It's Never Too Early to Prepare for the End of the Year!
Doesn't it feel great to be prepared and check essential things off your company's to-do list? While your organization's year-end date may not be December 31st, the long list of tasks to complete can seem daunting; but it doesn't have to be that way. Here are our five tips on how to prepare for a successful year-end!
First Step - Organization
As with any task these days, your first step is getting organized. Ensure you have reconciled all of your banking accounts for the year; remember to include saving, investment, and credit card accounts. Additionally, make sure you have supporting documentation for all of your transactions - invoices, receipts, statements, etc. If you find any missing transactions or lackluster documentation, go ahead and fix it now.
Pro Tip: Taking a few minutes to notate any discrepancies, errors, or other abnormalities each month means you're not scrambling to remember what happened yesterday eight months from now.
Second Step - Review
Now that you have everything organized and documented, you can take a moment to double-check your work. We are all humans, after all, and we can make entry mistakes from time to time. Take a look at your income and expense accounts to make sure transactions are where you want them.
Pro Tip: Money in should only be in an income account while expenses should only be in an expense account. As with all things in life, there are exceptions to the rule.
The review phase is also a time to make entries on unrealized income or expense from investments, adjust the on-hand inventory, or review bad debt. This is also a time to verify your accounts payable total, making special note of any unapplied payments or credits so you can get those corrected with the vendor or supplier.
Step Three - Collect
For companies that invoice their customers or nonprofits who have pledges from donors, this is the time to ensure that your income has arrived. Using the accounts receivable module of your software, you can know which customers or donors might need a friendly reminder email of an outstanding bill or donation due. You can also use this module to help you determine if you have any truly uncollectible amounts, allowing you to write those amounts off.
Pro Tip: If you do not have a policy or procedure for what your company or organization considers uncollectible income, now is the perfect time to create it. Not only will it help you now, but it will help you and other staff members for years to come.
Step Four - Payroll
Now it is time to double-check payroll reports, payroll checks issued, taxes paid vs. taxes owed, and accrued benefits accounts. Review reimbursement expenses to employees in this step to make sure the reimbursements were taxed correctly, if applicable.
Pro Tip: Not all reimbursements to employees are tax-free to the employee. Make sure you note if repayment is substantiated or unsubstantiated.
Step Five - Reports
We are finally at the step management loves. Because you took the time to reconcile accounts, review other transactions, make adjusting entries, fix payable issues, collect funds, and verify payroll data, you can feel confident about your reports. For those who like to go that extra mile, make sure to review your reports compared to other periods or your budget.
Pro Tip: Make notes on trends you see, budget variances that could be concerning, or different amounts that might appear odd to those who are not in the financial records every day like you are.
Throughout the year, it is also a good idea to review internal controls and processing systems. Is everything working correctly? Were there any areas where you found errors or repeating discrepancies? Is your software keeping up with you, or is manual data entry slowing you down? Be sure to budget time or funds according to help you resolve any findings for the following year.
The Springer Company is here to help you cross off any or all of these steps to ensure you have a successful, stress-free year-end. Call (405) 753-0729 or send us an email for a consultation on how we can help your business or organization.
These steps and guidance are The Springer Company's interpretation and general professional opinion. Please contact our offices for more information and details pertaining to your specific industry or unique needs.