Business owners spend a lot of their time ensuring the company is successful, often finding new ways to make more money. But the success of your business is not only identified by how much money you are pulling in. Success can also be measured by how efficient your business is. We’ve recently published a blog outlining common year-end activities and how to do so with your ERP software. In this blog, we’ll outline four month-end activities to ensure the integrity of your data, help you save time during year-end and to give you an accurate view into the health of your business. This is just a starting point of tasks that different departments can add to their monthly checklist.
Month-End Procedures Include:
- Performing a Bank Reconciliation
- Taking The Time to Verify Your Disaster Recovery Plan
- Deleting Abandoned Transactions
- Conducting a Monthly Inventory Cycle Count
Perform a Bank Reconciliation
Bank Reconciliation is usually performed on a consistent basis such as month-end. The process of comparing your ‘Virtual Bank’ to your ‘Real Bank’ ensuring the final balance matches allows you to identify unusual activity or potential cases of fraud. During this practice, you gain insight into how much money was deposited over the course of that month, how much money was withdrawn from the account, what the bank fees are that were charged, and any interest earned on balances in the accounts. This kind of information helps you understand if one month performs better than another. A very simple example has you noticing that during November you did not sell as many t-shirts as you thought, meaning you can save a little money by ordering less for December. Conducting a monthly bank reconciliation is also helpful if you have high employee turnover rates and need to keep an eye on your cash moving in and out. It gives you the ability to catch any mistakes by new employees before they pile up.
Take the Time to Verify Your Disaster Recovery Plan
In recent years you may have heard about the benefits of cloud-based software, but I realize it is a change that you and your business must prepare for. I get it, if it works, why change it? There are many benefits to switching over to the cloud including heightened data security and increased up-time and redundancy. Those reasons aside, if you are still using on-premises software, it’s vitally important that you check and verify your disaster recovery plan. These tasks should be on your IT Team’s monthly checklist:
- Run monthly backups and perform a test restore
- Ensure that one set of media is located off-site and is usable
- If using an online backup, check the online backup log to make sure that the backup worked
Download our guide to learn about the cost comparison between On-Premises Software and Cloud-Based Systems
Delete Abandoned Transactions
It’s not uncommon for staff to use the system to “check for information” while on the phone with a customer or even for a sales order to get started and be left unfinished for whatever reason. Deleting abandoned transactions helps to clean up the system and reduce the error of employees accidentally posting transactions that are in fact not real.
Look for open, unposted:
- GL Journal Entries
- AP Vouchers
- AR Vouchers
- Sales Orders (Review old orders)
- Purchase Orders (Filter for POs with expected arrival dates in the past)
- Return Merchandise Authorizations (RMAs)
- Accruals that have not been applied, or that have small balances
Conduct a Monthly Inventory Cycle Count
Conducting a Monthly Inventory Cycle Count helps you track and record the inventory in your warehouse and helps determine what is available for sale. This gives you an accurate view of lot counts, reduces holding costs, creates better purchasing decision information and identifies if employees are stealing. There are multiple methods of conducting a cycle count including ABC Cycle Counting, Control Group Cycle Counting, and Random Sample Cycle Counting. Take the time to understand each method to determine what is best for your business.
These are just 4 recommended month-end procedures that every business owner should conduct. It is advised that you speak directly with your software provider to learn their mandatory end-of-period procedures. At Blue Link ERP, we ensure training is provided to all users and help documentation is available for month and year-end procedures.