomorrow? Or a Silicon Valley Bank? (Say no more.) 

And, by the same token, and with the same concerns, where’s your money held and invested? How many eggs have you got in which baskets? What’s the probability any of them will drop, what will be the impact if they do, and what can you do to mitigate it in advance? 

Risk comes in many forms, but however it manifests itself your Finance function needs a plan to minimise it and enable you to keep calm and carry on if the worst happens (as well as take advantage of opportunities as they arise). 

Agility and adaptability, systems and processes 

Change can be painful, but it’s even more so if you have to deal with it manually and iteratively because you don’t have the systems and processes in place to address it repeatably and efficiently. 

Are your Finance systems and processes truly set up to cope with the upheavals you will face in the new financial year – and do they have the flexibility to accommodate changes next year (and the year after that)? 

On the other hand, can you access up-to-the-minute management information? Spot developing issues? Identify income opportunities? Communicate financial insights clearly to your teams? 

Let’s be honest: in a business climate that is already uncertain (but certainly likely to be challenging), if Finance systems and processes aren’t set up in such a way as to not only handle change and adaptability effectively, but contribute to the agility of the business, they’re not doing their job. 

So how can EFM help? 

The challenges and the potential solutions can be bewildering, but from where we’re sitting, with over 20 years’ experience of leading and managing many businesses’ Finance functions on both a day-to-day basis and in response to budgetary and regulatory changes, the critical disciplines are: 

  • Constant focus on cash flow –We work with your teams to ensure cash flow is closely and constantly monitored against assets and liabilities, and take action across the business to maintain the liquidity it needs to weather the Chancellor’s changes. 

  • Managing and optimising working capital - Improved invoicing processes, payment incentivisation, automation, leveraged supply chain financing, and tax efficiencies all potentially play their part in our strategy to strengthen your working capital in the face of financial challenges. 

  • Robust forecasting, scenario planning, contingency planning – Working with your people, we put in place repeated modelling and analysis to understand the effects of both gradual changes over time (revenue loss and gain) and sudden events (more drastic even than a challenging budget) and mitigate their financial impacts. 

  • Supplier swaps, ensuring value for money, cost-cutting– We help you to keep a close and constant eye on costs, negotiate more favourable agreements and payment terms with suppliers, and move to alternative providers where necessary, to keep costs from eating into your reserves in already straitened times. 

Finance without the premium 

Getting to grips with the new financial year early on is key, but we recognise that paying a full-time FD to do it often comes with an unaffordable price tag. 

That’s why we offer a proven, cost-effective alternative that is trusted by hundreds of businesses across the UK – new financial year upon new financial year. 

For more information on how EFM can help you, contact us. 

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