The end of another year is an opportune time to take stock of your financial practices and position your organization for success. Recently, we shared how to optimize your accounts payable function. Today, in part two of our series on streamlining your major accounting processes, we share best practices to help you navigate year-end close and financial reporting.
Complete reconciliations
Ideally, balance sheet reconciliations should be completed monthly, but not every company can do that. As part of the planning for year-end close, review your balance sheet and identify those accounts that should be formally reconciled. Consider using an automated solution like Smartsheet to assign account reconciliations to team members, establish due dates and track overall progress. As reconciliations are completed, an automated solution could also be used to assign reconciliation review tasks.
Communicate with your accountant
Be proactive and reach out to your accountant to discuss your company’s preliminary financial results to determine the adequacy of your estimated tax payments. You may have opportunities to take action and reduce your tax liability.
Plan for a physical inventory
It is never too early to start planning for a physical inventory. While this is a highly manual and time-consuming process, a physical inventory is a critical step in a company’s year-end close process and adequate preparation will help to ensure that all runs smoothly. Consider the type of product to be counted, the number of SKUs, their location and the resources required to count.
Review fixed assets
Review your depreciation schedule to determine if it accurately includes purchases and dispositions that occurred over the past year. Scan the schedule for fixed assets that are no longer in use and should be removed.
Assess accounts payable and accounts receivable
Perform an all-out search for invoices that may have been misplaced and were not entered into your financial management solution. Review your spam folders for invoices arriving by email and request that your team does the same. Sort through any piles of paper for invoices.
Review your accounts receivable aging report to determine accounts that are considered uncollectible. Evaluate the adequacy of your allowance for doubtful accounts and post the appropriate adjustment.
Perform an analytical review
Before you formally close the year, perform a review of your income statement and compare to the previous year. Are there significant variances? Are the variances reasonable given the facts and circumstances? Are there known expenses that should be accrued? Or, did mispostings occur?
Prepare for 1099s
Start accumulating information required for 1099 preparation. Most modern financial management solutions include features to automate this task.
Our Accounting & Financial Management advisors are ready to help you optimize your year-end close processes. Contact your RKL professional or use the form below to start the conversation.
