Moving from an annual set of accounts and tax returns to a monthly process can look daunting at first (twelve times the work?!). There are real benefits to knowing your profitability, cashflow and financial position throughout the year. Having up to date financial information allows you to deep dive into any anomalies, complete some trend analysis and plan for the future.
What is a Monthly Accounting Process?
A monthly process doesn’t have to be as strict as an annual set of accounts. For example we don’t recommend doing a lot of accounting adjustments each month. A “soft close” might look like:
"Soft Close" Process
- Reconcile all bank accounts
- Complete and send any invoices
- Load bills received for payment
- Quick check if anything is missing
Done at the start of each month (for the month prior), it could take as little as an hour and be really useful when it comes to analysing the reports you can get from your accounting system.
Preparing monthly accounts means you can take a look at your profitability as a % of total of revenue more often to see how you are tracking to your target.
How is your profit and cashflow compared to previous months? This can show you anomalies and exceptions that you’ll want to dive deeper into.
Stay Ahead of Taxes
Performing monthly accounting also means you can stay ahead of the Tax Man by accurately predicting your current period and year end profitability (for tax and GST). This will allow you to make more accurate decisions putting money away for tax.
Planning and Meetings
Having accurate information for strategic planning and board meetings is essential if you want to keep your board members informed, and allow you to accurately plan for the future.
Getting Help with Your Monthly Process
We help you to identify tasks that need to be completed on at least a monthly basis and work with you to get these done. Schedule a meeting with us today to see how we can help.
Disclaimer: Information provided to the best of the authors knowledge at time of publication. Laws are subject to change and independent advice should be sought before considering an investment decision. The above information is general in nature and should not be construed or relied on as a recommendation.