Closing your books on an eventful year can be a daunting endeavour, but it doesn’t have to be. While it’s tempting to get caught up in the joy and excitement of the winter holidays, there’s also no better time to get your finances in order, setting you and your business up for a stress-free holiday season and successful new year. Here are three tasks entrepreneurs should prioritize to jumpstart their end-of-year accounting:
Reconciling accounts
In an ideal world, business transactions would be meticulously recorded and would align with external statements received from financial institutions. With that said, mistakes do occur and, as a result, need to be adjusted accordingly. Reconciling your accounts is a valuable exercise that will not only keep your records accurate, but will also flag any financial inconsistencies – things like fraudulent activity, mischarged transactions, or unused subscriptions. These real-time, accurate insights can provide you with a more holistic picture about your business’ overall performance. To make your life easier, make reconciling your accounts on your mobile device a daily habit – whether it’s the first thing you do over a morning coffee, or the last thing as you head out at the end of the day.
Collect outstanding payments
The waiting game is never an enjoyable one and neither is the chasing that ensues. Here is an opportunity for technology to alleviate the effort required to encourage your clients to fulfill their payments, while also getting paid faster. Accounting softwares like Xero, exist to simplify the lives of entrepreneurs, bookkeepers, and accountants alike. Features like online invoicing can make collecting payments for accounts receivable increasingly accessible to clients, as long as they have a device and internet access. Automated invoice reminders can also reduce the effort needed to play ‘catch-up’, while helping enforce a friendly and timely collections policy. By keeping track of outstanding payments, you can ensure your business’ cash flow is healthy and in good standing.
Reflect on your goals to make new ones
By establishing financial projections, you are laying down the foundation to plan and budget for your business in the new year. Three basic financial documents are necessary to ensure your financial projections are sound – an income statement, cash flow statement, and balance sheet. These projections will serve as a benchmark to compare against your ongoing financial performance. You’ll be able to see if your business is falling short or if it’s exceeding your expectations throughout the year. While setting financial goals are a given, make sure to give some thought to your professional and client goals too. Consider how you are enabling professional development in yourself and your employees, and if the resources you have in place are inducing tangible benefits. As well, be sure to review your current client partnerships to see if they still align with your business objectives and values. These professional relationships should stimulate business growth for both parties, not hinder it.
The countdown to the winter holidays is officially on, and the sooner entrepreneurs close their books on this year, the sooner they can establish achievable financial goals for next year. Who knows – getting a head start on year-end accounting just might be the best gift entrepreneurs, bookkeepers, and accountants can receive this year!
