Three EOFY Questions That Aren't About Tax
By Sarah Petty, Founder Olive Business Partners
As the end of financial year approaches, most business owners shift into compliance mode. Receipts get gathered, the accountant gets called, and the focus narrows to what can be claimed and what needs to be lodged.
Tax is important of course. But before you close out the books on this financial year, there are three questions worth asking that most businesses skip entirely. They will not necessarily reduce your tax bill, but they will materially improve the quality of decisions you make in the year ahead.
1. Where is the business actually making money?
Most business owners know whether the business is profitable overall. Far fewer know where that profit is actually coming from and where it is being lost.
A business with strong top-line revenue can easily carry services, clients, or products that are eroding margin without it being visible in the total numbers. The profitable work subsidises the unprofitable work, and because the overall result looks acceptable, the underlying pattern never gets examined.
End of year is the right time to review and change that.
Look at your revenue by service line, product, or client and ask where the margin is strong and where it is not. This requires more than a revenue breakdown. You need to allocate the costs associated with delivering each type of work. Time, direct costs, contractor fees, and a reasonable share of overhead all factor in.
What you are looking for are the parts of the business where the return on effort is high, and the parts where it is not. In most businesses this exercise surfaces at least one significant finding, such as a service that has grown in revenue but carries thin margin, a client that takes disproportionate time relative to what they pay, or a product that looked profitable until delivery costs were properly accounted for.
You do not need to act on everything immediately. But going into the new financial year without this picture means making growth and investment decisions without knowing which parts of the business are actually worth growing.
2. What does your cash flow tell you about the year?
Profit and cash are not the same thing, and the gap between them is one of the most important things to understand before the year closes.
Look at how cash actually moved through the business over the last twelve months. Not just the opening and closing balance, but the pattern. Were there months where cash felt tight despite reasonable revenue? Were there periods where collections lagged, where large expenses clustered, or where growth consumed more cash than anticipated?
Understanding the rhythm of your cash flow, not just whether you ended the year with cash, but how it moved and why, gives you the information needed to plan better for the year ahead.
A few specific things worth reviewing:
Your debtor days. How long, on average, did it take clients to pay? If that number has been creeping up, it is worth addressing through tighter payment terms or a more active collections process before it becomes a cash flow problem.
Your largest cash outflows and their timing. Are there significant expenses that hit in the same month each year (insurance renewals, annual software licences, quarterly obligations) that could be anticipated and planned for rather than absorbed reactively?
Your cash position at 30 June relative to your obligations in July and August. Going into a new financial year with a clear view of your opening cash position and the commitments already in the pipeline is a simple discipline that reduces the reactive decision-making that derails many businesses in the first quarter.
3. Did the business pay you properly this year?
This is the question most business owners either skip or answer too quickly.
Owner pay is one of the most revealing indicators of business health and one of the most commonly distorted numbers in a small business. Payment to the owner happen when cash allows. The owner absorbs the slow months and pays themselves less. A strong quarter produces a catch-up payment. The pattern continues without ever being examined properly.
Before the year closes, look honestly at what you were paid across the full twelve months. Include salary, distributions, and any personal expenses run through the business. Then ask two questions.
First, does that number reflect the value of the role you are performing? If you were replaced by a hired CEO or general manager doing the same work, what would that cost? If what you paid yourself is materially less than that market rate, the business is effectively running on a subsidised labour model, one that flatters the profit figure without reflecting the true cost of running the operation.
Second, was your pay consistent and planned, or reactive and variable? An owner who pays themselves well in good months and poorly in slow ones has not solved the owner pay problem, they have deferred it. Sustainable owner pay is regular, budgeted, and treated as a non-negotiable cost of the business rather than a reward for what is left over.
If either answer is uncomfortable, the new financial year is the time to fix it. Build your pay into the budget from July as a fixed commitment. If the business cannot support it at the level it should be, that is important information and it means the pricing, the margins, or the cost structure need attention.
The review that changes next year
None of these three things will appear on your tax return. None of them require your accountant to prompt you. But together they give you a picture of the business that most financial statements do not.
Where the profit is really coming from. How cash actually moved and what to expect next year. Whether the business is genuinely working for you or whether you are still working for it.
Thirty minutes with these questions before 30 June will do more for the quality of your next financial year than most of the planning that happens in July.
Sarah Petty is the Founder of Olive Business Partners and has worked with businesses at every stage of growth, from early-stage startups to multi-billion-dollar global organisations. She brings CFO-level thinking to small business owners who want clarity, control and a business that actually makes money. Sarah is known for making finance practical, commercial and also human.