December is for many of us the final month not just of the calendar year but also of the book year, the fiscal year. If you work with finance in your nonprofit, you are focusing on being sure you have all the needed data for closing the book year. So how to go about ensuring completeness of your accounts?

Check invoices received (or not)

Making sure your data are complete starts by checking which data you have. The starting point, for me, is invoices and expense claims (to be) received. I start with that, because if I need extra information from other people this requires waiting time for the response (or for a question for clarification).

Checklist monthly invoices

It helps to have a checklist with the invoices you expect weekly, monthly, quarterly or annually. Check which items still need to come in.

Cash-based?

Often, invoices for the month of December will arrive in early January. That can cause an issue in case your organization’s accounting principles are cash-based. In that case, you will need to ask providers to send their invoice early. Or you will need to do an accrual booking for those invoices.

Plan and communicate

Some of your service providers or team members may not be aware of the process of closing the book year. I recommend sending out messages in early December that you want to receive all invoices and expense claims that refer to December (or earlier) not later than for instance 15 January. It helps sending out a reminder toward the end of December and one in the first days of January, too.

Check your balance accounts

In addition to making sure you have all incoming expenses from invoices and expense claims complete, let’s check that your balance accounts are not ‘hiding’ any items that may lead to expenses or write offs.

Break down balance amounts

For balance accounts where you expect an amount at the end of the year, break down the composition of the amount. What items together form the remaining balance? Is that correct? Or is an item missing, that you would expect to see? Or do you see now that items of prior periods are not properly reconciled, while they should have been? Make sure that the final balance amount can be justified as pending at year’s end and that you have all document proof easily available in case anyone wants to know. (Like your auditor or director).

Check balance accounts that should be at zero

There are also balance accounts that you expect to be at zero by the end of the year. For instance, the balance account for net salaries should not have a balance at the end of the year if you have paid out all the salaries as required. Check that these accounts do show a zero balance and that there are no unexpected transactions there.

Clean out the ‘to be sorted’ account

Finally, you may have an account for things to sort out later, like so many of us do. Check this account now and solve the remaining puzzles on it! Your team is now aware of the January deadline for the closing of the book year and will understand easily that their help for cleaning out this account is needed asap.

Check your income

Finally, it is good to also check your income accounts. Did you receive everything you expected to receive? (A project register that records advance payments to be received will help. Also, a donation register, and a campaign overview will be helpful tools here). Discuss with the team about reminders, if needed. Make sure you are also aware of any December campaigns that might still bring in donations, in kind or in money. So that you can be ready to process them as soon as possible.

The fundraising team will also want to know the exact state of donations received (in kind or in money) for their thank you-messages for the donors. So if you sort this out, they will have clarity on which donations have come in – and which ones haven’t appeared yet. That way, your work is helping them. And helping you will be helping themselves.

My key tips

  • Start with the items where you expect to need help from other people.
  • If you are overloaded with these tasks now, make a realistic plan for next year to address the same issues in quarterly or monthly closes. That will make your year-end life much easier next year!

 

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