Without a well-documented bookkeeping process, your business may not be meeting its full potential in terms of profitability and growth. Staff may be spending more time on each client, double checking which tasks are missing. This inefficiency has a knack of snowballing as your team play catch-up with any missed tasks.
Besides investing in an accounting software using a monthly bookkeeping checklist to ensure nothing falls through the cracks will assist your team in knowing what tasks need to be completed.
Some tasks we would recommend as the most important for your monthly bookkeeping checklist.
1 – Review Your Cash Position
This task is quite often overlooked, which can cause unnecessary complications or emergencies as there could be the situation that there is no available cash to spend.
You want to review how much cash you need on a month-to-month basis and make at least that much available.
If you have any cash-intensive plans in the coming months, you should make allowances for that as well.
2 – Update Your Bookkeeping Software
Make sure to keep your bookkeeping software up to date. This can only help you as much as you keep the data updated with all aspects of your monthly finances.
Collect, organize, verify, and store all bills/invoices/receipts related to business expenses and income. That way, the business has a comprehensive record of financial transactions for audits, tax purposes, or financial analysis.
If more than one person is contributing to the bookkeeping tasks, make sure to confirm that they have all done their part to the fullest.
3 – Review Customer Invoices
As soon as payments are received from customers, record them immediately in your bookkeeping software. This keeps you from making the mistake of contacting customers who have already paid you. It also helps you keep track of the payments you have received.
4 – Review Supplier Bills
Prompt payment of invoices ensures good relationships with suppliers and maintains a positive cash flow for the business. You can also avoid unnecessary late fees or disruptions of goods and services.
5 – Review Aged Receivables Reports
Examining any outstanding invoices and payments due from clients or customers. The purpose is to collect timely payments, detect overdue ones, and keep a healthy cash flow.
6 – Review Aged Payables Reports
This involves verifying and managing the money the business owes to its suppliers or vendors. It provides an accurate picture of the business’s financial obligations.
Generate an accounts payable report from your accounting system and execute payments according to the report.
Once done, record the payment details in your accounting system, linking the payment to the respective bills/invoices/receipts.
This will ensure an accurate tracking of payments made and future reference for financial reporting.
7 – Reconcile Credit Card and Bank Accounts
This task guarantees the accuracy of all financial transactions and contributes to the business’s financial integrity.
Once you have reviewed, paid, and recorded both customer and supplier payments, you are ready to check your reconcile credit card accounts and bank accounts for accuracy. By the end of this task, your actual cash position will become clearer, and you will have spotted any suspicious activity, double charges, or failed transactions that might have gone unnoticed over the past month.
8 – Calculate VAT
Although you can make quarterly payments for VAT, checking and calculating it monthly makes it much less cumbersome when it comes time to submit your VAT Return.
9 – Review Forecasted Cash Flow
Small business owners need to have a view of their cash flow goals, but they must be achievable and to meet the current business climate.
If you run a seasonal business, cash flow goals are even more important so you can thrive during and after the peak business periods.
You may need to review your forecasts if your financial statements exceed or do not meet your budget. If you do not have a budget, comparing your current income to previous months can be an effective way to prepare for the future.
10 – Create and compile financial reports:
Run reports and review all financial data, including (but not limited to) Profit & Loss statements, Balance Sheet reports, and Cash Flow statements.
This lets you gain valuable insights into the business’s financial performance and help you make informed decisions. These reports provide a snapshot of the company’s financial health, aiding in compliance, strategic planning, budgeting, and overall financial management.