Financial reporting plays a crucial role in business management by disclosing financial information and goals over a specific period. Business leaders rely on these financial insights to make informed decisions about the organization’s health. A financial report reveals how much money a business has, where it’s coming from, and how it should be allocated throughout the fiscal year. Using an OKR Planner helps align financial goals with strategic objectives for better fiscal management.
What Is an OKR Planner?
An OKR Planner (Objectives and Key Results Planner) is a strategic tool that helps businesses set, track, and achieve their goals effectively. It enables organizations to define clear objectives and measurable key results, aligning individual, team, and company-wide efforts towards common targets. This ensures that every action contributes to the broader vision of the business.
Expanding on Financial Reporting with an OKR Planner
Financial reporting is a vital aspect of business management, providing a clear picture of an organization’s financial health over a specific period. It helps leaders understand how much money the business has, where it’s coming from, and how it should be allocated throughout the fiscal year. By integrating an OKR Planner, businesses can align their financial goals with strategic objectives. This ensures that financial decisions are data-driven, focused on growth, and connected to measurable outcomes. The OKR Planner acts as a roadmap, guiding organizations to prioritize resources effectively, track performance, and achieve their financial targets with precision.
What is a Fiscal Year for Business?
A fiscal year for a business is a one-year period that companies mark for financial reporting and budgeting. A company’s fiscal year could be used for accounting purposes to prepare financial statements. A company’s fiscal year does not usually correspond to the calendar year. Although, educational institutes usually correspond their fiscal year with the calendar year.
The start and end dates of a fiscal year vary depending on the business. Within this period, essential activities such as financial audits, reporting, external audits, and tax filings are conducted. The specific nature of the business and its revenue cycle often determines the fiscal year. Different countries, companies, and organizations set their fiscal years based on their external audit requirements and accounting practices. By using an OKR Planner, businesses can align their financial goals with fiscal timelines, ensuring that key performance indicators (KPIs) and strategic objectives are tracked effectively throughout the fiscal year.
Most businesses start thinking about the fiscal year when it is time to file their taxes. The internal revenue system (IRS) is based on the calendar year. Sole proprietorships, S corporations, and partnership firms need to get permission from IRS to adopt a fiscal year for filing tax. C corporations get to choose between the calendar year and fiscal year for filing their taxes.
Choosing a Fiscal Year
Businesses that do not want to choose the calendar year as the standard fiscal year need to choose a 12 month period based on their business type.
How do I determine my fiscal year?
The fiscal year is sometimes referred to as the natural business year. The natural business year is when the company finishes the bulk of its business and the activity is at its lowest.
Seasonal businesses have very obvious fiscal year beginning and close dates, while businesses that aren’t seasonal do not have natural business years.
Examples of businesses that have natural business years different from calendar dates are:
- Schools and universities: they usually pick fiscal years during the time when classes are in session.
- Non-profit organizations: they pick the fiscal year such that it coincides with grant and award deadlines.
- Retail businesses: they choose that time of the year when holiday sales subside and inventories are the lowest.
- Agriculture: the time period after the year’s biggest harvest is chosen as the fiscal year.
Businesses that have a lot of inventory should pick the time when inventories are lowest as the end of the fiscal year. The end of the year for corporate organizations must be the time when activity is low and you have time to spare.
How to find a company’s fiscal year for accounting purposes?
Choosing a fiscal year that doesn’t align with the standard calendar year-end can be advantageous for accounting purposes. It allows businesses to optimize financial reporting, especially when creditors and investors prefer a fiscal year-end that reflects when most of their inventory has been converted into cash. The best approach to selecting a fiscal year is to identify your business’s natural year-end and use that as the fiscal year-end. An OKR Planner can help align your financial goals with this timeline, ensuring that key objectives and performance indicators are effectively tracked and achieved throughout the fiscal year.
Aligning Strategic Planning
Strategic planning for your business must be aligned to the fiscal year. Setting and reviewing of Objectives and Key Results should be synced with the fiscal year. Annual and quarterly planning and review of business objectives should be according to the fiscal year. Datalligence provides an OKR software that helps your business plan, review, and track OKRs.
