At the beginning of the month, accounts should get reconciled. Once you have completed all the reconciliations, you should run financial reports and review them thoroughly each month. But do you know what you are looking for? Look at your Profit & Loss, and look for any deviations from your budget – do you know why things are different? Does the actual performance make sense? Are there certain successes you should note (i.e., stronger sales in a particular area)? How about potential problems? When reviewing your reports month over month, there should be certain consistencies. There must be a clear explanation if there is a big fluctuation from one month to another. Otherwise, you may have a problem with your hands. One handy review might be to look at your Profit & Loss last month versus the prior month before that – QuickBooks can show you the variance between the months, which can help you identify potential inconsistencies and spot trends in your sales and expenditures.
It would be best if you also had your bookkeeper send you an A/R report and a detailed A/P report for you to review. Catching items that need to be adjusted as soon as possible saves you time and money. If an account is aging, early intervention may prevent a misunderstanding or head off a potential loss. Aging payables may mean you’ve missed something. Catch it early to maintain positive business relations and credit.
Reconciling and reviewing your accounts while the entries are fresh on your mind and everyone else’s makes a quick resolution easier for everyone involved.
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