Many companies view financial year-end as a necessary evil that they have to get through with white knuckles and gritted teeth. Fortunately, it doesn’t need to be this way.
With effective processes in place, automated systems, and a good strategy, there’s no need for the financial year-end to be a burden. Gary Epstein, MD of EasyBiz Technologies, the authorised local partner for QuickBooks Online in South Africa, discusses how businesses can manage their year-end process seamlessly.
An important first step in year-end preparation is to focus on what your company has done during the year, not just at year-end. Daily, weekly and monthly consistency and controls will ease the load. Good planning and great technology are key. Implement systems and processes that will enable the groundwork to be done monthly, instead of annually.
Keep a countdown calendar
Knowing how much time there is and what needs to be accomplished by when, is an important part of time management. For many companies, there will be major tasks that will need to be completed before year-end. Where possible, build these kinds of tasks into your timeline. You can even keep the countdown calendar updated the whole year and slot in fixed deadlines.
Have a ‘Tax’ account
Having a separate investment account to manage the company’s taxes, and doing a monthly reconciliation of the account will ensure that there are enough funds to cover the company’s tax liabilities at year-end. The recon will show whether there are any shortfalls, and the account can be topped up when necessary, so that there are no surprises at year-end.
Keep reconciling
No matter how well you plan ahead, there can be hiccups. When you’re confronted with a problem, whether it is accounts that don’t tally or debit and credit balances that don’t reconcile, just keep reconciling – there’s always an explanation for why numbers don’t match, but a proper approach to reconciliation can ensure that every number you report is accurate.
Update your chart of accounts
Your chart of accounts is a critical part of properly organising and reporting on the different revenue streams and expense categories that affect your business. However, continually adding to a chart can lead to a messy system that doesn’t align with the revenue and expense tracking needs of an organisation.
Before year-end, ensure that all of your employees understand which accounts correspond with which activities to make sure all details are included in the right places for the most accurate final outcome possible. As a part of this process, make sure that:
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All account types, including income, liabilities, assets and expenses correspond to reporting requirements.
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All accounts are named correctly in a clear, easily understood manner.
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No duplicate accounts exist.
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Inactive, unused or duplicate accounts are removed.
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All entries related to each account are correct and accurate, based on account type and designated purpose.
Stay tuned
Without a strong understanding of the events of the year and easily accessible documentation to support entries and invoices, your numbers are essentially meaningless. Unfortunately, for some companies, this can mean piles of paperwork to sort, organise and categorise. If the idea of handling all that paperwork by hand sounds exhausting, switch to an online accounting system.
Have the right software
Having user-friendly online accounting software will greatly support any business-owner in managing their own accounts as well as those of their clients. With the right software, you can:
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Create professional custom invoices, send payment reminders, and match payments to invoices, automatically.
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Reduce errors when you connect your bank to get a full view of your finances.
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Easily organise expenses into tax categories and track VAT on income and expenses.
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Capture and organise receipts – use your phone to take photos of receipts and match these to expenses.
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Run your business on-the-go with your mobile device.
Year-end isn’t a time that accountants and business-owners relish, but it’s a necessary part of the business cycle. With the right processes and automation in place, you can save a lot of time, effort and stress. Instead of looking towards year-end with fear and apprehension, put the right tools and practices in place to make every year-end a successful one.
