How to prepare your finance team for year-end accounts

The main body of the work year-end financials includes preparing and closing three core documents:

• The balance sheet offers a summary of the business’s current performance, including assets, liabilities and equity.
• Income statements allow you to see at a glance whether your business has been profitable at a particular time by itemising expenses and revenue, which might have resulted in a profit or a loss.
• Cash flow statements reconcile your opening account statement with your closing account statement for the period, explaining where the money has been directed.

The biggest challenge is reconciling all of the hundreds of data points that come together to create the most accurate picture. This is a huge task for the whole year – although it is make easier if your business has ensured each month end is completed accurately through the year.

When is the year-end accounting period?

The end of the financial year can mean slightly different things to different businesses.

There is plenty to do within a relatively short space of time, so keeping on top of things can be challenging. It’s useful to create a plan of attack, breaking down what needs to be achieved into tasks and assigning them to specific team members.

Prepare your finance team for your business financial year-end by treating it like a project with a plan and action points, as well as a means of keeping track of who is doing what and the progress made.

And don’t forget, as the end of year accounting period is a stressful time, make sure your people get enough breaks and are working together to share the workload.

The tax year (or fiscal year) always runs from 6 April to 5 April and the majority of businesses use this date for their accounting year too – hence the need for everything to hit the same deadline.

However some businesses prefer to choose another date for their business year-end. Many find it convenient to use 31 March as the end date for example, others follow the calendar year.

How do you prepare for accounting year-end?

Carry on reading below to find out how to prepare year end accounts and make the process as smooth as possible for your finance team:

• Every business is different so set out a close schedule for your year-end accounts that suits your business model and priorities. For example a manufacturing company will need to finalise stock balances. Allocate tasks across your team and set a timetable for completion.
• Gather all the relevant documentation to analyse the company’s state of affairs for the previous year, including income statements, cash flow statements and the balance sheet. These year-end financials are the basis for your overall assessment and what you submit to HMRC.
• Conduct a forensic check of accounts payable and accounts receivable. Look out for invoices which have already been paid or amounts in accounts receivable that have not been invoiced. Check for errors or missing invoices, make sure everything is in order and ensure that you pay any outstanding amounts owed before year-end.
• Summarise cash inflows and outflows for financial activities such as loans or repayment of loans; operating activities such as expenses and revenue; and investing activities such as assets purchased and assets sold. This will reveal the net increase or net decrease in business cashflow during the previous financial year as well as where the money was spent.
• If you have an inventory, complete a stock take. Stock is included as one element of your gross profit in your endof-year profit and loss statement, calculated by deducting cost of goods sold from net sales. It is important to record this accurately, and also account for any stock that remains unsold due to theft, damage or error.
• Now look deeper at the current profit margin, profit-loss statements, ratios and total debt ratio before forecasting cashflow going forwards. At the end of the financial year you can see seasonal peaks and troughs; additional expenses are often incurred at the beginning of the calendar year. These (and other) factors make it important to monitor cashflow meticulously.

Your year-end accounts overview

• Year-end is a good time to review pricing strategies and implement any necessary changes for the new financial year. Revisit current rates and pricing methodologies in comparison with competitors to determine whether you are overpricing or under-pricing.
• Take a close look at financial statements, worker input and customer feedback. Assess against objectives and conclude how well you performed as a Finance team and a company as a whole.

Re-examine your tax strategies

• Business year end is a good time to assess your current tax strategies. Evaluate your current tax systems and consider what could be done to streamline them – digitisation for example. This can help your team be more effective through the year as well as at year-end. Take time to consider any regulatory changes on the horizon and how you will deal with them.

Look ahead for the next financial year

At year-end, the Finance team is obviously focused on last year to close the books and finalise the statutory accounts. But whilst this is happening, the business continues to move forwards. Finance must be ready to offer support for core areas such as budgets, forecasts and quota deployment.

Consider the bigger picture too. Revenue growth of 5%, 15% or even more might be within reach, especially for businesses who are modernising and digitising their operations and building markets to meet the opportunities available.

Other considerations for Finance heads looking into the next financial year include potential numbers of new hires, infrastructure investments, and support systems scalability.

Who else can you involve in the year-end accounting process?

Part of the role of the Finance team, particularly at this crucial time of year, is to offer support to the wider business to ensure targets for the coming year are set with the company’s current fiscal performance in mind.

Finance can also engage with IT to discuss how emerging technologies can support or enhance how Finance operates and interacts with the rest of the business. Key considerations include streamlining processes, including cloud, blockchain, robotic process automation (RPA) and artificial intelligence (AI).

By leveraging smart technologies to streamline the end-of-year process, you will free up time so that you can focus on offering crucial business support. The right finance system can help smooth and automate the year-end process by providing key milestones to help manage the closing of the years accounts.

Ultimately, Finance must strike a balance between statutory, corporate, and governance obligations (accounts, reporting etc.) and making sure the management team, the board and everyone else understands the financial performance of the business as a whole.

Use our year-end checklist to make sure you tick everything off

Download your copy of the year end accounts checklist for a smooth financial close — easy to use, serves as the foundation for your end-year accounts. 

Need more help? Use our accounting software to streamline and automate your complex accounting processes to ensure every month-end and year-end runs smoothly. View our accounting software.