Keeping up with your monthly business bookkeeping isn’t something you look forward to, but it doesn’t have to be something to dread either.  With a clearly laid out checklist to follow and calendar reminders, you can tackle it with ease and keep your business on the right track.

We highly recommend having a monthly bookkeeping checklist that the bookkeeper and owner(s) go through each month.  Some businesses like to breakdown bookkeeping tasks daily and weekly too, which is great, but those tasks can vary significantly between individual companies.  We like to focus on what you can do monthly to ensure your business is successful and ready for your accountant at tax time.

 

Monthly Bookkeeping Checklist

1. Reconcile Cash and Credit Card Statements

You need to know that your business cash transactions are correct and you are working with an accurate cash position.  Reconciling your bank accounts and credit cards each month makes it easier to find and fix mistakes in time to correct them.

2. Review the Aged Accounts Payable Report

The Aged Accounts Payable Report needs to be reviewed to ensure the bills you have been entering throughout the month are accurate and have been paid in a timely manner.  Doing this will protect your design firm’s credit and overall reputation.  Incorrect transactions or “other” figures at the bottom of the report need to be removed to accurately reflect the company net income and current liabilities.

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3. Review Open Vendor Deposit Report

The Open Vendor Deposit Report shows vendor deposits on project and inventory purchase orders that have not yet been applied to a vendor invoice and deposits that have been partially used on vendor invoices. The Open Vendor Deposit Report needs to be reviewed to ensure that orders are being filled properly by the vendor and, more importantly, we are accurately recording our COGS, so we don’t overstate our net income at the end of the year.

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4. Review Aged Accounts Receivable Report

The Aged Accounts Receivable Report needs to be reviewed to ensure your clients are paying in a timely manner and to alert you to any invoicing errors like duplicate invoices, etc.  Doing this will protect your design firm’s credit and overall reputation. Any incorrect invoices, invoices that have nominal balances, or are not going to paid by the client should be handled accurately and efficiently so you are not overstating your revenue.

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5. Review Open Client Deposit Report

The Open Client Deposit report displays deposits on proposals and retainers that you have received from your Client, but have not yet applied to a client invoice. This report will also show client invoices that use a portion of the original deposit or retainer.  You need to review this report to ensure invoicing is being done in a timely manner and to monitor the proper usage of the client’s funds.

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6. Review Work in Process (WIP) Report

The Work in Process report needs to be reviewed to ensure that you are invoicing your clients for merchandise for which you have already purchased.  This report will help catch additional charges such as freight or shipping, reimbursables, etc. that can often get overlooked and should have been invoiced to the client.

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7. Review the Balance Sheet

Reviewing your Balance Sheet at the end of the month and comparing it to last month will give you insight into how you are managing your assets and liabilities.  You want to look for any significant changes and dig into why something has notably increased or decreased.  For example, if your Accounts Receivable is higher than normal, is that due to better sales that month or because your clients have been slower to pay you.

8. Review the Income Statement

Reviewing your Income Statement, or Profit and Loss Statement, at the end of the month will show you what your design firm has earned and spent.  You should compare month to month and year-to-date.  If you prepare a budget for your business each year you should also compare against your budget.  My previous blog post on Income Statement Layouts is handy for showing all the different options Design Manager offers for reviewing this report.

 

There is another task that could be added to a weekly or monthly bookkeeping checklist and that is reviewing Payroll Reports.  Every company does payroll differently, but making sure that the totals on the Payroll Reports from your payroll company (think Paychex, ADP, Heartland, etc.) match your payroll accounts in Design Manager is important.  Since your payroll company already provides you with detailed reports, it is only necessary to include the journal entries of the totals for each payroll account in Design Manager.

If you are a bookkeeper or a design firm owner and have other best practices to share, please do so in the comments below.