Catch-up bookkeeping: how to bring your books up to date, step by step

Six months in a drawer

Laura Bennett runs a design studio with two collaborators. Business is good: so good that in the last six months she has not had a single afternoon for the bookkeeping. The invoices she issued are in her email, the suppliers' invoices in a folder, the taxi and stationery receipts in a drawer that no longer shuts.

One Monday her accountant writes: he needs the books up to date in three weeks to prepare the annual return. Laura opens the drawer, looks at it for a while and shuts it again. She does not know where to start, and that is exactly why she never started.

Why it piles up

Hardly anyone falls behind through carelessness. People fall behind because client work always seems more urgent, because recording one week seems small and recording six months seems impossible, and because opening the drawer brings the fear of what might be inside. The backlog feeds itself: the bigger it gets, the harder it is to start. That is why the way out is not more willpower, but a plan.

Before you start, gather this

• The bank statements for every month behind, as PDFs or on paper.
• The invoices issued to customers and those received from suppliers.
• The receipts for expenses paid in cash or by card.
• The contracts for loans, leases and equipment purchases.
• The last closed balance sheet, or at least the balances the period started with.

The seven-step plan

1. Set the starting point. Choose the date from which you will record and note the opening balance of each account: cash, bank, customers, suppliers, loans and capital.
2. Sort by month. One envelope or folder per month. Record nothing yet.
3. Use the bank as the backbone. Every line of the statement is an entry: a receipt, a payment, a fee. Start there, because the bank forgets nothing.
4. Fill in what the bank does not see. Cash expenses, credit sales not yet collected and supplier invoices not yet paid.
5. Close each month before moving on. Reconcile the bank, review the trial balance and, when everything balances, close the month.
6. Mark what is missing. If an invoice is missing, note it and ask the supplier for it; if a statement is missing, ask the bank. Do not invent the figure.
7. Once you reach the present, set a weekly appointment. One hour every Friday is enough to keep the drawer from filling up again.

How long it takes

It depends on the number of transactions, not the number of months. The first month is the slowest, because it forces you to decide how each type of transaction is recorded; the following months repeat those decisions and go much faster. If the volume is very high or tax obligations are overdue, ask your accountant for help from the start.

What to avoid

• A single “six-month adjustment” entry that nobody will be able to explain later.
• Skipping months to reach the present sooner: each month depends on the balances of the one before.
• Inventing or rounding figures to make something balance. An unexplained difference is information; an invented figure is a hidden error.
• Forgetting personal money: if the business paid personal expenses, record them as owner's drawings, not as expenses.

Laura's three weeks

Laura blocked out three Saturdays in her diary. She spent the first sorting papers by month and entering the opening balances; recording January took her the whole morning. February took half that. On the second Saturday she closed March, April and May; on the third, June and the final reconciliation. Two invoices from one supplier were missing, and they arrived by email on Tuesday.

She handed the books to her accountant with two days to spare. Since then, on Fridays at five, Laura records the week. It takes her less than an hour and, she says, it is the calmest hour of her week.

Where Aconta Online comes in

Aconta Online lets you enter opening balances and record entries with the date each transaction took place, month by month. Every entry that does not balance is refused on the spot, the trial balance updates itself and, once a month has been reviewed, you close it so nothing changes it afterwards. The first company is free, no card required.