By Anwuli Chukwurah

Steps to take control of your bookkeeping and create a process for monthly close and reconciliation of accounts.

It’s the end of the month, and you have no idea if your financial reports are correct or showing the right numbers. If you’re asking yourself, is this right?! Then, you need to create a process to make sure all accounts and transactions are categorized and reconciled on a monthly basis. So, how do you build confidence in the numbers your accounting system is showing you?

When I’ve shown clients how to do their bookkeeping, I try to keep the process simple and something that doesn’t take over their time or brain space. It’s not a good look for me if the client walks out overwhelmed.

Steps to take control of your bookkeeping:

  1. One day each week to categorize for 1 hour
  2. First week of the month to finalize reconciliation
  3. Second week of the month to review financial reports

One Day Each Week

One hour each week to be on top of your transactions. If you keep this time sacred and focus for 45 minutes to 1 hour to ensure the weekly transactions are categorized, then it won’t feel so overwhelming by the end of the month. I’ve worked for companies that had 100s of transactions each month, and when I didn’t stick to this rule, I spent days at the end of each month catching up. It didn’t feel good, and I don’t wish the experience on anyone. So, do yourself a favor and keep this hour each week. Your future self will thank you.

First Week of the Month

Once you’ve finished categorizing your transactions, you’ll use the first week of the month to reconcile your accounts for the previous month. Reconciliation is where you make sure your accounting system matches your statements. Ending balances for the account in your accounting system should match ending balances from your account statements. Sometimes, there may be differences due to the timing of the ending date, but it shouldn’t be massive. Reconciliation ensures every account on your balance sheet statement is correct, and you can defend the numbers shown.

Second Week of the Month

The second week of the month is when you can review your financial reports with yourself or your team. Your numbers finally look right to you, and you know it’s right, so the next steps are to analyze your numbers to see if you spent too much on expenses, made enough sales, or have enough cash flow. This is where the fun begins, and you can use your numbers to plan for the next month or quarter.

Depending on how many transactions you have in a month, you can definitely truncate the steps and combine your reconciliation and financial review weeks into one. Having a repeatable process will make sure you’re confident in the numbers your reports show. If you start as a one-person team, this process makes sure that you can transition the work to another employee week by week until they can do it.

About the author:

Anwuli Chukwurah is a versatile finance professional with a track record of starting new finance organizations and scaling them for growth in fast-paced entrepreneurial environments. She has over 6+ years of experience working with small business owners, startups, and nonprofit organizations to help connect finance with their business goals. She aims to ensure her clients become comfortable and adept at navigating their numbers. She works with clients at Woolichooks and writes a newsletter for non-finance folks.

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