We’re into the final home stretch of 2007, and along with our best wishes for this Holiday Season, we thought we could offer some year-end ideas to help you wrap-up 2007 and plan for 2008. In many cases, we have made reference to the TravelOffice system. However, we believe these same ideas/steps may be followed to manage any business and ensure you have a smooth close and can plan your business for the future.
q Complete all outstanding sales invoices:
During the year, we all get busy focusing on sales, marketing, and other aspects of running our business. While ideally, you have been entering and reviewing sales invoices in the TravelOffice system regularly, you may have fallen behind leaving some invoices still in the “pending” or “review” status that should be “completed”.
To ensure you maintain complete and accurate accounting records, monitor your receivables/payables, and can start fresh for next year, organize and complete any outstanding invoices for your business. Make sure you review each of these sales invoices to ensure that they are accurately and completely recorded and then mark them as complete if they meet your definition of “completed” invoices.
q Reconcile your books:
Why reconcile? Reconciling your records ensures that your accounting records are accurate and complete, help you catch any mistakes or errors, and therefore better control your business. From the back-office module, you can reconcile all amounts received or paid to their source reports or bank statements. Here are some items that you should reconcile:
-
Reconcile sales amounts received from your customers and deposited to your bank account (if applicable, these would be the amounts deposited into the Trust Bank Account). If these payments were charged to your customer’s credit/debit card, reconcile the amount received (net of any transaction fees) as per the TravelOffice system against the statements from your “Card Payment Processor”, and to the actual amount deposited into your bank account. This will ensure that you have received all amounts accurately from your card payment processor.
-
Reconcile commission amounts received from suppliers to your bank statement (if applicable, these would be amounts deposited to your General Bank Account).
-
Reconcile payments made to suppliers (either by cheque or company credit card) to your bank statement (if applicable, these would be amounts paid from the Trust Bank Account).
Once you have completed all necessary sales invoices, and reconciled the amounts received and paid to your bank statements, you can:
-
If applicable, record any transfers made from the trust bank account to the general bank account in the TravelOffice system.
-
Generate the Sales-Related Journal Entries and post them to your General Ledger.
q Organize all expense receipts:
Hopefully, you already maintain separate folders to store receipts for your various expenses (such as rent, utilities, telephone, payroll, and internet). In order to save us time in tabulating all the various expenses, we also maintain a separate Excel file where we record these various expenses on a monthly basis. Within this Excel file, we maintain a separate tab for each type of expense and at the end of the month/year we simply take the totals and post it into our General Ledger system. We find that this works very well for smaller size organizations. If you would like a template copy of our Excel file, please send us a quick e-mail at info [at] merang.com and we will be happy to send it you.
In addition to these expenses, there may be other expense items such as depreciation or other write-offs of assets that you should also consider. You need to maintain accurate records of your fixed assets and properly calculate and depreciate these assets. Also, consider writing-off any receivable amounts that may not be collectible. From a tax perspective, these expenses may offset your income and help reduce your total tax owing. Therefore, proper planning can help you save money. However, do keep in mind that there may be differences in the calculation of these expenses for tax purposes versus for accounting purposes. You may need to check with your accountant for further details.
q Monitor the health of your business:
While you should be monitoring your business on an ongoing basis, this is a good time as any to take stock of your business. Through the TravelOffice system, you can generate various management reports to monitor sales activity, who owes you, and who you owe. You should also generate your financial statements (i.e. Balance Sheet, Income Statement, and Cash Flow Statement) and review these, after all journal entries have been posted.
There are various financial ratios (such as liquidity ratios, current ratios, debt-equity ratios etc.) and analysis that can be generated based on the information in these financial statements and reports that will provide you insights into the health of your business. In future postings, we will provide you with further details of these various ratios and analysis and interpret what they mean. A quick Google search will also take you to various online calculators that will calculate them for you.
Monitoring the health of your business at this stage will help you plan and prepare better for 2008. You should also analyse other customer and marketing statistics of your business that will help you better focus your marketing efforts in 2008.
From the Team at Merang, we hope the year to come will be full of personal accomplishments and great success for you and your company.
