Best practices: How to prepare for the year end

At this time every year, we look back at how things have transpired for our business. We look at our budgets and financial statements in comparison to what we originally projected. We may discover we missed our goals, overachieved, or were right on target. This is a standard process for every business—but gathering and reviewing the data isn’t always a simple process.

For Aspire users, the process is simpler: they can use the platform to make reviewing and planning an organized process. Reports, opportunities, and all other data that’s captured by the system are quickly utilized to streamline the financial planning process.

In preparation of the new year, it is time to clear out the old and plan for the new. Taking the time to analyze and plan is key to the success of your landscaping business.

Your tax/accounting firm typically starts looking at what is needed to complete your financial statements, whether they are audited or reviewed. Typically, they’ll provide a checklist of items needed to finalize your financials and file your annual tax returns. Whether you’re an Aspire user or not, Aspire has a checklist you can use to prepare your year-end correctly.

Checklist of To Dos:

Purchase Receipts

To begin the process, it’s a good idea to review your purchase receipts. You may want to remove older receipts that are no longer relevant. Over time, these will create clutter and disorganization. It’s best to archive or file older receipts, in case you need to refer back to them later.

Now, what about the items that you have received? Are there too many items on your list? Have you received an invoice, or was another purchase receipt inadvertently created for the vendor invoice? Now is the time to clean up and organize your purchase receipts.

Lastly, true up your approved purchase receipts. Make sure you’ve reviewed the receipts and made sure your bills are matching.

Work Ticket Lists (Active Jobs)

A new year means a new sales cycle. Review your active jobs in production and begin cleaning them up. A prime example of this is when a completed job is still marked as active in your records. Whether your process is deleting, cancelling, erasing, or marking as ‘complete,’ this type of cleanup is necessary each year.

Inventory

Materials are important for every landscaping company. Now is the time to take a physical count of your inventory. Many do this quarterly, but you should definitely do it on a yearly basis at a minimum. Once you have an accurate count, update your records and adjust your balance sheet to reflect the correct inventory amount for each item.

If you’re an Aspire user, you’ll want to make sure that the ‘extra’ costs have been credited from your inventory holding accounts and expensed on your P&L.

Reconcile

Reconciliation is a vital step to closing your year end, because it affects so many different areas in accounting. At the end of the year, it’s likely that some of your numbers between your management system and your accounting system won’t align. Revenue will have variance, and accounts receivable can have mistakes in deposits, invoices, credit memos, and payments. Typos and user error are common. You’ll need to reconcile your numbers in your system to ensure their accuracy.

You may even need to reconcile your retainage. Now this won’t apply to everyone; however, if you withhold retainage from progress invoices, then you will need to reconcile this in your balance sheet.

Once you’ve reconciled everything else, look into your over/under (or under/over) to make sure it’s reconciled to the account on your balance sheet where you book the monthly over/under, if you are entering earned revenue in your accounting system. If any items are outstanding, you’ll want to make sure they get resolved.

Monthly reconciliation is recommended as a best practice to simplify the process and make catching mistakes easier for you and your team.

End-of-Month or End-of-Year Closing

Reconciling your numbers is a large part of closing your year end (and/or each month), but you also need to continue managing the expenses and revenues as they occur to eliminate errors and ensure your numbers are as accurate as possible.

Following these steps each month will help reduce the possibility of errors while ensuring any that may have slipped through are caught. These steps not only make the process easier but also create a more efficient close at the end of the year.

For Aspire users, your process for closing December with the EOM Checklist in Aspire will not differ from closing any other month of the year!

If you’re not currently using Aspire but would like to learn how Aspire can help you, contact us today!