Lock Periods
When we lock periods
We lock the period in your Xero file at the end of:
– The Financial Year
– The BAS reporting period (ie Monthly or Quarterly)
We basically lock the period in your Xero file when we complete a lodgement with the ATO. Let’s explore some of the reasons why we do this.
Why – Data Entry
It’s so easy to type in a wrong date. Especially when January rocks around and you have to type in 2017 not 2016! We have seen typos previously where people have put in 2006 not 2016. This would mean your accounts are completely out of whack. Your GST claim could potentially be wrong and you could miss out entirely on the tax deduction for that expense.
Locking the period ensures you aren’t adding in expenses for the previous year or quarter that would then be missed as a deduction or GST claim.
Why – Results
Numbers are the single source of truth for every business. They tell the story of your results and how the business is performing. If you are constantly changing things after the fact you don’t really have a good handle on how your business is performing.
What does this mean to me?
In short, you can’t change an invoice or bill, or enter an invoice or bill with a date in a locked period. So now you can’t enter anything before 30th June 2016 as we have completed Financial Statements + your June BAS.
Speed is really important when it comes to your numbers. We always recommend completing your end of month process within 10 days. This gives you enough time to gather your bills from suppliers (including statements), reconcile your bank and credit cards.
If you leave it too long, looking at your numbers 3 months down the track doesn’t actually allow you to make changes quick enough.
If you need to change an Invoice you have sent to a customer you need to do a Credit Note. It’s a really good idea to get in the habit of doing this anyway. You want to see how many changes you are having to make to invoices and put in place processes to ensure you eliminate this as much as possible.