Written by Lea Rasmussen
Proactive Strategies for Year-End Financial Readiness- prepare NOW for a seamless 2024 close
As many finance and accounting professionals are taking a breather after completing their year-end close in December, this pause allows us to reflect on how to make this process smoother for this year’s 2024 year-end close. Whether your fiscal year ends on December 31st, June 30th, or any other date, preparing for a seamless close requires a proactive approach to financial readiness. Successfully navigating the year-end challenge hinges on meticulous planning and consistent execution. The key lies in proactive strategies, such as regular monthly and quarterly assessments, to transform this annual task into a streamlined process. This article shares actionable steps that, when consistently applied, pave the way for a stress-free and well-prepared year-end close.
Monthly Tasks:
- Reconcile your bank accounts. The significance of monitoring cash and cash flow cannot be overstated. Cash is a pivotal asset in financial management. Pay attention to 60-90 day outstanding checks; follow up with vendors to address discrepancies.
- Perform a thorough review of the balance sheet and profit & loss statement while the information is fresh.
- Compare actual results with the budget and the previous year to pinpoint any unusual variances.
- Reconcile balance sheet accounts; this is crucial to minimize the need for year-end corrections and provide stakeholders with accurate monthly financial information.
- Conduct a detailed review of Accounts Payable and confirm all the invoices are current.
- Determine whether new vendors will potentially need a 1099-NEC or 1099-MISC form by carefully reviewing the W-9 form and ensuring the proper selections are made in the accounting software.
- Analyze the Accounts Receivable Aging Report and take appropriate action based on the status of outstanding balances.
- Review all general ledger activities for classification errors, accuracy, and completeness.
- Safeguard financial records by creating copies of all capital purchases, consolidating them either in a capital expense line item on the P&L or categorizing them under fixed assets on the balance sheet.
Quarterly Tasks:
- Reconcile your wages paid to the 941 Employer’s tax form to confirm that all taxable wages paid are accurately reflected on the 941. If adjustments are needed, they can be corrected before the annual W-2 Wage and Tax Statements are filed for employees.
- Approve and file board and committee minutes required for annual audits.
- Review the status of your debt covenants during this period to ensure compliance.
Annual Tasks:
- Assess payroll adjustments required for inclusion for employee’s W-2, covering additional taxable income.
- Verify federal identification numbers for vendors receiving 1099’s and review changes in reporting requirements.
- Schedule an annual inventory count– outline and disseminate procedures for a seamless process.
- Review your fixed asset listing for any items disposed of during the year.
- If undergoing an external audit, proactively request a document checklist from the firm ahead of fieldwork.
Ongoing Tasks:
- Routinely assess and enhance internal control procedures to safeguard the integrity of financial data year-round.
- Foster continuous training for accounting staff, ensuring they stay abreast of industry trends, changes in accounting standards, and optimal use of accounting software. Ongoing education enhances process efficiency.
- Emphasize regular communication with stakeholders, including auditors, bankers, and investors. Keeping everyone informed throughout the year minimizes surprises and builds trust.
- Share practical advice for crafting a realistic and adaptable budget. A well-structured budget serves as a performance benchmark, helping to identify and resolve variances.
- Recommend benchmarking against industry peers to pinpoint areas for improvement. Understanding how your financial performance compares to industry standards guides strategic decision-making.
- Advocate for scenario planning, particularly in uncertain economic climates. Evaluating different scenarios empowers informed decision-making and facilitates adjustments to financial strategies.
Conclusion:
The proactive strategies shared in this article will not only streamline the year-end process but also position your business for continued growth and prosperity in the ever-evolving financial landscape. The journey of year-end financial planning can be transformed into a proactive and manageable one. Here’s to a successful financial year ahead!
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Our accounting and finance professionals offer an efficient and effective solution to financial management. We work on an ongoing, part-time, fractional basis to provide a cost-effective way to supplement your finance function and build for the future. To learn how Warren Whitney can support your business, contact Stephanie Ford at sford@warrenwhitney.com or 804.282.9566. We do not charge for the initial call. We want to learn about your business needs.
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