Make financial year end a little easier on yourself

By Jeff Lewis, Director Sage Pastel International

The time pressures that surround finalising your financial accounts in time for year end cause mistakes to be made all too easily. Mistakes that could cost you a great deal of money, either in the form of taxes or penalties, or in the form of an image of an incompetent company.

Is there a way to handle those time pressures better?

Well, having the right accounting software is an enormous help, because it automates the process of collecting and allocating financial information throughout the year. So it provides you with most of the necessary information in good time for year end.

Even then, you need to take steps to ensure that the information is accurate and complete before you start year end work because it’s at this time of the year that it is analysed and adjusted by management and accounting staff in order to produce income statements and balance sheets that make sense in the overall context of the business. Obviously, if the original data is incorrect you’ll get nonsense in your end results.

Also, in the process of moving the data around, perhaps from one account to another, and in consolidating or breaking it down into its component parts, the original data can be lost. Which means that there is no reference point to go back to, should the adjustments that have been made need to be cancelled.

And, hard drives can crash, files can be deleted intentionally or accidentally, and data can become corrupted or simply be destroyed by viruses.

So one of the most important things you can do at this time is to back-up all your original data – BEFORE you start working on it. Ideally, of course, you should be backing up your data on a daily or weekly basis throughout the year. And you should be backing it up on to a reliable technology such as tape or CDs. Never use floppies for this purpose. They have too little space and their integrity is questionable.

Whatever you do, don’t store your back-ups onsite. Theft, fire and simple human error can cause you to lose them. Keep at least a week’s back-up off-site in a place where security is guaranteed.

Always check the integrity of the backed-up data – because the PC or other device on to which you are backing up may be faulty without your knowing it. It’s vital, therefore, that when you have backed-up your data you restore it immediately to see that no errors have been made. Obviously, you would restore it on the back-up PC and not the original device.

Some businesses back-up only new information as it is added to the system. That’s better than not doing back-ups at all, but you should try to do a full back-up at regular, close intervals. That way your whole system is up to date all the time - and saves you a great deal of time at year end!

Another tip for a smooth run-up to year-end is to make a print out of all financial reports for the previous year end – including Income Statement, Balance Sheet, Trial Balance, General Ledger Detail Account Listing, Inventory Valuation and Management Reports, Age Analysis for Customers and Suppliers, Bank Reconciliation, Sales Representative’s Commission Reports, and Tax Reports. The reason is that, for this year, you may need reference to last year’s figures and if you have them printed out it saves you having to go back and restore your back-ups from last year.

Also, it's enormously helpful to get the advice of the people who implemented your accounting software for you. They are trained in the principles of accounting as well as in the functionality of the software, so they know what year end pitfalls to look out for and can also tell you how best to exploit your software to ensure that you're always optimally prepared for the year end rush and can handle it with the minimum amount of fuss and bother.