Closing the books - Preparing for Year-End

As we approach the end of 2023, a lot of us could be breathing a sigh of relief. It's been a tough one. However, for those in the finance sector, you are more than likely gearing up to ensure that your final financial statement is ready for a potential audit in the new year. Most accountants will tell you how stressful this can be - full of coffee-fuelled late nights, last-minute panics, and "where did that big invoice go?!". I've spoken to candidates and clients alike who tell me the various issues that can come up along the way. But there is a way to avoid putting your mental health on the line, and that's planning ahead.

What is Year-End?

Year End is the phrase commonly used to highlight filing your annual accounts at the end of the year. This normally involves balancing the accounts, reviewing any discrepancies, collecting any unpaid invoices, and preparing any financial statements.

Depending on how your organisation is run, closing your books tends to happen before December 31st, however, some organisations recognise year-end towards April (i.e. the beginning of the next financial year). Some can even mark it from the day the organisation was registered.

How can you prepare?

• Produce an effective plan incorporating a sensible time period

Plan ahead for all your Year End tasks ahead of time - make sure that the whole team is aware of their tasks and responsibilities and then book these focus points into a group calendar or SharePoint. Having a clear countdown strategy for everyone involved in the process, and setting weekly catch-up sessions ensures that all team members are clear on what they need to do ahead of time.

• Ensure that you keep all your invoices/receipts in one safe and secure place This may be a point that may frustrate you! If you haven't done this, do not worry - but could be a great tip for next year. This makes analysing financial information so much easier when you have all paperwork in one place. Some organisations have a paperless automation system, which keeps all that data on file for you to access as and when needed.
• Reconcile all your transactions Making sure all transactions match evidence on file, including bank statements, invoices, receipts. Make sure everything is accounted for in order to be prepared for audit.
• Chase your colleagues! Take the time ahead of schedule to confirm that all outstanding paperwork or balances are complete. Most of the time taken up at Year End could be chasing that one department that hasn't logged their receipts! Formalise a process that ensures that each department has to submit payments and debts within the same month, so you aren't chasing them 3 months later.
• Practise makes perfect This is particularly useful if you are new to your organisation (have been there less than a year). At the 9-month mark, you may feel that it would be good to conduct a practice year-end. This is effective in so many ways; you can look at the specific time frame it has taken to complete, therefore giving you the opportunity to plan ahead. It can also highlight any gaps within the accounts (missing receipts, information, etc) and it can also guarantee that doing these tasks now saves time for you later.
• Keep a secure file in place for audit You will be extremely popular with an auditor if you have all your balance sheet, and income and expenditure categories in place. Make sure this is organised either electronically or however you would like to present it. Not only does this save the auditor time, but it saves you money in the long run.

In a nutshell...

Preparation is key. Once everything is organised and in one place, the easier a big challenge such as year-end is sorted. If you are a paper-heavy finance team, my biggest piece of advice to you is to go digital! There are some fantastic software and apps available that will be able to take away some of the strain of balancing the books and expenses and allow you time to look into the more important things. It is important to also ensure that you are taking care of yourself during this process - if you are struggling in any way make sure you make time for yourself. Burnout is a real thing and can be demanding on you and your team.

Finance people - have you got any more tips for those preparing for Year End? What works for you?