Are you a new business struggling with month-end closing? Don’t worry, you’re not alone. A lot of new businesses and entrepreneurs struggle to keep up with their accounting books. As soon as they realize the urgency of finishing accounting tasks and reconciling accounts, another month passes. As a result, they fall behind in recording transactions.
Closing your books at the end of the month can be really stressful and time-consuming if you don’t know what to do. If you want to simplify your accounting responsibility of closing your business books, we have some serious tips for you.
In this blog, Finsmart will share a month-end closing checklist for better accounting in 2022. We have outlined major accounting tasks that require action over the fiscal period.
Are you ready to explore our month-end closing checklist? Let’s go!
#1 Create a closing schedule
Since you are a thriving business, it is pretty obvious that you have so much going on every month. From finance to marketing, production, surveys, shipping, and customer support – there is no dearth of tasks you have to carry out to operate your business effectively. No wonder, memorizing dates for performing accounting tasks is really difficult and frustrating in a crazy work schedule.
That’s why we suggest business owners not waste their valuable headspace memorizing a bunch of dates. Instead, note down all important and relevant deadlines. Prioritize each accounting task according to upcoming due dates. That way, you will be able to prevent delays and inefficiencies during month-end closing.
#2 Record incoming cash
The next important accounting tip of our month-end close checklist is about maintaining cash records. Put all incoming revenue totals, whether they have been remitted or due in writing (along with sources). Our accounting experts suggest business owners put the following incoming cash on record:
- Invoice payments
Measure the differences between your invoices and bank statements to make certain that you aren’t overlooking any outstanding customer payments. If there’s a payment in due or you find any sort of inconsistencies, manage them right away. Send customers a reminder of the amount due. Put any late fees into practice if required.
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#3 Reconcile accounts
Let’s be honest. Based on how efficiently you have regulated your expenses during the month, this step can either be a piece of cake or back-breaking on the month-end closing checklist. Reconcile every transaction with your bank account statements.
Break your account into the following categories:
- Cash, cheques, and saving accounts
- Prepaid or accrued account
- Bank loans and notes
Pick one option first. Start working on it carefully. Make strides for others afterward. This way, your business accounting will stay streamlined and you’ll be able to catch errors at month-end closing with ease.
#4 Update accounts payable
Account payable is really important to track what is owed to suppliers; ensure your payments are properly approved and accurately processed. All these will help you produce an accurate balance sheet. But let’s be honest. Since you are a business owner, you probably don’t have time to record transactions every day. True, isn’t it?
How about writing your purchases and organizing receipts? You will be able to keep your account payable in perfect form in that manner. After reconciling transactions, record them in your accounting books at the end of each week. Cross-check your records to make certain you have covered up all bills and invoices during your monthly close.
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#5 Review assets
One of the most important accounting tips on our month-end closing checklist. Assets are resources that are owned and controlled by a business. Building, machinery, raw materials, furniture, inventory – all of these are your business assets. Although assets don’t convert directly into cash, they can depreciate in value over time.
In other words, they are long-term items that add value to your business. When closing your month-end accounting book, record any payment related to your business assets. Note if you have made any new purchases or transactions related to fixed assets.
#6 Count inventory
The next accounting tip of our month-end closing checklist is to perform monthly inventory counts. Businesses that aren’t using an automated inventory management system or haven’t hired or outsourced accounting management services to keep on top of their inventory status often expose themselves to overselling and ruffling customers for items they want to buy from you.
You don’t want those things to happen to your business, right? If your answer is yes, start performing monthly inventory counts. By doing so, you will be able to figure out what items you need to replenish and identify products that will expire by a certain date. You will be able to make adjustments and reconcile your books after covering all end-month accounting actions.
#7 Check revenue and expense accounts
Another important accounting tip from Finsmart’s month-end closing checklist! Review your revenue and expense accounts. Make certain you recorded them in the correct account for a specific period. Write down all the sales and revenue for the time period you’re analyzing. Add together all costs of producing each product for sale. Be sure accruals and prepaid expenses are recorded in your books in the right manner.
#8 Review your work
Remember how we used to double or triple-check our exam paper before submitting it to the teacher? Just like that, you should consider having a second set of eyes review your work before completely closing business accounts at month-end. After reviewing your work by yourself, ask your manager or supervisor to have a look at your books.
Ask them to review your accounting information and tell you if it is accurate. That way, you can substantiate your business’ strategic financial planning is formulated on a healthy foundation.
Month-end close checklist
Closing your accounting books is really important for businesses. It demonstrates the monthly financial status and also shows which areas require attention. With this, our month-end account close checklist ends.
Got any queries to ask? Send them to email@example.com and have them answered by our accounting experts.
Check out these services as well if you operate or want to scale in India:
Outsourced payroll services in India
India entry services for global MNCs
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