Many business owners often dread having to keep up with their company’s books. It is easy to get sidetracked, and before you know it, you’re already behind documenting financial transactions.
Sure, closing your books may be a time-consuming and challenging process. However, if you have a monthly closure procedure and checklist in place, you will be through with accounting chores and reconciling accounts in no time.
So, how can you make it easier to close your books monthly? Goodbye, unorganized books, and welcome, month-end closure routine.
Continue reading to learn how to create a month-end close checklist and close monthly accounts.
Businesses execute a month-end closure to arrange accounting data and guarantee that all transactions for the month have been accounted for.
To speed up your monthly closing process, it’s best to ensure you have all the information ready before you can start closing your books. This includes your total revenue, bank account details, inventory levels, petty cash fund, financial statements, accounts payable and receivable, total Fixed assets, income and expenses, and general ledger information.
Remember that each company’s month-end accounting procedures will differ depending on the type of business, accounts, and accounting technique.
Here are some tips to ensure accuracy and guarantee a seamless month-end closing procedure.
Keep track of any cash that comes in
When closing your books every month, it’s best to record any cash received during the month. Some examples of incoming cash that you’ll need to track are revenue invoice payments.
Check your invoices against your records to ensure you haven’t missed any client payments. Make sure to issue an invoice to each customer you did work for throughout the month. If you discover any errors, correct them as soon as possible.
Reconcile Your Accounts Payable
Another challenge for closing books is not having time to record transactions every day. So keep track of your purchases and arrange your receipts so you can easily maintain your accounts payable in top form for the monthly closure.
Once you’ve tracked your transactions, enter them into your accounting software at the end of each week or month. Cross-check your records during the monthly closure to ensure that you settle all monthly bills.
Reconcile Financial Statements
It’s important to reconcile all of your accounts throughout the month-end closing process. Align your records to your account statements and perform a bank statement reconciliation to ensure that your monthly records are correct.
Generally, you can divide your accounts into three categories:
- Accounts for cash, checking, and savings
- Banknotes and loans
- Accounts that are prepaid or accrued
Start with one of the categories listed above and navigate your way through the rest. When reconciling your bank account, dividing the data might help you keep organized and identify problems at the end of the month.
Assess Your Fixed assets
Fixed assets are long-term investments that bring value to your company. Fixed assets include things like buildings, equipment, furniture, cars, and land.
Typically, your fixed assets do not transform straight into cash, and since fixed assets are usually larger purchases, their value might decrease with time. Record any payments linked to fixed assets when closing your books at the end of the month.
Review and Organize Financial statements
You are responsible for organizing and evaluating all of your financial statements at month-end closure. These mostly include your balance sheet, general ledger, and profit and loss account.
Organize your statements monthly so that you won’t be rushing for paperwork at the end of the month.
You may also utilize your financial statements to help you grow your business. When you go through your statements, you find that you’ve been spending much money on a product that isn’t selling. You may select to make the product with less expensive materials. Alternatively, you may decide to change the product entirely.
Checking statements could allow you to discover problems early on, such as overspending, and prevent difficulties with your books later on.
Closing Books with Performance Canvas
It is critical for your business to close your books monthly. It may show you your company’s financial statistics as well as areas where you need to improve. Monthly book closing may also help you make financial decisions for your company, avoid costly mistakes, and prepare for tax season.
Using an FP&A software like Performance Canvas Financials (PCF) to monitor your transactions and maintain your reports is one method to stay organized. PCF can help with your monthly book closing so you can simplify your tax filing and assist your team during audits. With PCF, you can maintain the accuracy of your financial accounts and books while seamlessly integrating them with your on-premise or cloud ERP system. It also provides you with a clear picture of your company’s financial situation and helps prevent future accounting errors. It can even do profitability analysis or give you a clear picture of which products generate the most profit or which products are just costing your business.
Call our team today if you’re interested in PCF to help close your books and learn more about its features.