Let’s face it – business ownership has its rewards, but it also comes with a lot of challenges and responsibilities. Chief among those responsibilities is maintaining current and precise accounting records to accurately gauge your company’s financial performance. Don’t lose sight of the importance of month-end closing procedures and the issues your accounting department faces.
Chances are, your accounting staff are dealing with tedious manual processing, including data matching and reconciliations. Some discrepancies may be unidentified and some items left open due to lack of time. Your accounting software may not provide a full picture of what’s really going on, and your staff may feel pressure to close the books in a rush.
So how can you make sure your general ledger is reconciled, your financial statements are spot-on and your books are in good shape? We recommend following the seven steps outlined below at the end of each month.
Key general ledger account reconciling reports
- Accounts receivable reconciliation to AR general ledger account balance for the same ending date
- Accounts payable reconciliation to AP general ledger account balance
- On-hand inventory value reconciliation to inventory G/L account balance
Recommended general ledger accounting balance reconciling reports
- The amount column total in the “Goods Receipts PO” option of the Open Items List should balance to ‘Goods Received, Not Invoiced’.
- The amount column total in the ‘A/R Down Payments – Not Yet Fully Applied’ combined with the ‘A/R Down Payments – Not Paid’ option of the Open Items List should balance to ‘Deposit on Customer Orders’ G/L Account Balance
- The Amount column total in the ‘A/P Down Payments – Not Yet Fully Applied’ combined with the ‘A/P Down Payments – Not Paid’ option of the Open Items List should balance to ‘Prepayments on Purchase Orders’ G/L Account Balance
Monthly transaction detail reports that run for the period of review
- Sales Tax Report
- Check Register Report
- Sales Analysis
- Purchase Analysis
- Purchase Journal – to report all expense detail posted for the period
- Inventory Stock Adjustments
Enter and post any required month-end journal entries
- Verify contents of all cost pool to be allocated
- All entries should empty the revenue, expense and income summary accounts
Run month-end financial statements and supporting sub-ledger details reports
- Balance Sheet
- Income Statement
- G/L Trial Balance
Set period status to “locked” to ensure there are no unauthorized, accidental or unknown postings to the period.
- Administration> Systems Initialization> Posting Periods
System housekeeping tasks
- Business Partner accounts reconciliation tools
- Un-deposited funds account
- Ensure that all posted checks have been confirmed with the AP check number
If you’re less than satisfied with your current accounting software or your month-end reporting processes, it may be time to consider a better system. The steps outlined above can be accessed automatically from an enterprise resource planning (ERP) solution like SAP Business One. SAP Business One is affordable, easy to use and quick to implement. It brings all aspects of your business – not just accounting and financials – together under one platform. Perhaps best of all, SAP Business One eliminates redundant data entry and produces meaningful reports, allowing you to make sound financial decisions about your company’s future.
We’re here to help. You’ve got enough to deal with, so if you’re curious about how SAP Business One can make your job easier, let’s chat. Drop us a line at firstname.lastname@example.org.