Post on 12-Feb-2020
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Weekly Reconciliation & Month-End Close Checklist
PROCESS GUIDELINES
A guide to standardizing your weekly bank reconciliation and month-end close workflow
Table of contents
03 Introduction 03 Theimportanceoffrequent&efficientbankreconciliation 04 Why standardize? 05 Bestpracticesforstandardizingbankreconciliation
06 Weekly Reconciliation & Month-End Close 07 Weeklyreconciliation—process&technology 08 Weeklyreconciliation—processoverview 09 Month-endclose—process&technology 11 Month-endclose—processoverview
12 StandardizingforEfficiency 13 Appendices & Acknowledgements
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ACCESS THE CHECKLIST
ToaccesstheWeeklyReconciliation&Month-EndCloseChecklistinGoogleSheets,clickhere!
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The importance of frequent &efficientbankreconciliation
01INTRODUCTION
Beforeyoucaneventhinkaboutexpandingyourservicesorenhancingyouradvisorywork,youneedacleansetofbooks,metrics,andthoroughanalysis.Bankreconciliationisanecessarycontributortoalloftheseactivities.
Oneofthekeyquestionsthatsurfacessurroundingbankreconciliationpertainstofrequency:howoftenshouldbankreconciliationbeperformed?Best-in-classfirmsperformbankreconciliationonaweeklybasis(asopposedtomonthly).Performingweeklybankreconciliationwillminimizethelagtimebetweenactivityandcoding.
Moreover,performingweeklybankreconciliationcanhelpyourfirmmoveclosertoprovidingreal-timefinancials.Reconciliationandmonth-endclosearenecessary for gathering accurate and completedata,whichwilltranslateintoanswersforyoursmallbusinessclients.Thankstocloudaccountingtechnology,performingweeklybankreconciliation(and gathering the data you need to provide better, faster advice)hasneverbeeneasier.
Anincreaseinthefrequencyofbankreconciliationleadstoanotherkeyquestion:howcanbankreconciliationbeperformedefficiently?Theanswerliesinstandardization.
Bankreconciliationismorethanjustabookkeepingactivity– it’sthefoundationforincreasingyourvalue-addtoyourclients.
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Why standardize?INTRODUCTION
Standardizationenablesanumberofbenefitsforyourfirm.Weeklyandmonthlyprocesseswillhelpyourfirmlookforwardbecausetheyenablemorepredictableprocesses,allowingyouto report on lead measures(insteadoflagmeasures).
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Moreover,processeswillhelpyouproducehighqualitywork,deliverworkontime,andremovetheriskof“surprises”.Asaresult,standardizedprocessescanhelpimproveyourNPS(NetPromoterScore)andstaffsentiment,whichcouldtranslatetoanincreaseinadd-onservicesforclients,higherreferrals,andlowerstaffattrition.
Perhapsmostimportantly,standardizationhelpstoincreasepracticeefficiency.Increasingefficiencyultimatelydrivestoplineandbottomlinegrowth.Freeing-upcapacity through standardization can create a reduction in resources (bottomlinegrowth),orallowyoutofocusyoureffortsongrowingyourclientsandservices(toplinegrowth).
Tosummarize,standardizingyourreconciliationprocess willhelptoensure:
Higher quality work:Standardizationwillmitigatethe riskofmissinginformation,incorrectdata,andothercommonerrors,resultinginahigherqualityendproduct.
Predictability & consistency:Attachingtimelinestoyourstandardizedprocesseswillensureon-timedeliveryofservices.Inadditiontopromotingconsistency(inbothqualityanddeliverytime),thiswillalsohelpyoubetterallocateyourtime.
Reduced cycle time:Removingtheuncertaintysurroundingownershipandintroducingstandardtimelinesandclearnextstepswillhelpyousignificantlyreduceyourcycletime.
Accountability:Knowingwhoisresponsibleforwhattasksateverystepoftheprocesswillhelpensurethatyourteamandyourclientsworktogetherasawell-oiledmachine.
Flexibility:Processesthataredocumentedandsimplifiedcanbeassignedtolower-skilledstaff.Withmorehandsondeckandastandardizedtransitionofwork,furtherefficiencyiscreated.
It’simportantforbankreconciliationandmonth-endclosetobestandardizedbecauseofthevolumeandfrequencybywhichtheyrun–i.e.,boththenumberofclientsinvolvedandthenumberofinternalhoursspentontheseprocessesarehigh.Asmallimprovementinahighlyrepetitiveprocess(suchasweeklyreconciliation)willleadtomassivegainsovertime.Standardizationwillensurethattheybecomesecondnature,whichreservesyourstaff’sbrainpowertobespentonmorecomplicatedservices,suchasadvisory.Moreover,itspeedsupthemundanetoallowyoutospendtime ontheworkthatinterestsyou.
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Best practices for standardizing bank reconciliation
INTRODUCTION
Standardization(viadocumentedprocessesandchecklists)enablesalowercostofcompletingworkandahighervolumeofworktoflowthroughyourfirm.Thisincreaseinefficiencycontributestohigherrevenueperemployeeandoverallfirmprofitability.
So,howexactlydoyougoaboutstandardizingyourbankreconciliationprocess?
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EMBRACE TECHNOLOGY
CONTINUOUS PROCESS IMPROVEMENT
Youdon’thavetostandardizeallofyourworkflowsatonce!Startwithoneprocess(orevenpartofaprocess),thenbuildupandoptimizeonanongoingbasis.Thestepsprovidedbelowarealso available in a Google Sheet, whichyoucancopyandmodifytobetterfityourfirm’scurrentworkflowandyourclients’businessneeds.Efficiencydoesn’thappenovernight!
Documentingyourworkflowswillmakeitobviousastowherecloudaccountingtechnologycanhelpmakecertainprocessesmoreefficient.Intheweeklyreconciliationandmonth-endclosechecklistsbelow,weprovidesuggestedtoolsyoucanusetoexecuteand/orautomateeachstep.Keepinmindthattechnologyisanenabler,notaresolution,andshouldthereforebeconsideredasthelaststepofanystandardizationexercise.
DOCUMENTYOURWORKFLOWS
Aswithanyaccountingandbookkeepingworkflow,yourfirststeptostandardizationshouldbetodocumentyourworkflows.Documentingyourworkflowswillhelptokeepeveryoneonthesamepagebecauseitwilldefineownershipofeachstep,aswellaswhatneedstobecompletedinordertomoveontothenextstepofaprocess.
Youcangetstartedwithdocumentationbyputtingpentopaper(or,usingaGoogleSheetoraworkflowtoolsuchasKarbon)towritedowneachstepoftheworkflowyouwishtostandardize.Keepinmindthatprocessimprovementisaprocessinitself(the ten steps provided here will provide a primer on the process of process improvement). The steps providedinourweeklyreconciliationandmonth-endclosechecklistsaremeanttohelpyoudocumentyour weeklyreconciliationandmonth-endcloseworkflows.Usetheseasaframeworktogetstarted!
1.1 1.2 2.1a 2.1b 2.2
Process & Technology
Complete month-end close adjustments: Process & Technology
Review & advise client: Process & Technology
Process Overview
Process Overview
WEEKLY RECONCILIATION PROCESS & CHECKLIST
MONTH-END CLOSE PROCESS & CHECKLIST
Thefollowingchecklists—Weekly Reconciliation Process & Checklist and Month-End Close Process & Checklist—willoutlinethekeystepsinvolvedforweeklyreconciliationandmonth-endclose,aswellascommonbestpracticesastowhoexecutesagainsteachstep,whenthestepshouldbecompleted,andhowyoucanusetechnologytofurtherimproveefficiency.
— Weekly Reconciliation & Month-End Close Process & Checklist
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Process & TechnologyWEEKLY RECONCILIATION PROCESS & CHECKLIST
PROCESS PROCESSSUGGESTED TOOLS SUGGESTED TOOLS
1. Publish all receipts, bills, and invoices fromfinancialdocumentmanagementapp
Logintofinancialdocumentmanagementapp
Reviewdocumentsandensureallcoding iscomplete
Publishreceipts,bills,andinvoices
Publishpaidinvoicestoaccountingsoftware
Publishunpaidbillstopaymentprocessor
DownloadaPDFtoattachtoposted transactionsinbankfeed
2. Review A/P report & pay bills
Checkthatallpriorpaymentshavebeenreleased
Checkforoutstandingbills
Pay/scheduletopaybillsthataredue
Reviewuncashedchecks
Ensurebillpaymentsareapproved (ifusingathird-partyapp)
3. Reconcile sales & additional accounts (if applicable)
ReconciledepositsfromthePOSsystem,paymentprocessors(e.g.Stripe),andotheraccounts(e.g.PayPal)inclient’saccountingsystem
4. Reconcile bank & credit card transactions
Code transactions as needed
Fortransactionswithquestions,makeacommenttotheclient(ormarkasuncategorizedexpensesuntilinputreceivedfromclient)
Createbankfeedrulesasappropriate
Reviewuncashedchecks
Reviewyear-to-dateP&LandBalanceSheetforcoding accuracy (if applicable)
5. Run & review relevant reports (if applicable)
Dependingonclientservicelevel,reviewkeyreports for any inaccuracies
Double-checkeverythingiscapturedandcalculatedcorrectly(e.g.,includesSales&Use tax[US]andVAT[UK])
6. Email client with status update & questions
Provideclientwithbasicweeklyreporting/status(e.g.cashposition,listUncategorizedExpensesasanaccountforreview)
GeneralLedger:
Reporting:
1.1
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Process OverviewWEEKLY RECONCILIATION PROCESS & CHECKLIST 1.2
Duration (hrs): 0.5
Duration (hrs): 1.25
Duration (hrs): 0.75
Duration (hrs): 0.25
Duration (hrs): 1.25
Duration (hrs): 0.25
Owner: Bookkeeper
Start weekly reconciliation
Publishallreceipts fromfinancialdocument
management app
ReviewA/P report&paybills
Reconcilesales&additionalaccounts
(if applicable)
Reconcilebank & credit card transactions
Runandreview relevantreports
(if applicable)
Emailclient withstatusupdate
& questions
Weekly reconciliation
complete
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Process & TechnologyMONTH-END CLOSE PROCESS & CHECKLIST Complete month-end close adjustments
PROCESS PROCESSSUGGESTED TOOLS SUGGESTED TOOLS
1. Collect & upload all statements
Collectbank,creditcard,PayPal,andotherstatementseitherfromthefinancialinstitution,Hubdoc,orpaperstatementfromclient
2. Ensure bookkeeping is complete
Checkthattheweekly(andoverall)bookkeepingprocessismarkedcomplete
Ifincomplete,completeweeklybookkeepingandcomebacktomonth-endcloseprocess–thisincludesreconcilingaccounts,reclassifyinguncategorizedtransactions,clearingsuspenseaccounts,andcalculatingrelatedtaxes(e.g.,sales&usetax,VAT,GST,PAYG)
3. Follow-up with client on any missing information
Thisincludesanymissingbankstatements,questionsfrombookkeeping,andrelatedcoding issues
4. Make adjusting entries
Recordamortizedprepaidexpense,monthlydepreciationtofixedassets,andaccruedexpenses
5. Complete necessary reconciliations
Runreconciliationreportforeachcurrentassetaccount from the accounting system
Matchthereconciliationreportnumberswiththestatementbalances
ForQBO,completethenecessaryreconciliationwithinQBO
6.Create&compilefinancialreports
RunallnecessaryfinancialreportsincludingP&L,BalanceSheet,AP,andARreports
Reviewtheabovereportsandlookforappropriatebalancesandactivity;compilethemtogetherandnotifytheassignedAccountantforreview
2.1a
GeneralLedger:
Reporting:
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Process & Technology2.1b
7.Reviewfinancialreportsforerrors
Reviewfinancialreportsforincorrectbalancesfor account types
Reviewfinancialreportsagainstpreviousperiods
Ifcorrectionsweremade,sendworktoassignedBookkeepertore-startmonth-endcloseprocess
8.Interpretfinancialdataforclientmeeting
Interpretthefinancialdataforclientmeeting
Preparemanagementreport,notes,setagenda,anddeterminekeytalkingpoints
9. Publish & issue management report
Priortomonthlyadvisorymeeting,eitherpublish&issuemanagementreportoruploadcompiledfinancialreports(tofilesharingapplication)andsharewithclient(vialinksorclientportal)
Sendtheclienttheagendaandkeytalkingpoints
PROCESS PROCESSSUGGESTED TOOLS SUGGESTED TOOLS
10. Advise client
Conductclientadvisorymeeting(face-to-faceorvideoconference)
11. Follow-up with client
Emailclientasummaryoftheclientmeetingandschedulenextmonth’smeeting
Documentclientmeetingnotesinclientrecord
12. Close books & update documentation
Closebooks,markworkcomplete,andnotifyotherteammembersofthisstatus
Relayanychangestoclient’sprocesstoassignedBookkeeper
Management report:
Client interaction:
MONTH-END CLOSE PROCESS & CHECKLIST Review & advise client
GeneralLedger:
Reporting:
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MONTH-END CLOSE PROCESS & CHECKLIST
Process Overview2.2
COMPLETE MONTH-END CLOSE ADJUSTMENTS
REVIEW, SHARE & ADVISE
Duration (hrs): 0.75
Duration (hrs): 0.5
Duration (hrs): 0.75
Duration (hrs): 1
Duration (hrs): 0
Duration (hrs): 0.5
Duration (hrs): 0.75
Duration (hrs): 0.25
Duration (hrs): 0.25
Duration (hrs): 0.25
Duration (hrs): 0.5
Duration (hrs): 0.25
Owner: Accountant
Collect&upload allstatements
Ensurebookkeeping iscomplete
Follow-upwith clientonanymissing
information
Makeadjusting entries
Completenecessary reconciliations
Create&compile financialreports
Reviewfinancial reports for errors
Interpret financialdatafor clientmeeting
Publish&issue management report
Adviseclient Follow-up withclient
Closebooks& update documentation
However,firmswhohaveahandleonbankreconciliationdon’tfeelthisway.Theyaresuccessfulbecausethey’reabletocatchdiscrepanciesquickly(whiletheirclientstillhasthedetailsontheirmind).Asaresult,theycanresolveanyissuesbeforetheyescalate.
Bysystematizingnecessarytaskssuchasbankreconciliationandmonth-endclose,they’reabletogatheraccurateandcompletedata,whichtranslatesintobetter,fasterclientadvice.
StandardizingforefficiencyBankreconciliationisoftenupthereonthelistofanyaccountant,bookkeeper,orsmallbusinessowner’sleastfavoritetasks(oftenelicitingreactionsthatrangesomewherebetween“Bank reconciliations… I know eeeww!” and “I’d rather face root canal surgery with no anaesthetic than do bank reconciliations.”).
Standardizingyourfirm’sfoundationalprocesseswillhelpyougainefficiency,whichleadstoincreasedprofitabilitybecauseyou’llbeabletoproducehighqualitywork,delivertimelyresults,increasepredictability,andenableflexibility.Moreover,theseefficiencygainswillallowyouandyourstafftodomoreoftheworkthatyouenjoydoing.
Documentyourworkflows,focusoncontinuousimprovement,embracetechnology,andwatchyourfirmskyrockettoanewlevelofefficiency!
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ACCESS THE CHECKLIST
APPENDIX
Checklist Overview
Tomodifythechecklist:
1. ClickheretoaccessthechecklistviaGoogleSheets.
2. IntheGoogleSheet,click“File”inthetopleftcorner.
3. a)Select“Makeacopy”tocreateaneditableversion ofthedocumentinGoogleSheets.
b)Or,select“Downloadas”andselectyourpreferredformat.(You’llbeabletodownload thedocumentasanExcelfileorCSV.)
FollowthelinkbelowtoaccessthecondensedlistofstepsinourWeeklyReconciliationandMonth-EndCloseChecklist.Usethisdocumentasastartingpoint—addyourownrequirementsandupdatethemasyouoptimizeyourprocesses.
Acknowledgements
JelenaArkula, BooksLA
CarlaCadwell,CadwellConsulting & Training
KellieParks, Calmwaters Cloud Accounting
StephHinds, Growthwise
AlanHemingway, Hemingway Bailey
BrucePhillips, HPC Accounting & Tax
OnbehalfofKarbonandHubdoc,we’dliketoextendaspecialthankyoutothefollowingindividualswhohelpedusputthisdocumenttogether:
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