December is a hectic month for many businesses. Not only is it time to get serious about organizing your books for the year-end, but December also brings with it a flurry of financial activities on the services side of business. Extra orders and last minute client requests seem to be even more arduous when the holidays have already left you with fewer employees on hand to help.
This time of year also incurs additional expenses that you may not have thought about all year. It's best to be ready well before it comes down to it, but at least prepare your business to face the music when the bells start ringing.
These three tips are simple, yet tend to be overlooked, so we hope they help your business survive the holidays, and bring some joy to the New Year when it comes time to reconcile your books.
1. Prepare for an Influx in Sales and resolve Outstanding invoices
Although a common reality for most retail businesses, many service businesses also see an upswing in interest and service needs during this time of year. The last thing your business wants to do is to end the year with unhappy clients because you can't fulfill requests. If December is a busy time for your business, be prepared for the upswing by anticipating trends, collaborating with your team, and aligning with your bookkeeper.
Hopefully you haven't waited until now to address unpaid invoices for the year, but its still a good time to make some friendly collections calls and resolve outstanding invoices. It's also important to re-evaluate your collections strategies so you can be sure to stay on top of your business's cash flow for the new year.
Collections are often the last thing anyone wants to do, however, outstanding balances can seriously impact cash flow and hold your business back. By implementing collections strategies and adopting collections best practices for your business, you can improve the likelihood that you will get paid on time or even in advance next year.
2. Adjust for Holiday Pay and Vacation Pay
In addition to getting more business this month, a lot of employees will be tapping in to their paid time off in order to spend time with family. With an increase in requests for vacation time, your payroll and accounting functions will need to be aligned in order to make the necessary changes to PTO balances, as well as any adjustments for paid holidays or time and a half wages.
Depending on if your company uses the accrual basis or cash method, you may have to record the time off for employees on the balance sheet. If you are using the accrual method, when an employee takes time off, the company incurs the expense and the liability for those days. These need to be accurately reported on the balance sheet to keep the books organized without disrupting cash flow.
3. Account For Extra Expenses
Many business owners continue to use holiday or end of year bonuses as a way to show their gratitude for employees’ overall contributions for the year. Some companies simply add the bonus to a pay-period in December and distribute it within a regular paycheck. Other companies prefer to hand out cash or gift card bonuses instead, which will need to be recorded on an employee’s W2. Other items, such as expenses related to your company’s holiday party, client gifts, event tickets or even charitable donations will also need to be recorded properly, so it's always a good idea to seek your CPA’s advice on how to account for these expenses.
If your year-end bookkeeping and financial tasks are putting you in a bah-humbug mood, then 2018 might be the year that you give yourself the gift of peace of mind by outsourcing your business's bookkeeping and accounting processes.
Getting professional help is the gift that keeps on giving – providing much needed bookkeeping and accounting to keep your finances in order, and accurate, timely reporting to give you the financial intelligence that helps you to drive your business success.