Closing the year without losing January
Year-end has a particular way of arriving. Not gradually and not in the month it belongs to. It turns up as a single enormous job in the first fortnight of January, when the team is tired, the auditors are waiting and nobody has any appetite for reconciling a balance that has been wrong since March.
It doesn’t have to work like that. Most of what makes January painful could be done now, in pieces, while there’s still capacity in the week. The reason it’s not done is rarely a lack of time. It’s that year-end feels like a January job, so it waits until January.
The one question that sorts the list
Before deciding what to bring forward, apply a single test to every task on the year-end list.
Does this job change depending on whether December is a good month or a bad one?
If the answer is no, it can be done now. If the answer is yes, schedule it for January and stop thinking about it.
That question sorts most year-end checklists in about ten minutes and the result usually surprises people. The list of things that genuinely have to wait is much shorter than the way most finance teams behave suggests.
What to bring forward
Balance sheet reconciliations are the obvious candidate and the most commonly deferred. The bank reconciliation is probably fine, because somebody looks at it monthly. Accruals, prepayments, stock and intercompany balances are a different matter. These are the accounts where errors accumulate quietly and an error introduced in March is considerably easier to find in October than in January when nobody remembers the transaction.
Old debt needs a decision rather than a deferral. Anything more than six months old should be either actively chased or provided against now. Writing it off in February is not the same as having decided what to do about it and the conversation with a customer about a summer invoice does not improve with age.
The fixed asset register deserves an afternoon. Walk the building. Check that what’s on the register is what’s actually there. Businesses routinely depreciate equipment they sold two years ago and they routinely fail to capitalise something bought in a hurry. Neither is dramatic on its own. Both are awkward to unpick under time pressure.
Supporting schedules are the least interesting item and the highest return. Whatever the auditor asked for last year, they’ll ask for again. Building those files now, while the year is still fresh, converts a fortnight of scrambling into a morning of tidying.
What genuinely has to wait
Anything that depends on the final trading position. The statutory accounts. The tax computation. Year-end journals and the final stock valuation.
That’s close to the whole list. It’s worth writing it down explicitly, because the act of seeing how short it is tends to change how the rest of the quarter gets planned.
The task nobody schedules
Write down what went wrong with last year's close while you can still remember it.
Which schedule took three attempts? Which reconciliation had no clear owner? Which auditor question caught the team out? Which file existed in four versions?
Twenty minutes of this in October saves days in January and it’s the single most skipped task in finance. It gets skipped because it produces nothing and because it involves admitting that something didn’t go well. The businesses that do it stop repeating the same year-end for the third year running.
The part that’s not about year-end at all
There is one more job worth doing in October and it has nothing to do with closing the year.
Write down what you want finance to be able to tell you by this time next year that it can’t tell you today.
Not a job description. Not a system requirement. Just the questions. Which customers are genuinely profitable? What the cash position will be in twelve weeks. Whether that site is carrying its own costs.
Once those questions are written down, the answer to what you need usually becomes obvious: a person, a system, a process or simply somebody asking a different question of the data you already hold. Without them, businesses tend to buy something and hope.
It takes an hour and it is the only item on this list that changes anything beyond the accounts.
Where to start
Pick the reconciliation you least want to look at.
That one is the year-end problem. It’s the account nobody has fully understood for a while and it’s considerably smaller today than it will be in twelve weeks.
Everything else on this list is housekeeping. That one is the job.
If you want to talk about how we could help with this then get in touch.