Producing accurate and timely financial results helps boards of directors and owners understand the financial position of an organization. Often, these people run reports on this data to make decisions — often on a tight deadline. To keep those in charge of governance best informed, they need accurate data and reliable bookkeepers who finalize and close the books on time every month.

Know Your Monthly Strategy

Because timely financial statements are so important to an organization and its stakeholders, bookkeepers should have a plan to ensure their work is completed when their leaders need it.

So above all else, it helps to be organized. If our recommendations don’t work for your way of doing things, it’s okay. Being organized, keeping a checklist of exactly what tasks need to be completed, and learning from your mistakes month-to-month are the most important parts of closing the books.

More specifically, however, we find it helpful to break the process up week-by-week to ensure you aren’t caught off guard at the end of the month.

Week 1

Get ahead of the game by preparing for closing the month at the beginning. During the first week, get as much material ready to go as is available to you, rather than leaving it for the last week of the month.

  1. Review prepaid insurance and prepaid expense schedules (These amounts be consistent month after month.)
  2. Check on any additions to fixed assets
  3. Gather all bank, investment, loan, and line of credit statements — having these ready to go will make next week’s work easier.

Week 2

Once you begin to collect information as it becomes available, take the next step during the following week. As soon as you can, perform reconciliations on the following types of accounts:

  • Bank
  • Investments
  • Credit cards
  • Loans
  • Lines of credit

Once you reconcile these accounts, lock the month’s activity so your reconciliations stay accurate. If you need to make an adjustment, you may need to use a manual journal entry.

After your reconciliations are complete, you can provide draft financial information for your organization’s management, owners, and/or board of directors.

Week 3

Continue reconciling accounts if you didn’t get to all of them in week two. Make adjustments in the current month as needed and record the reason, amount, and date. Otherwise, continue with your other projects and responsibilities.

Week 4

As you prepare to close the books for the month, make sure to check for the following anomalies:

  • Customers with large outstanding balances. Verify whether these amounts are likely to be collectable or if they should be written off.
  • Vendors who have performed services but not submitted an invoice. Reach out to those vendors and have them email their invoices to you.
  • Missing revenue or expense amounts in the income statement (statement of activities). Using your accounting software, print monthly income statements for the last 12 months and review the statements to find any missing revenue or expenses.

Provide copies of the final financial monthly statements to those who need to see them and close the books for the month. Again, any adjustments made after the fact should be entered as journal entries and tracked appropriately.

Making A Routine

Though it may seem odd or uncomfortable to break the monthly financial statement preparation into distinct chunks, establishing a healthy pace for getting this work done will help everyone involved with this process.

Whether you use our advice or come up with your own schedule, we hope this information has served you well. Feel free to contact us with any questions you may have!