Two words in succession that are enough to send shivers down the spine of any business owner or accounts department are ‘month end’. The hectic time of the month where books need closing, and all accounts need tying up – and it always comes around so blinkin’ quickly.
When it comes to executing the process successfully, there’s a fair amount to think about. As the cliche goes, there are a lot of moving parts that need to come together for you to continue operating a well-oiled machine.
What do I need to do at month end?
Month end activities generally include tasks such as:
- Paying all due and/or outstanding bills and invoices
- Entering supplier invoices
- Processing all cash payments and Point of Sale payments
- Closing outstanding purchase orders
- Updating the fixed asset register
- Processing all transactions and making sure accounts payable is up to date
- Reconciling and cross-referencing accounts to make sure all books are balanced (including VAT and payroll data)
- Reviewing petty cash (if this is something the business uses)
- Carrying out an inventory check (again, if applicable)
- Processing any new loans
- Producing a month end report
- Putting any preparations together for the month ahead – ready to do it all again in another 4-5 weeks’ time!
It can feel like no matter how meticulously you plan for month end; it ends up being a mad rush. That said, there are a few things you can do to make the whole thing run more smoothly, starting with your bookkeeping.
We’ve compiled the best bits of advice on how to improve your bookkeeping system below, to help kick your month end woes to the curb.
Hire a bookkeeper who’s a master of their craft
One of the best ways to ensure something is done well is to leave it in the capable hands of a professional.
An experienced bookkeeper will significantly reduce the risk of errors which result from a lack of knowledge about bookkeeping processes. They’ll also be able to set up financial statements for you, so you can view reports on the health of your business.
Establish a process that works for everyone involved
When putting your bookkeeping protocol in place, make sure it is communicated clearly to everybody involved. Ensure that anybody with responsibility knows what they need to do, and when they need to have it done by.
It’s textbook best practice but being thorough (and concise!) with your bookkeeping processes will go a long, long way towards a smoother month end.
Standardising procedures also reduces the risk of making mistakes, and makes it easier to spot errors so they don’t slip under the radar.
This includes any external bodies, too. If you do outsource to a bookkeeper and/or an accountant, make sure they know your process, or even help you plan it. This transparency will allow them to become an extension of your team, rather than just an appendage.
Find bookkeeping software that makes life easier for you
Now we might be biased but for us, this is a big one.
Investing in comprehensive, easy-to-use bookkeeping software with time-saving features is a fool proof way to improve your bookkeeping process. Particularly if you choose cloud-based bookkeeping software that can be accessed anytime, by anyone who needs it, from anywhere in the world with a solid internet connection.
As with any purchase for your business, it’s advisable to shop around and choose the best bookkeeping software for your needs.
There might be specialist processes that you want dealt with all in one, such as payroll, but generally you’re looking for features like those listed below.
- Automate the most time-consuming and tedious tasks.
- Help you manage upcoming payments, and automate reminders to help you get paid faster.
- Process complex data entry tasks more easily, such as wage journals and adjustments.
- Disallow or flag up incorrect data entries for you to fix. Accounting accuracy is crucial for reporting income, and planning out financial decisions that will impact the future of your business.
- Ongoing support through the Making Tax Digital (MTD) transition.
- Automatically pull transactions from your accounts and payment platforms (for example by using bank feeds).
- More efficient invoicing.
- Simple but comprehensive reporting tools to inform better business decisions.
Work with a reputable accountant
Taking measures to ensure you run a tight ship when it comes to your bookkeeping is essential. But, do you know how to really, really get the best out of that process?
Hiring an accountant with knowledge and experience will allow you to take the rewards of excellent bookkeeping to the next level. They’ll help you understand the data, and use your records to plan future business growth as efficiently as possible.
An accountant will also be able to point out where your bookkeeping process needs to improve. This might be on a day-to-day, month-by-month, or annual basis, so that your accounts and reports can work harder for you.
They can help you transform your bookkeeping from a box-ticking exercise, into something with the potential to significantly influence your business’s bottom line.
Plus, having the support of a financial specialist is priceless if HMRC decide they want to have a word about anything.
Keep copies of receipts and invoices
Recommended guidelines tell you to keep copies of your receipts and invoices for at least three years. Once month end has passed, don’t think that’s your cue to ditch the paperwork and let your digital filing go awry. You never know when you might need it!
HMRC might decide to carry out an audit, or a client might raise concerns about an invoice leaving you to tunnel through the paper trail to support your case.
Maintaining a high level of organisation now can save you a great deal of time, and a huge headache, further down the line.
Don’t leave everything to the last minute!
In the world of business accounting, deadlines are the real deal. Miss one, and you’re likely to find yourself facing a hefty penalty.
Just because something is due at the end of the month doesn’t mean you have to wait until the end of the month to stick it on your to-do list. For example, regular accounts reconciliation as transactions happen is far more efficient than a single swoop when month end rolls around.
Leave yourself plenty of time to tend to your books or, going back to timesaving software, make sure your shopping list includes features which will help you manage your record keeping in real-time. That way month end doesn’t become a chaotic countdown every single time. It’s good for your business and it’s good for your stress levels.
Staying focused on your bookkeeping
If you’re the kind of person who struggles to focus, or tends to get sidetracked throughout the month, here are some great ways to reign yourself in and stay organised:
- Incorporate your account processes and deadlines into any project management tools you use like Trello, Asana, or Monday.com. Assign tasks to whoever is responsible within the process, and include task due dates to bolster accountability.
- Use bookkeeping software that will let you set up automated reminders.
- Back up those automated reminders by setting your own calendar reminders too. There’s nothing wrong with doubling down when it comes to accounting deadlines.
- Clear your diary when you’re dealing with your accounts so that you aren’t distracted, and you know that you’ve carved out time specifically to dedicate to that task.
Another great tip is to set a soft deadline a few days ahead of the official one, allowing you the luxury of some wiggle room. This means you’ll have some slack to play with if unforeseen hurdles, like staff absences or business commitments, crop up.