For many small business owners, month-end accounting tends to get pushed aside until there is a tax deadline, a cash flow problem, or when numbers don’t quite add up. When you are focused on other aspects of the business, bookkeeping gets pushed aside. However, spending some time reviewing your finances at the end of each month helps you stay in control, spot issues early and make better decisions.
At Hanley & Co. Accountants, we have compiled a month-end close checklist for small business owners. For more information, call us near Kendal on 01539 821869.
What is the Month-End Close?
The month-end close is the process by which companies verify, adjust and finalise their financial figures for that month. It is a systematic process of reviewing, documenting and reconciling all financial transactions that took place before starting the next accounting period.
A monthly closing process ensures accurate reporting and helps you identify any errors.
Reconcile Your Bank Accounts
The first job at month-end should be reconciling your bank account. This means checking all transactions recorded in your accounting system match the transactions shown on your bank statement. At first glance, this can sound very technical, but it is essential in keeping accurate records.
During this, you may uncover:
- Missing transactions
- Duplicate entries
- Unrecorded bank charges
- Direct Debits that have not been posted
- Payments received but not matched to invoices
Bank reconciliation gives you confidence that the financial information you are looking at is accurate.
Review Unpaid Customer Invoices
Once your bank accounts have been reconciled, take a close look at outstanding sales invoices. Unpaid invoices can quietly create pressure before they become obvious. One of the most common cash flow issues in small businesses is delayed payment, and month-end closes are the perfect time to chase overdue balances, send reminders, or follow up with clients.
The earlier you deal with an unpaid invoice, the better your cash flow will become.
Review Supplier Bills & Upcoming Payments
It is also important to look at what your business owes. Check outstanding supplier invoices, subscriptions, rent, and any other regular direct debits. A business may have money in the bank, but it doesn’t mean all of it is available to spend.
Reviewing your own bills and upcoming payments helps you to:
- Avoid late payment fees
- Maintain good supplier relationships
- Understand short-term cash commitments
- Plan spending more confidently
Check Your Cash Flow Position
Cash flow is often what determines a business’s stability. A profitable business can still experience serious pressure if cash is coming in too slowly or going out too quickly. At month-end, look ahead and find out:
- What money is expected during the next few weeks
- What major payments are due
- Will cash remain comfortable or could things become tight
Forms of cash flow include:
Even a basic awareness of incoming and outgoing cash can help you make better short-term decisions.
Compare the Month with Previous Periods
Comparing the latest month with previous months helps you to identify trends, such as:
- Sales growth or slowdown
- Seasonal patterns
- Gradually rising costs
- Changes in customer payments behaviour
- Pressure on profit margins
Most financial problems build slowly, and a monthly comparison can often catch those changes early enough for you to act.
Contact Us
If you require accounting advice, contact Hanley & Co. Accountants near Kendal. Serving across Cumbria, call us on 01539 821869. Alternatively, send us a message via our contact form and we will be in touch.
