Who says I have to? I think I want a change

Have you given any thought to changing your business year end? Why did you chose 12/31 or 6/30 in the first place? Maybe you have considered a merger with a company on a different year end. Maybe you are considering changing your year-end because it’s currently not on the right cycle for your business, or it’s a distraction to more important things going on at your company during that time of year. 

There are a few different perspectives on this topic, and likely many people in your organization that don’t give a hoot. But the timing of the end of your fiscal year can impact your business in a variety of ways. Here are a few factors you will want to consider when looking into changing your fiscal year-end:

Timing of your revenue cycle. Whether for profit or nonprofit, you may have seasonal revenue.  It can be helpful to make that high-revenue season at the beginning of your fiscal year so you know early on whether you are within the range of your budgeted revenue and can make adjustments to spending and investments accordingly.

Annual tax return preparation and financial statement audit. Changing your year-end will result in a ‘stub period’ for both the tax returns and audit. Plan to double up on your accounting fees during a 12-month period – you’ll have to have 12-month statements and stub period statements prepared.

Year-end action plans. What activities occur after the fiscal year is closed and the financial statement results are known? Are Bonuses paid? Are charitable donations made? Are grants given?  How will this be affected in the first year?

Banking arrangements may need to be modified. Check your debt covenants to know if your requirements are on a certain date, or after a certain period post-fiscal year close. Communicate in advance with your bank about these changes so that their expectations can be met and your credit is not at risk.

State or Federal government programs and registrations. Are there any material campaigns or registrations that your business relies on? Understand fully before making the change what the impact will be on your qualifications in and participation with these entities.

Audit Evidence. If you are under audit, think of the information you rely on as evidence during your audit. Will there be an issue with availability of that information being timely and sufficient?

If you have lessons learned from your experience changing your year-end, or want to talk any of this through, we would love to hear from you. We are just a phone call away and can also be reached at info@quincycfo.com.