Catch-up bookkeeping: getting a year of books back on track
Falling behind on bookkeeping happens to good businesses. A busy season, a staff change or a software switch, and suddenly months of transactions are uncoded and unreconciled. The good news is that catch-up work follows a predictable sequence. Following it in order avoids the most common mistake: fixing the same period twice.
1. Lock down the opening balances
Everything depends on a reliable starting point. Confirm the closing balances from the last filed return or last reviewed period, and agree them to the balance sheet in the accounting software before touching any later transactions.
2. Collect every statement before you start
Gather bank, credit card, loan and merchant statements for the full catch-up period at the outset. Working from complete statements prevents gaps that only show up at the end.
3. Reconcile month by month, oldest first
Work forward from the opening balance one month at a time. Code transactions, reconcile each account to its statement, and only then move to the next month. This keeps errors contained to a single period and makes review straightforward.
4. Keep a running query list
Some transactions will not be clear from the statements alone. Rather than guessing, record each one on a query list with the date, amount and what is needed. Sending the client one organised list is far quicker than dozens of separate emails.
5. Close the period properly
Once every month is reconciled, post year-end adjustments such as accruals, prepayments and depreciation, and review the profit and loss and balance sheet for anything that looks out of line. Only then is the file ready for tax preparation.
6. Put a monthly routine in place
A catch-up project is only worth doing once. Agree a monthly close routine going forward so the books never fall that far behind again.
