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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!

03

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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13

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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