Catch-up bookkeeping

A catch-up fills in months that were skipped. A clean-up fixes months that were done but don't hold up. Many backlogs need some of each, and this service covers both, within data entry, bank reconciliations, and bills and invoices.

Catch-up work is the missing data entry: bank transactions with nothing recorded against them, supplier bills paid but not entered, and sales with no customer payment matched. Clean-up work is in the entries already there. Common problems include:

• the same transaction recorded twice, once by hand and once from the bank feed
• transactions recorded against the wrong account, so a report shows a cost or a sale in the wrong place
• customer payments recorded as new income instead of being matched to their invoices, which leaves those invoices showing as unpaid
• bills paid from the bank but still showing as owed
• old items left unreconciled, long after the month they belong to

We correct entries like these as we reach each month, and the handover summary lists what changed. Changing how the file itself is set up, such as the chart of accounts, is a decision for your accountant.

When you ask for a quote, it helps to say which you think you have. A file where nothing has been entered for months is mostly data entry. A file that's been kept but doesn't look right is mostly checking and correcting. The first look at your records shows the real mix.

There's no set point where a backlog becomes too long. What decides where a catch-up starts is the records, not the number of months behind. Three things set the starting point:

• The last month each account was reliably reconciled. Each bank, card and loan account is checked, and the work starts from the earliest of those months.
• The last year your accountant finalised. Your accountant's figures for that year give the balances the catch-up builds on. Changes to a year your accountant has already finalised are a question for your accountant.
• The statements you can get. A month can't be reconciled without the bank's record of it, so missing statements are the first thing to request.

Starting partway through a backlog leaves a problem behind. The skipped months are still unexplained, and an error in any of them flows into the opening balance of each month after it.

A long backlog does mean more to gather. Bank statements, supplier bills and sales records for the whole period are the core of it, and the table above lists the rest. If the business changed banks or closed an account during the backlog, that account needs its statements too, even though it's no longer in use.

Because each month's closing balance is the next month's opening balance. Reconcile the oldest month first, and the month after it starts from a figure that's already been checked. Working in any other order causes problems:

• A recent month can look right while resting on an opening balance that's wrong.
• An error found in an early month changes the opening balance of each later month, so later work has to be checked again.
• Missing and doubled entries are harder to place. Worked in order, each one shows up as a difference in the month it belongs to.

Inside each month the order stays the same: enter what's missing, match bills and customer payments, then reconcile each account against its statement. The reconciliation is what tells us a month is finished. It explains the gap between the statement and the books: payments that haven't cleared yet, errors in the books that we correct, and any bank error, which you raise with your bank.

Differences the documents can't explain go on the query list, with their date and amount. If you're weighing up doing the catch-up yourself, our guide, How to catch up on bookkeeping, walks through the same order step by step.

Gaps are normal in a backlog. What happens next depends on what's missing, because a statement and a receipt do different jobs.

Bank and card statements come first. The reconciliation depends on them, so a month without its statement waits until a copy arrives from the bank. Requesting missing statements at the start stops them holding up the work later.

A missing receipt or bill is different. The bank shows that a payment was made, so the month can still be reconciled. What's missing is the record of what the payment was for. A copy of the supplier's bill fills that gap, because it names the goods or service, the date and the amount.

We don't guess. A payment with no document and no clear payee stays on the query list until you explain it, and how a cost with no receipt is treated is a question for your accountant.

The size and state of the backlog, more than its age. Two backlogs of the same length can be very different jobs, which is why we look at the records before giving a quote.

The last of these is the one you control most. Sending statements for the whole period at the start, and answering each query list in one go, keeps the work moving from month to month.

Once we've looked at your software, statements and paperwork, we can tell you what to expect.

You have up-to-date books in your own software, and a handover summary of the catch-up. The summary covers:

• the period worked on and the accounts reconciled
• the corrections made, such as duplicates removed and entries moved to the right account
• anything still open, such as transactions waiting on your explanation or documents still missing
• the customer invoices and supplier bills still unpaid at the end of the period

Your accountant starts from reconciled books, and the summary shows what changed and why. Keep it with your records, so anyone who looks at those months later can see the reason for each correction.

Then there are two ways forward. You can keep the books current yourself: with bank feeds connected, receipts filed as they arrive and each account reconciled monthly, a new backlog has less room to build. A monthly reconciliation also finds a missed entry while the month is still fresh enough to remember. Or we can keep them current for you as small business bookkeeping, picking up from the month the catch-up finished.

If you're keeping them yourself and want help with the software, set-up and training covers getting access to it, connecting supported bank feeds and training you or your staff.