By Brian Ravencraft
Financial practices that business owners and farmers implement and then do repeatedly over time tend to be beneficial. One of those practices is known as “closing the books” or the “month-end closing” process. I am not just speaking in accountant slang; these are actual exercises that can set any business up for success and can save the owner many headaches when the end of the year arrives.
The month-end closing process is something you can set up with your accountant. This will be conducted at the end of every month and will allow you and the accountant to really take a deep dive into the finances of the business. This will be the time to reconcile any mistakes and to plan for upcoming expenses. Doing this simple exercise will also allow you to prevent lost revenue, plan for tax obligations and more.
The month-end process can look different for different businesses, but it typically includes actions such as: reviewing the balance sheet and financial statements, reviewing accounts payable and accounts receivable, examining journal entries in accounting software, evaluating income and expenses, reconciling accounts, and reviewing fixed assets.
No matter how to execute the month-end close, make sure that you are conducting this exercise around the same time each month. Perhaps set a standing date with your accountant so it is already marked on your calendar. I recommend having a checklist in place for the process so important steps are not missed. Finish out this monthly exercise by analyzing the data you uncover carefully and have having a thoughtful conversation with your accountant about open items and needs that should be addressed quickly. This is so much better than letting pressing matters and concerns pile up only to be addressed in a stressful manner at year-end.
If you have questions or need assistance with the month-end closing process, please reach out. I am here to help.
Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, primarily focusing on the areas of Tax Consulting and Management Advisory Services within several firm service areas, focusing on agri-business and closely held businesses and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention that each client deserves. You can reach Brian through www.agribusinessaccounting.com or www.HolbrookManter.com.