What do you need to do in the year-end closing process? If you are working in Finance just like me, chances are that it’s getting busy.
In addition to the day-to-day activities, there are three things you should do to finish the year well.
Table of Contents
Assess Your Balance Sheet Positions
One of the main accounting principles is the accrual principle. First, the transactions need to be recorded in the right period. After that, you need to review your balance sheet positions and book any impact on your profit and loss.
For assets: Review their value, and if needed, you need to book an impairment.
For provisions: Update your assumptions to your best knowledge to have an accurate provision.
Most importantly, remember to document these steps!
Furthermore, here are some areas to have a specific focus on at year-end:
- Personnel/HR provisions
- Litigations
- Bad debts
- Stock
- Warranty
- Invoices not received
- Any fixed or immaterial assets no more in use
Prepare Your Landing Scenario for The Year-End Closing
Now that you are closing in November start working on forecasting December. As a result, identify the risks and opportunities on your last forecasting. Then, discuss it with your business partners and your management. Moreover, in your exchanges, you will identify what are the key levers to make opportunities happen and mitigate risks.
Collect Cash
Most certainly, a lot of companies have included their operating cash flow as part of their objectives. Therefore, this means that the management can request the finance team to make an additional effort to maximize the cash collection.
The Bottom Line – Year-End Closing Process
Ultimately, being prepared, organized, and proactive with accounting practices throughout the fiscal year is the key to a smoother year-end closing process.
Also, let me know if you have any remarks or questions on this topic!
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