Month End - Credit Card Statements

[nagem]

Hello!

I help in the accounting of a small digital publishing company. We have not had a hard monthly closing process in the past, but are working towards implementing some better practices.

I had one question come up that I wasn't sure how to handle. We have two credit card accounts that have statement end dates of mid month. So right now we aren't going through to reconcile the charges until I get the statement. This means that anything that may have been missed isn't entered until the following month, thus changing the financials.

For example:

Transaction is 2/25/14
Statement close is 3/15/14
Account reconciled 3/16/14 - the 2/25 transaction was caught as missed and entered

How should I be making sure everything is entered in time for a timely monthly close? Do people wait and enter all charges in the month the statement closes regardless of when the transaction actually took place?

Not sure the best way to handle this.

 

[Fidget]

Do you have, or can you get, access to the credit card accounts on-line? If so, your problem is solved as you can use that to get all the transactions to go into your month end accounts.

The billing period for ours is 29th one month to 28th of the next, but we put the whole of it into the current period, which means that any given period can have up to 3 days of transactions from the previous period in it.

Similarly, the mobile phone billing period is 12th of one month to 11th of the next, but as the bill is roughly the same month on month, the whole billing period goes into the current period.

 

[Samir]

If you are waiting until the end of the month to enter credit cards, you're losing money when a card isn't processed properly. Most every card processing company has a daily statement. And beyond that, your daily close should show how much you processed in cards and how much you are due (your cc AR).

Whenever I have a company with credit cards, those cards are treated as an accounts receivable. The sales is sales, so the income statement isn't affected by cards that are deposited/undeposited. Any outstanding cc are shown on the balance sheet as an AR.

As far as your example, if done the way I outlined, your income statement would remain the same even when you miss a deposit. This type of entry would affect your balance sheet, but only in a minor way since the entry simply moves money from the AR to the bank account asset account, keeping the overall balance of the assets the same.

(The only exception to this is when your deposits to the bank include the merchant fee being deducted. Then there is a small expense that will alter the income statement, and the balance sheet asset total will reduce in value while the current earnings will change to reflect the change in the income statement.)