5 Ways How You Should Review Your Month-End

Closing ProcessBy Team LUXA

What is a month-end closing process?

A process at the end of the calendar month where you “close the books” to your accounting transactions to gather a snapshot of all of the months activities.

“The monthly accounting and bookkeeping closing process is important because it provides management with vital financial information. This process should be standardized by creating a list of standard journal entries to promote consistency between monthly closings.”

How often must this take place? This all depends on the complexity

of your business. There are some businesses that

have a better financial review if month-end procedures are done every month.

Others can extend that to every quarter to once per year.

Why should companies employ this practice?

IT’S EASY TO LOSE SIGHT OF THE FINANCIAL TRANSACTIONS!

Consider it an opportunity to pause and take stock of how the company is performing.

“These adjusting entries produce accurate financial books, which are the basis for correct financial statements.”

5 Ways Month-End Closing Should Be Done

1. Bank reconciliations Take a look at the bank

transactions to make sure they reflect accurately the transactions that are in the books.

2. Accounts receivables Assess if there are any past dues

or invoices that require special attention for collections.

3. Accounts payables Look at invoices that need to be

paid and the age of the invoice. Also, assess what has been spent during the month.

4. Inventory Review the inventory on-hand.

Analyze the inventory that has turned and the  inventory that needs replaced.

5. Whole financial picture Assess how the business is

performing versus anticipated forecast. Is the revenue coming in as expected? Are the expenses flowing as forecasted? Does the owner need to tweak some of the activities to get back on track?

Can a business owner do all of this themselves?

Quickbooks, for example, facilitates a month-end close for business owners and makes it easy to record transactions for the non-accountant. However, the software is not a replacement for accounting best practices that are analyzed by an experienced accounting professional.

If you need help determining how to improve your month end closing process find help now.

We believe small business owners can improve their accounting and bookkeeping performance with a little help from people who love doing accounting.

We want you to focus on changing the world, not your accounting structure. Be great at what you do and above all just know you have friends here at LUXA Enterprises willing to help.