Clean Up Books Bookkeeping Question

by Marti
(Florida)

Clean Up Books

Clean Up Books

A friend has approached me with a bookkeeping favor, seeking assistance to rectify her financial records and bring her back on track.

Among the challenges she faces are unpaid checks lingering in her online business bank account for a staggering period of 3 to 4 years. These checks have not been cashed, possibly voided, and have been long forgotten.

Now, the question arises: How can we effectively clean up this mess and bring her books up to date?

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Aug 09, 2023
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starstarstarstarstar 		Retroactive Bookkeeping Cleanup
by: BB

Cleaning up old transactions in bookkeeping, especially those as old as 3 to 4 years, can be challenging but is essential to ensure accurate financial records.

Review the Checks: Begin by assessing all the checks that haven't been cashed. It would be useful to contact the payees and confirm whether they received the checks or if they intend to cash them. If the checks are lost or won't be cashed, they can potentially be voided.

Voiding Checks: If you determine that certain checks will not be cashed, you can formally void them in your bookkeeping software. Make sure to keep a record (either digital or physical) detailing why the check was voided, in case of any future inquiries.

Reconciliation: After addressing the checks, reconcile the online business bank account. This will involve matching the bank statement transactions with those in the bookkeeping records. Any discrepancies need to be investigated and corrected.

Adjust Financial Statements: Once you've cleaned up the bank account, review financial statements from previous years. You might need to adjust them if the voided checks had been previously recorded as expenses.

Seek Professional Help: If the process becomes too overwhelming, consider seeking assistance from a professional bookkeeper or accountant. They can provide guidance and ensure that the clean-up doesn't lead to more complications down the line.

Implement Regular Review Practices: To prevent such issues in the future, it's a good idea to implement regular monthly or quarterly reviews of the business bank account. Setting reminders for outstanding checks can also help ensure they don't linger unnoticed for years.

Cleaning up old bookkeeping records can be time-consuming, but the peace of mind and accuracy it brings to your financial statements are worth the effort.
Jul 17, 2023
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starstarstarstarstar 		Cleanup Bookkeeping
by: Stephanie

When faced with unpaid checks in your friend's checking account dating back several years, it's essential to take steps to clean up and reconcile the records. Here are some recommendations:

Review and identify: Go through the list of unpaid checks and determine which ones are still outstanding and relevant. Cross-reference them with your friend's records to ensure accuracy.

Contact the payees: Reach out to the individuals or companies who received the unpaid checks. Verify if the checks were lost, forgotten, or if there were any issues preventing them from being cashed. It's important to confirm the status of each check.

Void or reissue: For checks that were never cashed or are no longer valid, consider voiding them in the accounting system. This will help reconcile the books and reflect the correct balances. If necessary, reissue new checks for valid payments.

Adjust the records: Make the necessary adjustments in the bookkeeping business software or ledger to reflect the updated status of the checks. This may involve recording voided checks, updating outstanding check balances, and adjusting the appropriate accounts.

Reconcile the accounts: Ensure that the checking account is reconciled with the bank statements to match the corrected records. This step helps identify any discrepancies and ensures the accuracy of the financial statements.

By following these steps, you can help your friend clean up her bookkeeping records, resolve the unpaid check issues, and establish a more accurate and organized financial system.

It's advisable to consult with a bookkeeping 101 expert or accountant for guidance specific to your friend's situation.

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Cleaning Up Non-Profit Books

Cleaning Up Non-Profit Books

Cleaning Up Non-Profit Books

I am working with a new non-profit. They did not keep accurate records for the year. While their bank statements show more income that they show invoices for, the invoices do not match the deposits.

This is a small group that provides housing and services to adults with mental illness. The person who sent out the invoices always billed for the standard amount. However, if the client was served for less than the month invoiced, they got paid based on the actual length of time in the agency's care.

So, I have invoices marked paid, but the amount was wrong. I don't see any misuse of funds - in fact the deposits recorded by the bank are considerably higher than the total of invoices.

I know that the founders put considerable amounts of their own money into the agency to get it started. How do I reconcile this so that the accounts balance?

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Aug 09, 2023
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starstarstarstarstar 		Non-profit Bookkeeping Discrepancies
by: BB

Reconciling the books for a non-profit, especially one that did not maintain accurate records, can be challenging but not impossible. Here's a step-by-step approach to help you navigate this:

Bank Statement Review: Begin by carefully reviewing all bank statements for the year. Identify every deposit and categorize them.

Invoice Matching: Match every bank deposit to its corresponding invoice. If a deposit doesn't have a matching invoice, note it down.

Identify Discrepancies: For each mismatch (where the invoice amount doesn't match the deposit), determine the reason. As you mentioned, it could be because clients were billed a standard amount but paid differently based on the actual services availed.

Founders' Contributions: Identify and document any contribution made by the founders. These amounts should be recorded as owner contributions or donations to the organization.

Journal Adjustments: Create adjusting journal entries to rectify any inconsistencies. For example, if an invoice was marked as paid but the amount was wrong, make an adjusting entry to reflect the actual amount received.

Maintain Detailed Notes: For future references and potential audits, maintain detailed notes explaining each adjustment. This is crucial for transparency and for ensuring that anyone who reviews the books later can understand the changes made.

Future Recommendations: Suggest implementing a more robust accounting system. Train the organization's personnel on accurate invoicing and payment recording practices to avoid such discrepancies in the future.

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