Tuesday, 5 Nov 2024
Businesses have to operate within strict timelines and adhere to standardised workflows. The systematic processes cannot be disturbed because delays lead to disruption and downtime. Every department must be vigilant and stick to the code of conduct. The finance department, especially, has to be on its toes to maintain records and allocate resources. They have the profound task of managing working capital, monthly budgets, investments, etc.
Since it is challenging to keep track of every incoming and outgoing amount manually, they rely on accounting software and knowledgeable bookkeepers in Melbourne. These professionals are committed to keeping the books in order and up-to-date. They ensure this by completing the month-end closing process with discipline and efficiency. Here is everything entrepreneurs must know about month-end closing. It helps to review finances and make smart decisions that bring effective results.
Month-end closing is a significant part of bookkeeping. It occurs at the end of every month when the business’s finances are reviewed. It entails looking into every minute financial detail during the last 30 or 31 days. The tasks include checking the number and value of transactions, generating financial statements, evaluating business performance, reconciling bank accounts, and ensuring timely reporting.
The finance department ensures the journal is accurately updated and entries have been reviewed. They also track compliance and adhere to state regulations to avoid penalties and mistakes. The month-end closing process maintains accuracy and positive cash flow.
The month-end process follows a standardised process for financial management. It is put in place by expert bookkeepers in Melbourne and covers the following:
The bookkeeper must collect all the latest financial data to prepare up-to-date reports. They should have bank statements, financial statements, general ledger accounts, journal entries, invoices, payment receipts, investment income, etc. They ensure precise credit and debit entries to record correct income and expenses. All business transactions must be included, and journal entries must be moved to the general ledger.
The bookkeeping professionals take charge of accounts receivable by ensuring customers pay on time and follow up with them to get paid. They check discounts and identify bad debts. They are also responsible for accounts payable and ensure the business pays all its dues by the end date. They prevent calculation mistakes and duplicate payments.
The finance department double-checks the financial data by comparing the cash book with the bank statements. They are adept at identifying inconsistencies like incorrect entries or outstanding cheques, which helps to remove all errors from the records.
Fixed assets are long-term possessions like commercial property, vehicles, business equipment, etc. Melbourne bookkeepers track their depreciation and expenses related to maintenance and repairs. They also take stock of inventory and the petty cash fund.
Preparing financial statements is the most significant part of bookkeeping. It includes understanding the profitability and cash flow of the business by preparing the income statement, balance sheet and cash flow statement. These are reviewed and submitted.
The month-end closing checklist includes the following steps:
Bookkeepers maintain a schedule for the month-end close process. They have fixed timeframes for completing all tasks and keep track of the due dates to avoid penalties.
They use digital tools and software to ensure efficient recordkeeping that covers all income and expenses. Reconciling bank accounts helps them verify the data and maintain error-free records.
The professionals must prepare a list of the inventory, equipment and all other assets owned and newly purchased by the business. They must also have the latest data on the current liabilities.
The bookkeeping experts in Melbourne must prepare, submit and preserve all financial records. They must maintain productivity by offering financial advice and analysing the reports to provide insights and suggestions for growth.
Hiring a specialised bookkeeper is the first best practice that helps streamline the process. They ensure the month-end closing timelines are met and all responsibilities are completed through delegation and the adoption of the latest tools and technology. Following a systematic procedure that has been documented and communicated to the finance team helps maintain speed and accuracy.
The team must conduct pre-close and post-close meetings to understand the workload, divide responsibilities, set timelines, and review successes and failures. Analysing performance helps identify redundant activities and gaps in the process that must be filled to maintain agility and compliance with the laws. The finance department must ensure data privacy and keep management in the loop about the business’s financial performance.
Creating a perfect month-end close process helps maintain error-free records and prepare for the tax season. It also makes preparing the reports a breeze for professionals and helps overcome weaknesses in the process that can lead to expensive mistakes.
