Daily period closing refers to the process of your staff recording daily collections from all sources, including cash, checks, and credit cards.
For some, a daily close may seem overwhelming. However, instituting daily closings can be hugely effective in managing a company’s accounting, ensuring that financial data is always accurate, and pinpointing discrepancies before they become issues. Daily closing also helps eliminate accounting discrepancies at the end of the month by keeping an accurate, day-to-day record.
The three biggest benefits of daily closing are reconciliation and theft prevention, catching human error, and prepping for month-end closing.
The importance of daily closes
Daily closings can help in a variety of ways, including preventing employee theft, catching human error, and assisting with the month-end closing.
Reconciliation and theft prevention
While virtually all business types can benefit from daily closes, it is especially useful for retail and service companies who may run the risk of employee theft. When reconciling on a weekly or monthly basis, it is more difficult to trace the missing dollars. By using a successful day-end close process, employees are held accountable for the collection of cash for goods and services rendered. Businesses with extensive monthly transactions also benefit from reconciling cash on a daily basis, allowing staff to know how much cash is on hand at all times.
Catch human error
Other benefits of daily closes include the ability to trace discrepancies to human error, like an incorrectly-keyed amount or payment method. Additionally, any adjustments to collection amount can be recorded as well, like cash taken from a register for an unanticipated payment. It’s also important that daily deposits match with your daily close amounts.
Prepping for month-end close
When activity is recorded as it happens on a daily basis, the month-end close experiences fewer discrepancies and moves at a faster pace. And, much of this day-end closing can be farmed out to departments outside of accounting. Daily or weekly reports can be generated by other staff, and accounting can reconcile these on an on-going basis, rather than waiting until the month-end close.
Start daily closing today
If you aren’t already, start the process of daily closing. Putting time and effort into the frontend will free up time during month-end closing, making month-end closing quicker and more reliable. Daily closing will also help you manage and track cash flow and theft.
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