Kay Day, Dayta Co-Founder, has been working with customers for twenty five years and agrees that year end is probably the most difficult time for finance departments. Here’s what she had to say:
“Let’s face it, year-end is just plain awkward. It’s an interruption to normal working life, but the world doesn’t stop turning just because it’s there. People still have to continue processing invoices, paying suppliers, receiving money from customers and so on.
These transactions are in the new year and will hit the sales ledger, purchase ledgers and cash book, but won’t appear on the nominal until the old year-end is complete
The challenge of financial year crossover
Year crossover can make life difficult and one of the things that doesn’t help is forgetting to allocate transactions.
For example, there may be outstanding purchase invoices at the end of August, that aren’t allocated until the beginning of the new financial year in September. If transactions aren’t allocated, the software has no way of knowing whether the invoice has been paid or not. After all, it’s not psychic, it’s just a computer program!
And that doesn’t just happen at year end. If a colleague is not trained properly or forgets to allocate a transaction, it just sits on the system. As a result, the retro reports cannot always be trusted.
Overcoming the challenge
The only way to resolve the problem when it happens is to manually trawl through everything to get the figures reconciled. And if the books aren’t reconciled in readiness for the accountant’s requirements at year end, it increases the time the accountant spends working on your behalf and, therefore, increases their charges.
Some people choose to minimise the problem by blocking any transactions in the new year, so there is a clean starting point i.e. you don’t have items spread across deferred, current and waiting posting. This may be fine for a week or so, but not much longer.
Then when the year-end accounts are finally complete, you have the auditors to satisfy, so that’s more time away from your daily work. They will want to see all the paperwork as well as having access to the electronic files.
Financial year end is inevitable, but there are some key measures to take to minimise the disruption:-
- Ensure that all staff are fully trained in how the accounting software works and what they need to do.
- All budget holders and staff involved with the accounts will need to be informed about what happens at year end and their responsibilities. Circulating a checklist and the timing details will help.
- Always be reconciling throughout the year.
- Have all the paperwork and passwords ready for the auditors and in the order they are likely to check it.”
For the details on exactly how to prepare and implement Year End in Sage, down load the document relevant to your school below:
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