For consumers and retailers, the end of the year means holiday shopping, parties, eating too much, and sleeping too little. For another segment of the population, the end of the year heralds another less festive activity: closing the books.

An organization’s year-end closing procedures, the accuracy of the results and the insights they provide are vital to its long-term success and stability. Following are some best practice guidelines* to keep in mind when preparing to close the books, to help ensure a successful result.

Technical accounting – process set-up and preparation

The process to close the books can and should begin long before the end of the year. One thing that can be a significant benefit to both routine, ongoing accounting tasks along with the year-end accounting requirements is automation.

Whether undertaken by a large accounting staff or a one-man shop, there are many tasks related to closing the books that can be automated to make the process more efficient and accurate. Bookkeeping in general has largely become an automated function, with various technology solutions and best practices in place to increase efficiency. However, knowledge of and compliance with technical accounting rules and principles is still important to ensure data accuracy and to perform proper analysis.

It’s also important to ensure that you understand the regulations and statutes that affect your business. If you do not have an accounting staff, consult with an accountant that has experience in your industry to set up policies and procedures. After this, map out processes for your staff and systems, and how each handles various types of data, that will ensure that you are able to recognize revenues and expenses properly, accurately, and consistently. Process mapping software, such as provided by Lucidchart, can be hugely helpful with this.

Ensuring data completeness and accuracy through integration

Increasingly, key business systems are being integrated with an organization’s accounting solution. These systems can include bank statements, billing, expenses, payroll, CRM, or inventory. Which applications you connect will depend on your business needs and priorities. Integrating cloud applications can save time and expense in the long-term but may be costly and time-consuming in the short-term.

We recommend that you begin the integration process early in the year or reporting period so that you have your applications connected and tested before you begin the close or audit process. Throughout the year, monitor your integrations for errors. They should be able to tell you which records failed to integrate properly, and you can use this report as the beginning of your year-end process as you need to ensure these records are successfully added to your accounting system.

If you’re a Recurly merchant, you can benefit from our integrations with QuickBooks Online and with Netsuite. These integrations improve data integrity, ensuring greater accuracy and more streamlined financial operations and compliance. Our automated revenue recognition feature calculates month-end and deferred revenue balances and posts them as a journal entry in the designated accounting software. These products are commonly used tools in a best-in-class accounting process.

Perform reconciliation & analysis

If you’ve completed the steps above, when it comes time to close the books most of the work has already been done through the processes and automation that you’ve implemented. What is left then is reconciliation and analysis.

  1. Check year-end balances against summary totals from transactions to ensure that balances are directionally correct

  2. If any discrepancies are found, investigate individual records to identify issues

  3. Post any necessary adjusting entries to ensure that detail records match to total balances

  4. When you are comfortable with business results and have consulted with an accountant or completed an audit, close the books for the year to ensure that your numbers cannot change.

  5. After year-end, re-assess your processes to ensure they still match up with technical accounting rules

In conclusion

Enterprises rely on the skill and experience of their finance and accounting teams to provide accurate figures, results, and forecasts—key information for making strategic business decisions. The financial processes involved can be complex at times, but comprehensive and accurate reconciliations, such as the year-end close, are a critical element of a stable business that functions smoothly and is positioned for long-term success.  

Because our core business involves billing and payments, Recurly understands the needs and concerns of finance and accounting professionals. Our software and our integrations help us offer the kinds of automation and efficiencies that we know aid accounting functions and improve financial deliverables and results.

*Note: This post is intended to provide best practice guidelines. Recurly is not an accounting firm, and the foregoing should not be construed as accounting advice.