5 Tips For a Smooth Year End Close

August 30, 2023

As a fun group of opinionated folks, we combined our related corporate experiences and Loan Vision tricks to come up with some tips for a smoother year end close.  I KNOW I’ve had year end closes from Hades that I certainly wouldn’t want to repeat anytime soon!  Here’s what we came up with:

1. Balance Sheet Reconciliations

You absolutely SHOULD NOT wait until late December/early January (or your fiscal year end) to try to reconcile your balance sheet accounts! Almost everyone reconciles their bank accounts each month, but not everyone does all the other accounts.  DO ALL THE ACCOUNTS!  Both with and without balances, if they have any activity.  Tie the accounts to an outside source – warehouse statement/billing statement/account detail.  Address the lingering scraps of refuse that always clog up your accounts.  Make it clean and ready for your auditors.  Loan Vision has several reports that are handy for doing these reconciliations!  Under the Loan Level Reports tab, there are the Gen Ledger Reconciliation Report (my fav), the G/L Account Rec by Loan No and the G/L and Loan No Reconciliation.  Each are different and extremely useful in unique ways.

2. Vendor Management

Are you paying your vendors before they give you a W9? Adopt a vendor management policy and have a standard process:  W9, ACH approval form, Certificate of Insurance listing your company as additionally insured if they come onto ANY company property.  I could go on and on about the ACH benefits for ease of reconciliation and safeguarding your cash, but you get the point.  Review the vendor ledger entries after a payment to ensure that you have set the vendor card up accurately, look for the tax ID and the 1099 codes.  This will really help you in January.  The vendor cards within Loan Vision have all these fields, use them!

3. Borrower Data Management

MAILING ADDRESSES – If your loan cards are not updated with any mailing address changes from your LOS system, they will remain frozen in time as of the last date of updating.  If the mailing address SHOULD change at funding, write that into your funding schema.  Otherwise, the mailing address may remain the borrower’s address when they first applied for a loan.  You will be VERY sad in January when it’s time to issue 1098’s and all your data is stale.

4. Aged AR and AP reports

These 2 reports are EXTREMELY helpful to clearly show any unapplied items and any old and lingering things that need to be addressed. Items that show as a zero balance are likely application issues within the ledger entries.  Many times on the customer side, we see payments received at a GL level rather than customer level.  My suggestion would be to turn off the direct posting option on the First Payments Receivable GL account (Borrower AR), it would serve to remind whoever is making deposits that they have to be done at customer level.  On the AP side, credit memo’s and voids have a tendency to muck up your records behind the scene if not done properly.  It would be a best practice to run both of these reports monthly and clean up as needed.  The Loan Vision Customer and Vendor modules are robust and useful tools if you use them to their full capacity.

5. Reach out to your auditors

Your auditors base their bill on how long it takes to get thru your data. Reach out several months before year end and inquire as to WHAT reports they will want to see and if you can provide any data for them before year end, then they’ll just need to do a roll forward.  Don’t be afraid of audits, look at them as not only a means to an end but also a way to streamline your operations in the accounting department.  There’s a phrase from the book “Turn the Ship Around” that I love – “Embrace the inspectors.”  “Concerning areas where we were doing something exceptionally innovative or expertly, we viewed the inspectors as advocate to share our good practices with.  Concerning areas where we were doing things poorly and needed help, we viewed them as sources of information and solutions.  This created an atmosphere of learning and curiosity among the crew, as opposed to an attitude of defensiveness.”  Love this book!

6. ***BONUS***

Keep in touch during the entire year with your tax accountants, and make sure that you’re doing adequate tax planning and making quarterly payments properly. No one likes a tax surprise at year end.  And tax law tends to change mysteriously, abruptly, and frequently. At least it seems that way to me (and I hate taxes, btw).

The long and short of it is……………keep up to date on all of your nuisance items and keep a clean set of books. That way, your year end will not turn into a nightmare!  As always, we’re here to help!

Tracey Jeffries

Senior Consultant
About the Author

As a Senior Consultant on the Support Team, Tracey Jeffreys is responsible for answering support tickets and helping out where needed. What Tracey loves most about Loan Vision is the team in general and the family-like atmosphere the office has. Tracey also loves the software itself for the powerful insights into a lender’s financial processes it gives. When Tracey is not at Loan Vision, she enjoys traveling, hiking, biking, and playing with her grandkids.

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