Bookkeeping
A practical order of work for bringing books current before a year-end, a loan application or a raise.
CA Hritik Dang · 5 min read
Books fall behind for ordinary reasons: a bookkeeper leaves, the business grows quickly, or the founder means to get to it next month. The problem usually surfaces when it matters most, at year-end, during a loan application or in investor due diligence. Here is the order of work we follow to bring books current.
1. Find a reliable starting point
Identify the last point where the numbers can be trusted: the last filed financial statements, an audited balance sheet, or a month where the bank balance was properly reconciled. Everything after that point will be rebuilt.
2. Collect the records
- Bank, credit card, payment-gateway and loan statements for every month.
- Sales invoices and credit notes.
- Supplier bills and expense receipts.
- Payroll records and statutory filings already made.
- Contracts for loans, leases and major purchases.
3. Reconcile cash first
Work month by month and reconcile every bank and card account to its statement. Cash is the most objective record you have, and once it is right, most other errors become visible.
4. Rebuild receivables and payables
Match customer receipts to invoices and supplier payments to bills. Confirm balances with major customers and suppliers. Write off or provide for amounts that will not be collected, with the owner’s agreement.
5. Correct statutory balances
Reconcile GST, TDS and payroll liabilities with the returns actually filed and the payments made. Differences here can have penalty or interest consequences, so they should be identified early and discussed with your tax adviser.
Close each month as you finish it, so the catch-up never has to be redone.
6. Close and lock each month
As each month is rebuilt, post the month-end adjustments, review the reports and lock the period. Then move to the next month. This keeps the work orderly and prevents later changes from undoing earlier months.
7. Put a routine in place
Once the books are current, agree a monthly calendar: reconciliations in the first days of the month, adjustments and review next, and a short pack to the owner. A steady routine is what stops the books falling behind again.
This article is for general information only and is not professional advice. For questions, write to info@hdangandcompany.com.