A Special Series from North American Wholesale Lumber Association
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Every company has a different way it handles its financials and method of closing the books at the end of the year. Here are some tips that everyone can follow to make the process clearer and easier: Stay on top of the activity throughout the year do not wait for year-end to begin analysis and reconciliation. Keeping track of your numbers throughout the year through monthly closings, for example allows you to identify potential problem areas faster and manage the year-end closing more proficiently. Invest in good accounting software that is integrated with the operations of the company. Though a spreadsheet may help with certain aspects of this process, it cannot handle every piece and, frankly, you don’t want it to. ook into software that will make the accounting for your business seamless and efficient. Develop expectations and concentrate on areas that fall outside of those expectations. Exceptions from the expected results will often identify misrecorded transactions posted during the course of the year allowing for correcting entries to be made. Create budgets and assign responsibilities to those budgets. Wherever possible, make the process a team effort. This could provide a better sense of ownership for certain employees and can also ease the burden of preparation on just one person. Be transparent. Related to the point above, allowing for increased transparency can strengthen the team and provide more clarity into the financials.
bviously, the actual closing process at each company will vary however, most companies will complete similar tasks, which are outlined below onfirming proper cutoff of purchasing inventory and sales accounts receivable for the period. ank account reconciliations are prepared for each bank account. Detailed accounts receivable reports are reconciled to the general ledger. Detailed inventory reports are reconciled to the general ledger. Detailed accounts payable reports are reconciled to
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the general ledger. ank loan balances are agreed to bank records. ayroll journal entries are prepared and reconciled to payroll reports. nvestment accounts are reconciled to statements received from broker. Accruals are reviewed for completeness and cut-off. ixed asset schedules are updated for additions and disposals, and agreed to the general ledger. Depreciation entries are estimated each month and then finali ed at year-end. re-paid expenses are reviewed and adjusted accordingly. evenue and expense accounts are reviewed and reclassifications are made if appropriate. inancial statements are prepared and reviewed. rint all necessary year-end reports. ack up data to prevent any data loss. his is by no means an exhaustive list it simply gives an example of the steps that may be involved in the process of closing the books. our company may have its own template or if it doesn t, this list can be adapted for your business. eep in mind that financial vigilance is key to ensure accurate reporting during year-end. he biggest mistakes business owners can make when it comes to the process of closing the books are, a not reconciling accounts regularly to the ledgers during the course of the year, leaving a very challenging process at year-end, and, b improper cut-off of sales and expenses, resulting in misstating the company s income for the year. o matter how your company decides to prepare for year-end, you want to ensure that your process is sound, accurate, consistent and complete. Utili e the necessary resources and plan ahead. Donal chnei man is chief financial officer for her oo Lumber, slan ia,
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NAWLA
A A orth American holesale umber Association is the association that delivers unparalleled access to relationships and resources that improve business strategy and performance through sales growth, cost savings, and operational efficiencies for wholesalers and manufacturers of forest products and other building materials that conduct business in orth America. earn more about how A A can help your business at www.nawla.org.
December 2015
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Building Products Digest
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25