Streamline your accounting process with HighRadius’ Autonomous Accounting solution to fast-track month-end close and reconciliation processes
Year-end is a hectic time for every business owner. You might be managing and juggling accounting processes to ensure a smooth financial transition for your business. Just like how you create checklists for activities you want to perform in your day-to-day life, you should create a year-end accounting checklist for your business to wrap up the year more efficiently.
Year-end closing for accounting is the process of inspecting and updating a company’s accounting records at the end of the fiscal year. The process involves taking an in-depth look at a company’s financial transactions and ledgers over the past fiscal year, with the ultimate goal of creating a finalized financial record.
The process involves reconciling accounts, identifying discrepancies, and making necessary adjustments to ensure that the balances match between the bank’s records and your accounting records.
Year-end closing can be a challenging process due to the complexity of managing financial transactions between multiple legal entities, complex transactions, lack of standardization, manual processes, and compliance requirements.
As a business owner, your prime objective should be to tidy up the accounting tasks and make them more organized and efficient for future use. One of the most important ways to do this is to make a checklist that will help you streamline your workflows. This will give you a headstart to make your year-end a successful one.
Preparing for the end of the year in your accounting department is a crucial task to ensure your financial affairs are in order. Here’s a simplified year-end accounting checklist to help you streamline the process:
If you work with third-party finance & accounting consultants or use any accounting software, you need to prepare all the required documents before the year-end. Here are some of the documents you need to gather:
In case you are using financial software to manage your accounts, you can extract all this information with just a click of a button.
Before the year comes to a close, you need to do a sanity check of your accounts receivable and payable. This will ensure that you settle all collections and debts without any penalty.
When it comes to accounts receivable, you need to check for all the past due invoices. If any customer has unpaid invoices in their account, contact them as soon as possible and ask them to settle them before the deadline. You can also take a look at your accounts receivable aging report to verify if there is any unpaid invoice or not.
Accounts Receivable Aging Report Excel Template
You must collect the owed money from the customers before the new year. This will ensure that you get enough room as a business and be able to report strong earnings.
You can also send a gentle reminder to all those customers who are yet to clear the unpaid invoices. In case a customer hesitates or refuses to clear the bill, you can:
You must keep in mind that you have to be professional while reaching out to customers about past-due invoices. If the collection process becomes difficult, offer them a payment plan incentivizing them to clear out the invoice at once. It will show the customers that you care about their needs and understand their situation very well.
Tax planning is the process of analyzing and planning the financial position of your business that will allow you to pay the lowest amount of tax possible while abiding by the laws. In simple words, tax planning is the process of minimizing your tax payable amount.
It’s no secret that taxes can reduce your annual earnings, and tax planning is a great way to counter the liabilities in a financial year. It will help you utilize the tax deductions and exceptions in a fruitful manner that will benefit your company’s interests.
Preparing and analyzing financial statements is crucial not just for enterprises but also for small and mid-sized businesses. They let you analyze past and present transactions and help you predict the business’ financial future. It allows you to plan for the new year accordingly.
Financial statements such as income statements, balance sheets, and cash flow statements can help the management team as well as shareholders and investors analyze the year-end better.
Keeping a record of all accounting data for future reference is critical to all businesses. Hence, don’t forget to add -‘backing up of important information’ into your year-end checklist. Adopt a reliable backup system that will protect your important accounting information on your phone or computer. You can also use cloud backup which will enable your company to send a copy of your backed-up data to another location in case the system is compromised. With the help of cloud backup, you can also restore information and get protected against IT crises such as cyberattacks or other disasters.
Reconciling bank accounts and credit cards is an important part of the year-end procedures. You can compare your bank account statement with accounting records to verify the spending. It should match the balance recorded in the log books. In case you find any discrepancies, you must check again and make the necessary adjustments to settle the records.
Before the new year starts, setting goals is extremely important for a finance team that would let them plan for the targets accordingly. It also helps the team to stay motivated and focus on the set goals. The right set of goals should be specific and attainable within the realm of possibility. You must also choose relevant goals which focus on improving the areas of weaknesses in your business.
Thus, smart goals are the ones that are planned on a monthly or quarterly basis, giving you room to achieve success on future projects.
Your new year will be off to a great start once you start following the above-mentioned checklist. This will help your finance team to work more efficiently, save time, and make better financial decisions. HighRadius’ Autonomous Accounting software can help you detect anomalies, which will save your finance team from doing manual work during the year-end close. This will also help you identify and resolve variances through configurable matching criteria and algorithms.
Answer: A checklist is important because it provides a detailed step-by-step process that you need to follow. It works as a reminder for your prioritized tasks and helps you plan better so that the deadlines are not missed.
Answer: The year-end closing process in accounting is the time when companies do an audit and update their books at the end of the financial year. This is a very important step in every business’ financial reporting process.
Some items that should be included in year-end accounts are summary of performance, balance sheet, income statement, cash flow statement, closing entries, and reconciliations.
Some reports that an accountant needs for year end closing are income statements, balance sheets, cash flow statements, trial balances, inventory reports, depreciation schedules, and tax reports.
Accruals are accounting entries that record revenue or expenses before the cash is received or paid. At year-end, you need to adjust these accruals to ensure your financial statements accurately reflect your company’s financial position.
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