That Year-end closing is a busy time for the finance and accounting departments of every company. It involves checking and updating the accounts to reflect all the business transactions, incomes, and other events that have taken place during the last fiscal year. Among other things, the aim is to calculate the result for the past 12 months to show a true picture of the company to stakeholders and submit accurate information to tax authorities.
To prepare the annual accounts of a company and succeed in this sometimes herculean task, a process must be followed. The number of steps depends on the size of the company, but some of the main ones are:
1. Collecting accounting documents: it is necessary to collect all accounting documents related to the transactions and events of the past year. This includes bank statements, payment receipts, invoices, etc.
2. Recording of accounting transactions: to ensure an easy account closing process and achieve accurate financial statements, it is necessary to make sure that all transactions that occurred during the fiscal year are recorded correctly.
3. Check bank balances: make sure that your bank account balances reconcile with your accounts (this is called bank reconciliation).
4. Make accounting adjustments: once the bank balances have been reconciled, the various accounting adjustments for the year must be made. These adjustments ensure that the annual accounts are correct.
5. Preparation of annual accounts: balance sheet, profit and loss statement, cash flow statement etc.
How to improve the annual closing process?
Although it is a busy time, there are simple practices that can be implemented before and during the annual closing process, allowing the workload to be distributed and controlled while ensuring a good level of quality in the reports that will be generated.
Create a timeline
It is common for finance and/or accounting departments to create a timeline with the key milestones of the annual closing process. It can contain the tasks to be performed by the teams and the planned delivery dates. In this way, each team will be more aware of the impact of their action (or lack thereof) to generate accurate results.
Anticipate the work
Anticipating some of the work of the annual closing process is an easy practice to implement and allows you to identify potential problems or accounting inconsistencies and resolve them in advance. The main benefit is to prevent teams from working in a rush and thus improve the quality of their analysis.
Rely on reliable partners
During all this work, the company must rely on reliable partners that can help them record, track, and obtain clear and correct financial and accounting data and comply with current regulations.
Here at Pryor Global, our backoffice outsourcing sector has highly qualified and experienced teams to help companies mitigate risks in their financial and accounting operations. Be on the side of those who understand the subject.
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