LALI Business Consulting Pty Ltd

Buidling better business for today and the future

Small business accounting: End of month procedures

Why end of month procedures?

To understand the performance of a business, it is essential that the business’s accounting systems are complete and accurate. In order to ensure the accounting systems are complete and accurate big companies develop process and procedures and ensure there are completed at the end of every month.

End of month reporting is a big deal in big companies. There is valid reason for this: they want to understand how their business is performing to make sure they take necessary actions to improve on their performance and grow their business.

The management team reviews the reports produced from the accounting systems and make decisions. It is therefore critical that these reports gives them complete and accurate picture of the performance of the business.

What about small businesses?

Small business accounting is no different to the big one except for less transactions.

If you want to grow your business and make it more profitable and valuable it’s better you understand the numbers behind your business like your big friends do.

Here is a simple end of month tasks check list to ensure your accounting systems are complete and accurate:

Day       Task

D+1       Perform end of month bank reonciliation.

D+2      Complete your sales cycle:

1. Ensure all goods and services delived during the are invoiced.

2. Ensure all credit notes processed for account for goods returned and pricing      errors.

Complete your purchasing cycle:

1. Enusre all invoices for purchases are recorded in the accouting system.

2. Ensure all debit notes are processed in the accounting system.

Complete your general ledger journals:

1. Calculate and enter depreciation journals.

2. Post other general ledger journals ie: Pre-payments, accruals, inventory valuation, payroll etc.

D+3      Analyse sales activity, gross margins, expenses, AR, AP and inventory balances.

D+4      Prepare preliminary financial statements and review the results.

D+5      Prepare and post adjustment journals and finalise the financial results.

D+6      Prepare key performance indicators (both financial and non-financial) reports and compare them with previous periods and budgets.

D+7      Reconcile balance sheet accounts.

D+8      Review the results of the business and initiate actions to improve performance.

Businesses who regularly review their performances and keeps complete and accurate accounting systems can act swiftly to any changes in the market conditions and take advantage of and mitigate potential risks.

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This entry was posted on 29/11/2011 by in Accounting.

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