The end of the month seems to roll around quickly when you run a business.
It might be a time for celebration if you’ve had a good month in business. Or, it could be when you plan to tighten your belt because the cash flow isn’t great.
Unfortunately, you won’t know which applies unless you have done your end-of-month checks.
Doing these monthly checks helps you ensure that incomings and outgoings are up to date and that your cash flow is good. It also allows you to review your situation against your budget or business plan for the year.
Finally, it means less panic at the end of the financial year as your records will be up to date!
So, how do you do these important financial healthcare checks?
There’s a lot to remember, so we’ve put together a handy checklist of all the things you should tick off each month.
The End-of-Month Bookkeeping Checklist your Business Needs
1. Bank Reconciliation
A bank reconciliation is where you match the transactions in your accounting system to the amounts on your bank statement.
Conducting a bank reconciliation ensures that there are no odd transactions and that everything matches your business records. If you find anything that doesn’t add up, investigate it while it is still fresh in your mind.
Investigation can be done manually, although that can be time-consuming if you have a lot of transactions. If you have your accounting set up with a system like Xero it’s much easier (so we’d definitely encourage you to take your finances to the cloud if you haven’t already done so!)
2. Accounts Payable
Accounts payable encompasses all the things you owe money for – to suppliers or creditors.
Unpaid bills make for unhappy suppliers and can cause an issue with your cash flow. Make sure you have paid all the invoices owing or noted if any will not be due until after the period you are reconciling.
3. Accounts Receivable
This is the money coming into your business, so it’s critical that you keep on top of it. Check that all relevant invoices have been raised and approved and that you’ve received everything you expect in the right amounts.
4. Debtor Management
Once you can see which invoices have been paid on time and in full, you can pay attention to any outstanding payments. Chase any amounts that are outstanding. You may need to send a reminder, or if it is a significant or long-standing debt, you might need to make a phone call.
A simple and friendly reminder is often all needed to get the payment in. Your invoice may have gone astray or been forgotten. You can set up automatic reminders in Xero to prevent the need to chase amounts manually.
If the friendly reminders don’t work, consider other ways to recover the funds. Using your bookkeeper can be a significant next step or potentially even debt recovery services as a last resort.
5. Batch Payments
A batch payment is a group of payments made to individual recipients from the same account. So, if you have several bills to pay around the same time, grouping them all in a batch payment can be convenient.
If you use this method, you’ll need to consider your batch payments in your end-of-month review. Check they are correctly set up to ensure your bills are paid on time, and nothing is missed.
6. Balance Sheet Checks
The balance sheet keeps track of your business’ value. It tracks all of your assets, liabilities, equity, capital and debt, amongst other things. Checking your monthly balance sheet helps you verify that the general ledger figures match the bank statements.
7. Profit & Loss Checks
Profit and loss reports help you keep track of revenue, costs and expenses, plus they show whether you’ve operated at a profit or made a loss that month. Regularly reviewing these against your budget, forecasting and comparing to previous months helps you to keep an eye on your finances and how your business is tracking.
8. GST Review
To ensure you submit the correct figures to the IRD, you will want to review that your GST is correct. You can do that by reconciling your GST payments and ensuring everything is up to date for your next GST filing deadline.
9. Monthly Journals
Journals are where all your financial transactions are recorded. Each month you should check that all required entries have been made. Journal entries help you to ensure your financial records are captured in the right period.
10. Fixed Assets & Depreciation
Each month, you should check that all your fixed assets like computers, vehicles and buildings are recorded in a register and have relevant paperwork attached. Then, you need to tackle their depreciation.
Depreciation is one of those things that you know is great for your business, but tricky to get right! Over time, the value of your assets will naturally depreciate, so this needs to be accounted for in your numbers. There is a formula that you can use, however if you aren’t sure how to account for the depreciation correctly then get in touch with your bookkeeper (or the Admin Army team!)
Need Some Help?
Don’t have the time or the skills to get all this done every month? Failing to do these checks each month puts you at risk of forgetting bills, losing money and coming unstuck when it comes to tax time.
Luckily, Admin Army have got you covered. Our troops can come in and get all your figures into line. Every month we’ll run through all these checks for you and let you know if anything needs your attention. Our processes, templates and checklists are all on point to help us streamline your end of month finances.
To make it easier, if you aren’t already doing your accounting online, we’ll help you get setup with online accounting software like Xero or MYOB. This makes it simple for you to keep track of your finances, and easy for us to work with your figures.
Ready to get your figures neatly lined up each month? Contact us to book one of our troops for your bookkeeping.