1. Collect the source records.
Gather bank and payment processor statements, sales invoices, supplier invoices, receipts, credit notes and the relevant payroll reports. Keep business records organised by period. A bank transaction proves money moved; the invoice or receipt explains what it was for.
2. Record and classify transactions.
Check that sales and costs have been recorded once, in the correct period and with a useful description. Identify transfers between your own accounts so they are not mistaken for income or expenses. Query unclear transactions instead of guessing.
3. Reconcile the bank and clearing accounts.
Match the accounting balance to the bank statement at month-end. Investigate unmatched items, duplicate entries and timing differences. If card payments reach the bank net of fees, reconcile the gross sales, charges and settlement timing rather than treating every deposit as a new sale.
4. Review money owed and money owing.
Review customer balances and overdue invoices. Compare supplier balances with statements where available. Check credit notes, payments allocated to the wrong account and old balances that need evidence. An old item should be investigated before it is adjusted.
5. Check the balance sheet.
Look beyond profit. Review loan balances, fixed asset movements, stock information where relevant, owner funding and suspense accounts. A trial balance can balance mathematically while individual accounts remain incorrect.
6. Close with an action list.
Note missing evidence, unresolved balances and the person responsible for each follow-up. Produce the agreed reports after the key reconciliations are complete. Keep a record of adjustments and their supporting documents.
- What is complete?
- What still needs evidence?
- Who follows up, and by when?
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