At the end of each month, accounting departments roll up their sleeves and tackle repetitive tasks and non-value-added closing activities like manual account reconciliations.
Is your department one of them?
We know the feeling.
Closing the books can get pretty grueling. Doubly so if your team is still not very adept with month-end closing processes.
Lack of experience can eat into your time, resulting in delays, and increase the risk for errors. Working longer hours and making corrections with deadlines looming can disrupt your team’s workflow and be energy zapping overall.
Are you ready for the good news? You can stop wasting time and getting overwhelmed. Embrace the best practices that will have you whistling at month end.
Here are 5 surefire ways to a highly efficient, expert-level closing.
Clean up your chart of accounts
This chart is one of the biggest factors that will impact the amount and the kind of work your accounting and finance team will be doing during close.
Which means it’s an ideal place to start making improvements. Have a good look at it and see where it hurts you.
The higher the number of active accounts, the higher the volume of work to be done. If you have more accounts, then you have more choices when it comes to recording journal entries. This means more opportunity for journals to be recorded to incorrect accounts.
More accounts certainly mean more reconciliations, more variance analysis work required. So go through the chart of accounts with your team and trim down your account set.
Set a detailed close schedule
The chaos and potentially staggering workload at month-end closes can benefit greatly from some discipline and structure. Introduce these by creating a detailed schedule that sets a completion day for each journal entry. From daily updates, you can slowly adjust over the next few months until you get down to hourly increments.
The ideal accounting/finance team infrastructure is that everyone is capable to take on one another’s primary duties.
For that to become a reality, start cross-training.
When a team can interchangeably take on each other’s primary duties, that gives you deep bench strength and provides the organization with great flexibility which will be helpful during times of stress. This will make the close process much more elastic and able to respond to the ups and downs of business.
Have your team keep their eyes and ears open for new ideas, no matter how small, and try them out in your organization to see if it can incrementally improve operational effectiveness during close.
Keep in mind that new ideas can come from anywhere. So look more closely at things, listen more attentively to people, both from your organization and from without.
Finally, work with your internal audit team. They can make a great consulting partner in analyzing your process and brainstorming ideas for improvement.
Cloud computing is cost-effective and offers great incentive to companies to digitize their process and become more competitive.
Month-end close automation can cut down up to 40% of month-end reconciliation work, reduce administrative activities by nearly 90% and provide real-time insight and analytics into the state of your month-end close.
Technology innovations and your own team’s openness to learn new skills, troubleshoot issues, and try out new ideas for improvement hold the key to a new and streamlined month-end close experience.
Ready or automation? Explore Skystem’s month-end close solution.