Bookkeeping is cyclical. Year in and year out, the cycle is continual and this is why the responsibility placed on bookkeepers and accountants is so important. Just as every business has its fiscal year and quarterly reports, the numbers team has its own reporting to do. But outside of annual reporting, it’s important not to overlook the importance of end of month reporting. Or as insiders call it ‘wrapping up the books at the end of the month.’
In fact doing end of month reports is one of the most important tasks that a bookkeeper has because annual and quarterly reporting hinge on how well the books are balanced, all twelve months of the year. Because if the books are not properly updated, even the smallest problems can snowball into something much greater at the end of the fiscal year. Bookkeeping and accounting are one of the few professions where you’re required to be as error free as possible – when you’re dealing with someone else’s money, mistakes are costly.
So what does a good end of month report look like? Well it starts by establishing a set closing date. Typically this is at or around the very end of the month and the date should be communicated to all those who send you invoices. It’s important that you establish a firm date for this and make it clear that all expenses and revenue must be posted at this point. “It’s basically set in stone,” says Sheri Gulston, accounting officer at Ashton College. “You can’t close the books until everything has been reported and you can’t modify the ledger either.”
Once you’ve established a firm closing date you can move into balancing the sheets. When examining the sheets (or ledgers) what you’re looking for are any discrepancies between your debit and credit columns. “This is where you often find mistakes” says Gulston. “If there are accounts you’re uncertain about then you make a note to come back to them later during the adjustment phase.”
After you’ve concluded putting together a balance report you can start to adjust individual entries. “This is where you correct the balance on your ledger and tie up any loose ends. Sometimes you might have overdue invoices or invoices that came in at the last minute” says Gulston. “If you’ve done your balance report correctly then the adjustment process shouldn’t be too time consuming.”
Once you’ve adjusted your ledger entries then you need to double check your balance report to make sure that the two are synced up. This may seem like a step you can just skip but this isn’t a road you want to go down. “A lot of bookkeeping mistakes are missed at this point,” says Gulston. “Your balances might vary slightly after you’ve done adjustments so you need to backtrack a bit and make sure everything lines up.”
The final step in doing your end of month reporting is the end of month reporting itself. The report needs to include all the expense activity for the period to date and proper documentation of your balance sheet. “If you’ve done all the previous steps correctly then the report should be error free,” says Gulston. “But if it isn’t then you need to go through all of the preceding steps to find the error. Remember, take your time and you won’t make any mistakes!”
Founded in 1998, Ashton College is a post-secondary institution offering flexible education options for working professionals looking to upgrade their certification or change careers.