Change to Financial Year End

[Meandraft]

I've recently learnt via a Companies House notification that the company I work for has just changed their year end from 31st December to 30th June. Any ideas or experience on why a company would do this?

[lizardbrain]

I'm not an accountant or anything like that but I've done this before, I can't think of a reason why a company in distress would do this. It's usually a convenience based on syncing up with other systems. If a company was in distress, changing the date would be the last thing on their mind.

[mikeiow]

lizardbrain said:

I'm not an accountant or anything like that but I've done this before, I can't think of a reason why a company in distress would do this. It's usually a convenience based on syncing up with other systems. If a company was in distress, changing the date would be the last thing on their mind.

I suspect you’re right.
The US company I worked for did that many years back. Didn’t make a blip on the trajectory.
Maybe ask the company on a public forum

[v8notbrave]

Could be to help get accounts done early to help with refinancing i.e have audited accs for a bank or external finance or something trivial like reducing auditor fees. There is a very disproportionate no. Of companies with a Dec y/e so auditors are flat out to get accounts done within the 9 mths of y/e

[Countdown]

Meandraft said:

I've recently learnt via a Companies House notification that the company I work for has just changed their year end from 31st December to 30th June. Any ideas or experience on why a company would do this?

Is it delaying the next set of accounts or bringing them forward? i.e. if it's making the next accounting period 18 months rather than 12 it MIGHT be trying to buy time.

is it part of a Group of companies and trying to align reporting periods?

[Meandraft]

It'll make the current accounting period 18 months.

[okgo]

All sorts of companies run weird and wonderful year ends. Many software businesses run a month out so they close all their big deals end of Jan when people are at work

[Countdown]

Meandraft said:

It'll make the current accounting period 18 months.

As I said they MIGHT be trying to buy time before having to disclose their year end position. It's a complete faff to do so they must have a good reason for doing so.

[trickywoo]

Meandraft said:

It'll make the current accounting period 18 months.

If anything has changed regarding mergers or acquisitions it’s no big deal. If however, nothing has changed I’d be on warning expecting something else to happen inside the next 6 months.

[hajaba123]

lizardbrain said:

I'm not an accountant or anything like that but I've done this before, I can't think of a reason why a company in distress would do this. It's usually a convenience based on syncing up with other systems. If a company was in distress, changing the date would be the last thing on their mind.

Distress can be a reason to change and can actually be one of the first things on their minds- fights with auditors around going concern, potential year end covenant breach that they want to avoid, trying to sort a refinance etc etc
Can also be less concerning reasons as others have said

[Smidge001]

The company i worked for changed its year end because it got a new (American) CEO, who couldn't get his head round the concept of a September year-end, and that Oct-Dec was therefore Q1, Jan-Mar was Q2 and so on. Seriously, we had to change the year end for about 15 companies in the group and pay twice as expensive audit fees, cock up all historic reporting (Q1 of an old financial year not equivalent to Q1 this year etc) purely because the new CEO couldnt get his head round it. Biggest waste of time. I lost a lot of respect for the CFO for not standing up to him on that one.

It really can be for no good reason at all.

[lizardbrain]

hajaba123 said:

Distress can be a reason to change and can actually be one of the first things on their minds- fights with auditors around going concern, potential year end covenant breach that they want to avoid, trying to sort a refinance etc etc
Can also be less concerning reasons as others have said

Fair enough, I retract, and should have made it clearer it was a wild guess

[Abc321]

It’s usually to line up year with VAT quarters / tax year / a number of reasons likely nothing to do with anything sinister.

They may have moved accountants who often their first port of call is to tidy up the admin bits and change the YE.

I wouldn’t worry (unless their is more info you can give us on other ‘stuff’ going on)

[Panamax]

So many companies have a 31 December year end that accounting firms are insanely busy doing a lot of stuff at the same time. Shift the year end to 30th June and the company may be able to get a better price/service from accountants/auditors.

If the company has recently been acquired by another company (and so become a subsidiary of it) it makes perfect sense to align the year ends of the group of companies.

Depending on the nature of the business and who its customers are it's possible contracts and/or contractual payment dates are more stable at the end of June than at the end of December. It may also be easier to chase customers for cash in June than over the Christmas period.