For many non-profits, the fiscal year-end on June 30th can feel like a looming storm cloud. But fear not! With a little planning and some key steps, you can ensure a smooth and stress-free closing process. Here’s your roadmap to a successful year-end:
Step 1: Gather Your Documents
The first step is to collect all your financial records for the year. This includes:
- Bank statements (checking, savings, investment accounts)
- Invoices and receipts (income and expenses)
- Donor records and grant agreements
- Payroll records and tax documents
Step 2: Reconcile Your Accounts
This is where the magic happens! Reconciliation ensures your bank statements match your internal accounting records. Here’s a quick breakdown:
- Download your bank statements for the month (and any outstanding months).
- Compare each transaction in your accounting software to the corresponding bank statement entry.
- Identify any discrepancies and research them until they’re resolved.
Step 3: Review and Finalize Inventory
For non-profits with physical inventory (think a thrift store or food pantry), take time to count and value your stock. This ensures an accurate reflection of your assets at year-end.
Step 4: Accruals and Prepayments
Don’t forget about expenses you’ve incurred but haven’t received a bill for yet (accruals), or payments you’ve made for services you haven’t received (prepayments). Record these to ensure a complete picture of your financial health.
Step 5: Review and Update Donor Records, Paying Close Attention to Restricted Funds
Double-check that all donations are accurately recorded and categorized. But with restricted funds, there’s more to manage:
- New Restrictions:
- Carefully review any new donations or grants received in the final months of the fiscal year.
- Identify clear restrictions on use (purpose, time frame) and create new tracking categories if needed in your accounting system.
- Releasing Restrictions:
- Determine if any previously restricted funds have met their designated criteria (project completion, etc.) during the fiscal year.
- If eligibility is confirmed, reclassify those funds to temporarily restricted or unrestricted, ensuring proper reflection in your financial statements.
- Communicate these changes in donor reporting to ensure transparency and trust.
Step 6: Generate Your Financial Statements
Once everything is reconciled and reviewed, it’s time to generate your financial statements:
- Balance Sheet: Shows your assets, liabilities, and net assets at a specific point in time (June 30th).
- Income Statement: Summarizes your revenue and expenses for the entire fiscal year.
- Cash Flow Statement: Tracks the movement of cash in and out of your organization.
Step 7: Breathe Easy and Celebrate!
You’ve done it! With your clean and accurate financial statements in hand, you’re ready to face any audits, submit reports to funders, and confidently plan for the next year.
Bonus Tip: Partner with a Bookkeeper!
While this guide offers valuable steps, a qualified bookkeeper can take the pressure off entirely. They’ll handle the heavy lifting, ensure everything is compliant, and free you up to focus on your mission.
Ready to achieve a smooth June 30th close for your non-profit? Contact us today for a free consultation!