Closing the books: A helpful year-end checklist for your Finance team

Whether your year-end closing is this quarter or still months away, your Finance team needs a strategy for keeping stress low and productivity high while generating those annual balance sheets, profit and loss statements and cash flow statements in case there’s an external audit.

Calculating the fiscal year’s business expenses, income, revenue, assets, investments, etc., on top of regular month-end closing and quarter-end reporting that are also going on, can be a heavy load for your team to carry. To avoid getting overwhelmed, it’s essential for team members to follow set workflows and stay focused on the high-priority tasks.

Year-end must-dos

To effectively close the year-end books on time, it may be helpful to:

• Come up with a schedule. Identify important activities that must be completed by certain target dates, such as the end of each week. Critical dates to note include reporting and data processing deadlines and the fiscal close date. Creating a common calendar can help the team stay on track.
• Compile all outstanding invoices and receipts. Ensure that employees understand what’s required and give them ample time to submit documents. To speed up the process, you may want to research software solutions that provide digital receipt capture.
• Reconcile all transactions. Ensure that your recorded transactions match what’s on credit card statements, bank statements, invoices and receipts.
• Review asset accounts. To determine the value of all assets your company currently owns, reconcile all cash accounts and record adjusting entries. And if applicable, compare inventory accounts with your physical stock and review prepaid spend.
• Accrue accounts receivable (A/R). Any money owed at the end of the year should be added as credits on the income statement and debits on the balance sheet.
• Accrue accounts payable (A/P). Any unpaid debts should be listed as liabilities or accrual expenses on the balance sheet.
• Close out A/P and A/R. Compare amounts that are received or paid against what’s been accrued. Ensure that all records of money coming in or going out match what actually occurred. If there’s an outstanding balance, create adjusting entries to the original journal entries.
• Account any grants or entitlements. Record any government contributions, special tax exemptions or private grants that were received during the fiscal year.