End of month financial checklist

The dichotomy of a tough financial climate is when you least have the money, you need the most financial reporting. That’s where understanding and taking responsibility for the financial welfare of your business is valuable. Doesn’t mean you actually do the reporting, it means you must be able to confidently delegate to a bookkeeper. This end-of-month financial checklist will help you do that well.

Monthly checklist for a creative business

• Close any outstanding purchase orders by either matching POs against invoices and approving for payment; or for work not yet completed, move the POs to the next month.
• Process accounts payable. Ensure supplier invoices, staff expenses and other outgoings are entered into your accounting software and ready for payment.
• Send sales invoices. It’s vital for the financial health of your business, regardless of how busy you are, to ensure you have invoiced all your work current for the month. It’s better to action this as soon as possible, but at the very least, invoice monthly and send to the appropriate client contact.
• Reconcile aged debtors and creditors. These reports highlight overdue payments to suppliers, or overdue client invoices that should be followed up. Unpaid debtors is a huge drain on a small business.
• Complete banking tasks. As well as reconciling your petty cash once a month, log all your banking tasks, including credit card payments into your accounting software.  Reconcile your bank accounts, loan accounts including any interest paid.
• Reconcile your GST. Confirm entries are correct for both GST received and paid.  Lodge your BAS return if you are on a monthly cycle.
• Reconcile your payroll. Confirm entries match the single touch payroll report, then lodge monthly PAYGW if you are on a monthly cycle.  Lodge employee superannuation contribution amounts by the due date to avoid penalties being imposed by the ATO.
• Produce month-end reports. Review your trial balance, profit and loss statements, cash flow and balance sheet.
• Reconcile annual leave /personal leave entitlements. Doing this regularly avoids a large build up of entitlements. It also means you can encourage staff to take leave if the pipeline is looking sparse.
• Review performance against budget. Reviewing regularly makes it easier to make proactive small tweaks often, rather than huge reactive decisions.
• Review and update cash flow forecast for the month ahead in light of actual results for the month.

The reason studio/agency owners and managers should understand this stuff is because the more organised the handover to the person responsible for your finance admin, the less time it takes them to do their job. The less time, the less money.

Take away

In our experience, designers don’t fail at being creative. They fail at being small business operators and that’s because they don’t embrace the financial side of running a business with the same interest, energy or commitment as they do the creative side.

Designers don’t need to do the financial tasks that help a business flourish, but it’s much easier to delegate if you understand.

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Want more?

Here’s more information on designers making change:
1 Mini case studies about designers doing new business well
2 5 areas where small tweaks make a big difference
3 It’s OK to close your business if you’ve rethought what success means to you