6 financial tasks you should complete before the end of the year

It is time to focus on wrapping up the current calendar year while starting the new year. While it is essential to start the new year off with new goals, it is also vital to complete the following tasks closing year-end. The end of the year is a busy period for all of us but completing each of these tasks will eliminate costly errors and data entry to provide data-driven and insightful decision making.

1. Do a Physical Inventory

As we end one year and prepare to head into the next, it is an excellent time to review your physical inventory. For an accurate balance sheet, it is a necessary component. Be prepared to make a physical list on a day you are ordinarily closed or close solely for this purpose. Educate your staff on their responsibilities and the importance of making sure every item gets counted. Accurate inventory data is needed for financial statements. An ERP software solution reduces the amount of downtime necessary to complete inventory counts. With an automated and real-time solution, the system eliminated the need for manual recounts and duplicated counting processes. Once the physical inventory count is complete you will need to classify your inventory (high demand items vs. less critical items), project your inventory needs for next year (review your reports from previous years), and dispose of unwanted inventory (return items to vendors and liquidate items).

2. Maintain your Master Vendor File

To thrive during your year-end closing process, you will need to work on maintaining the Master Vendor File. You will need to consolidate and validate all your vendor data (company names, addresses, phone numbers, contact names, email addresses, and global standards). Remove duplicated vendors to prevent duplicated payments. It is wise to remove a vendor if you haven’t used that vendor for 15-18 months. Update all accounts payable with automated solutions. Vendor verification can save the day.

3. Run your Yearly Reports

Most robust ERP solutions offer business intelligence and reporting features. The built-in reports will generate common accounting reports such as profit and loss statements, balance sheets, and tax statements. The system will generate accurate reports using real-time data already within the solution.

4. Do your Financial Tax Reporting

Integrated ERP software packages enable payroll reconciliation with electronic filing to streamline state and federal payroll and simplify tax reporting. Integrated ERP software packages allow payroll reconciliation with the electronic filing to streamline state and federal payroll and simplify tax reporting time. Electronic timecards, data capture, and automatic tracking eliminate manual entry procedures, data errors and redundant entries. With integrated payroll and HR functions of an ERP timely W-2 and quarterly reports can easily be printed before the first payroll of the new year. You're also able to review and compare financial statements from previous years to evaluate successes and determine strategies for improvement.

5. Get your Year end Accruals and Retained Earnings Roll in order

A good ERP package has built-in functionality to easily facilitate year-end accruals and the role of the Net Income/Loss to Retained Earnings. Performing these tasks at Year-end is especially important to ensure all income and expenses are reported in the appropriate year thus accurately reflecting your financial performance. These quick and easy tasks will help you to close your books in record time explicitly.

6. Lock your Ledger to Prevent Postings to the Wrong Year

One of the most critical tasks at year end is to ensure all system users are set to post entries to the appropriate year. Some users, such as in accounting, require the ability to post-closing entries to the year that just closed as well as entries in the new year. Most others should be locked out of posting to the prior year and only allowed to post in the new year. A strong ERP system should be able to handle these varying and ever-changing posting date requirements effortlessly.

April Potts is responsible for Marketing & Sales at Dysel North America and combines experiences in marketing, at dealerships and with ERP software to help dealerships move their business forward.