As we edge closer to 6 April – widely recognised as the ‘start of the new financial year’ – it’s important for business owners and financial teams in any industry to tie up their previous year’s books in order to help forward-plan.
Construction businesses in particular, as Rob Binns chief financial officer at The Access Group, explains, operate in a distinctive environment due to the unique nature of their business and shares his advice to help construction businesses strike the balance between closing their books for the year just gone and forward planning for the next.
Size matters
When the financial year is coming to a close, planning and sequencing for the new fiscal year becomes an important task. But for smaller teams lacking extra hands and up-to-date solutions to manage the transition, the task can prove challenging.
Indeed, every business is different and in critical times like these, with the continued outbreak of Covid-19, good planning is even more essential no matter the size of the business. It’s all about understanding the challenges in the context of your own organisation and putting plans in place to ensure you meet those statutory deadlines.
Financial forward planning is of course important for any business too, but it is particularly critical for business owners in the construction industry with so many moving parts to map out. Often with unexpected challenges or delays that cause setbacks, projects can incur major expenses or significant overspends. A forward-thinking and well-prepared financial leader will have measures in place to consider and help navigate these complexities.
If you have the luxury of a large team at your disposal, it could be useful to ‘divide and conquer’ by separating the finance team into two separate divisions. One division would take care of closing the books for the year just gone, the other would work in parallel by planning budgets, from hard costs and soft costs, to highlighting any key issues that may crop up throughout the coming year.
Don’t forget to take the current situation into account when splitting your teams, as many of your division may now be working remotely from home, making communication between the groups much more challenging. Although various avenues in business may have temporarily paused for the time being, this transition is crucial to the longevity of any business and projects you may have in place now and in the near future.
Communication is key
Tying up the end-of-year finances is crucial to any business. By communicating effectively with senior business leaders, the finance team can translate the outcome of the financial performance into the forward-looking projections for the business to help it achieve long-term business success.
Without end of year fiscal data, the company can be operating blind with almost no guidance. There may have been a period previously where demand for a certain material spiked, or sales dropped on home purchases in the country, both perhaps highlighting a trend to be aware of going forward. Without this information, businesses could be repeating the same mistakes, ultimately losing revenue
Generally, the role of a finance professional has changed in recent years, with businesses focusing more closely on strategic planning and reporting, thanks in part to the volume of data now readily available. Technology has made strategic planning, and remote working, much simpler, particularly with integrated systems and reporting solutions that enable finance professionals to report back to directors and business owners who want to see the bigger picture.
In construction, software that allows finance teams to project cost and monitor workforce activity, can be incredibly beneficial especially when it comes to them contributing more meaningfully to the overall business strategy.
Be aware of market changes
In order to put future plans in place, it’s important to recognise how the market may have shifted over the last year, from both internal and external changes, as this could give finance teams an indication on market patterns for the year ahead.
With so many stakeholders involved and multiple variables to manage, the finances of a construction project, if not carefully monitored, can spiral out of control. The very nature of the sector demands organisation and forward-planning, making the fiscal transition vital to guaranteeing projects go off without a hitch.
Investing in a system that offers full visibility of employee, supplier and financial data, are key to ensuring you’re not on the back-foot if changes indeed do arise.
Market changes could have a number of implications on the industry, leading to project hold-ups and cancellations, employee redundancies and subsequently pre-purchased materials wasted. A centralised data dashboard that can be accessed by each stakeholder, from any location, can help to streamline projects where collaboration on timescales and budgeting are essential. This software frees up finance teams who will no longer have to respond to constant requests for information, meaning they can work more productively.
Balancing the scales from the past year, and looking ahead, is no doubt a challenge for any financial team, but with the right solutions in place and an eye on the wider market, it’s possible to balance the books in time while working to move the business forward.
Rob Binns is the Chief Financial Officer at The Access Group. Rob leads the finance team at Access and is responsible for all finance, accounting and tax matters of the company, transforming the team in order to scale and support the growth and aspirations of the Access business.
Rob Binns, CFO, The Access Group
For more details on The Access Group, visit www.theaccessgroup.com/finance
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