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As the end of the year approaches, many small business owners will find the need to wrap up administrative tasks and manage end of year finances all while making ambitious plans for the coming year. But at this time of year, it's crucial to pause and take time to reflect on how your business has performed in the last 12 months, and use those insights to form effective strategies for the future.
At Wise, our mission is to empower business owners of all sizes with the knowledge and tools they need to do business across borders, with fast, low cost and transparent payments in 40+ currencies. In this guide, we'll walk you through the complexities of year-end financial management, providing some tips to help your business grow in the coming year.
Before reviewing your end-of-year financial statements, consider syncing up your Wise Business account with your accounting software, such as Xero, FreeAgent, or QuickBooks, to improve your cash flow and automate your routine tasks.
While traditional accounting processes are often repetitive and time-consuming, with valuable hours lost to manual processing of expenses, invoicing, and payment reconciliation, Wise Business account integration with your accounting software is easy and fast. Whether you're a sole trader, a small business, or an established scale-up, having a 360-degree view of your business finances can have a significant impact on growth and profitability.
Sync up your accounting software with Wise Business account
Begin by conducting a thorough review of your financial statements, including profit and loss statements, balance sheets, and cash flow statements. This comprehensive overview will help you assess your business's financial health, enabling you to identify areas that require attention and recognizing areas of strength.
Through this review process, you can uncover potential issues before they become significant problems. Whether it's identifying cash flow hiccups, recognizing a decline in customer satisfaction, or detecting inefficiencies in your supply chain, a thorough examination of your business allows you to tackle the challenges proactively.
For international businesses, a careful review of year-end financial statements is indispensable. Analysing profit and loss statements not only unveils region-specific revenue patterns but also helps you to tailor market strategies based on localised consumer behaviours. It can also help you to analyse any transaction fees and overheads related to buying or selling overseas. Your balance sheet can then be your compass for the following year, helping you to make decisions on expansion strategy, resource allocation and risk management, which are all crucial when adapting to different economic landscapes across countries.
With a Wise Business account, you can download your statements at any time, not just at the end of the year, helping you keep on top of your finances. The ability to review statements and track transactions in multiple currencies is particularly beneficial for businesses operating in multiple currencies across various markets.
At Wise, we believe in transparency about the fees you pay on your international transactions. That's why you can also download your fee statement, so you or your accountant always know how much you've paid on fees with your Wise Business account.
Understanding your tax obligations is crucial for effective financial planning. Start the process by conducting a comprehensive assessment of your tax liability for the year, examining the specifics of income, expenses, and any changes in tax laws that may impact your business, including whether you need to pay taxes on investments or shares.
Scrutinise every aspect of your financial transactions, especially if you’re operating in multiple countries, to identify potential transactions which may be eligible for potential deductions or might incur additional taxes. This includes not only traditional business expenses such as office supplies but also lesser-known deductions and credits specific to your industry or business activities. Please note that depending where your business operates, your tax obligations may differ.
To maximise your tax benefits, consider consulting with a qualified tax professional or accountant. They can offer tailored advice based on your unique business circumstances, potentially uncovering opportunities and liabilities you might have overlooked.
Conducting a comprehensive review of accounts receivable and payable will be essential if you're to enter the new year with a clear picture of your finances. Begin by scrutinising accounts receivable to identify outstanding payments from clients, customers or business partners and put in place an ageing analysis to prioritise follow ups. Craft personalised communication for client follow-ups to maintain positive relationships and consider automated reminders to encourage timely settlements, positively impacting cash flow.
Consider using the Wise Business 'Request Payment Links' to streamline your cash flow even further, by making it easy for your** clients to pay you in the currency they prefer**. This hassle-free approach lets you prompt payments from customers in various currencies and avoids delays, communication gaps and endless email exchanges. You can also choose how to be paid - straight from your customer's Wise account or by bank transfers.
For businesses dealing with physical products, maintaining an efficient inventory management system is crucial. Whether you make them by hand in an artisan workshop or import them from China, an efficient inventory management system is crucial. Conduct a comprehensive inventory count that extends beyond a simple tally, categorising products based on their velocity. Identify slow-moving items that may tie up capital and excess inventory that can strain resources and occupy valuable storage space.This can also help you shape your sales strategy and understand what's going to drive growth in the coming year.
Analyse each product category in detail, considering historical sales data, seasonal trends, and market demand fluctuations. This granular analysis optimises inventory and informs future purchasing decisions. Identifying slow-moving items early allows you to prepare targeted marketing strategies, promotions, or discounts to prevent potential losses.
You can also consider implementing new technology solutions, such as inventory management software, to streamline the process. These tools provide real-time insights, automate record-keeping, and can enhance overall efficiency so you know where you’re at as you wrap up the year.
Tip: Offer year-end promotions to clear out excess inventory and boost cash flow.
Delving into your business's capital expenditure requires a careful approach so you can be sure that you're both achieving operational efficiency while doing strategic financial planning for the year ahead. Take a close look at the equipment you're thinking of purchasing. Make sure it's up-to-date with the latest tech and follows the trends in the industry. Consider how it might impact the overall performance of the business.
You could also conduct a cost-benefit analysis, which allows you to weigh up immediate expenses against long-term advantages of investment in projects and initiatives such as international expansion or new product lines that could result in growth, increased productivity and greater competitiveness.
One way to put money aside with your Wise Business account for those bigger expenditures is to put them in a Jar. Money in a Jar is kept separately from your balances. Opening a Jar gives you flexibility to separate money for a specific purpose, whether that is to ensure your business savings are kept safe, to help you manage payroll, or cover unexpected costs or plan for future investment. Jars enable you to set money aside in any of the 40+ currencies.
When you open a Jar, you'll choose the currency you want to save in, give it a name and an icon. Then you can add money from any of your balances. When you're ready to spend, you'll need to withdraw money to a balance that's in the same currency as the Jar. Jars can be found in the same place as your opened balances.
As a small business owner, proactive financial management is the key to long-term success. By taking the time to assess your year-end finances and implementing these actionable tips and tricks, you set the foundation for a prosperous new year with realistic and measurable goals.
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*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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