Accounting

End of Year Success: Tips for a Smooth and Effective Close

As Autumn rolls on and the leaves start to fall, most Australians start thinking about shorter days and cooler weather, and maybe even pulling on an extra layer. For business owners, however, Winter (and more specifically June 30th) means that it’s time to focus on the end of the financial year, and closing the books. 

Year-End close is an unavoidable administrative hurdle for businesses of every size across Australia, and is especially challenging for accounting teams, who are often placed under significant pressure. With the rest of the organisation gearing up for a strong start to the new financial year, accountants are looking back over the previous 12 months in order to complete essential close tasks, including: 

• Checking financial statements
• Reviewing accounts receivable and accounts payable 
• Reconciling transactions
• Identifying discrepancies
• Fulfilling financial reporting requirements
• Preparing data for auditors

Year-End can involve long hours and late nights as accounting teams race to ensure forms are filed and reports submitted by strict deadlines – so it’s no wonder so many of us don’t look forward to it. The good news is, Year-End doesn’t have to be difficult.

The Year End Close: Why Does It Matter?

The Year-End closing process is the regulatory requirement that companies verify the accuracy of their annual finances. It demonstrates the business’ 12 month financial performance, and provides transparency for shareholders and the public. Following the close, many businesses will also need to open their accounts up for auditors – who will rigorously check their accuracy. 

Beyond meeting regulatory expectations, the close is an opportunity for a company to understand its own financial position, check the efficacy of its accounting system, and use that data to make decisions about the future. 

With all those factors in mind, CFOs must work to optimise their Year-End to be thorough and accurate. While that may mean the process is particularly challenging for certain organisations and their accounting teams, there are plenty of ways to ease the pressure. Preparation for the close is critical: with the right accounting software and the right strategies, companies can reduce end-of-year friction, increase its efficiency, and, in doing so, make life easier for their employees. 

Let’s take a look at some key tips for making your Year-End successful and stress-free. 

Pro Tips For a Stress Free Year-End Close

1) Plan Ahead

One of the defining stress factors of the Year-End close is time pressure. Accounting teams usually have numerous tasks which have multiple dependencies, which often require input from third parties, and which must be completed to strict deadlines.  

To minimise delays, or at least the impact of delays, and so reduce pressure on employees, it’s essential to plan the Year-End close months in advance – as early as March depending on the size of the organisation, or complexity of the process. Preparation helps accounting teams confirm holidays, contact relevant stakeholders and third parties, allocate resources, and get a head-start on other critical tasks that will ultimately ensure unexpected obstacles don’t derail completion when time is running out. 

2) Optimise Checklist

An effective task checklist is essential for an orderly, thorough, and efficient close. In practice this means checklist visibility and functionality should be a priority for companies seeking to reduce end-of-year stress. CFOs need to be able to keep track of overall progress and potential delays, while team members need to understand their responsibilities (and those of their colleagues), and task dependencies. 

Whether you’re using Excel or another tool, it’s important to develop your checklist with that level of versatility in mind – and adapt it to fit the needs of your organisation. Automated checklist tools offer a significant advantage here: changes to the list can be made instantly, everyone can be notified of delays, and responsibilities or deadlines can be adjusted in a matter of clicks. High level  visibility of the checklist is also valuable: automated dashboard tools offer accounting teams at-a-glance visibility of close checklist progress, and can help CFOs spot delays coming down the line. 

3) Centralise Storage

The Year-End close requires accounting teams to work collaboratively across numerous different documents, and with reference to a range of data. However, storing that data in different locations across a wider tech infrastructure can lead to knowledge siloing and administrative confusion, with team members unable to access important documents or working on different versions of files. 

Companies can combat this kind of close inefficiency by centralising storage of data on the network – essentially creating a single source of truth for employees working under pressure during the close. Centralised data storage promotes version control by ensuring that files remain up to date for everyone, and means that critical knowledge is quick and easy to access for every team member. 

4) Modernise Communication

Accounting teams need to be able to communicate quickly and clearly during the close, and address emerging problems as soon as possible. In this context, phone and email exchanges are often unreliable since they leave stakeholders out of the loop, bury important information in increasingly unwieldy discussion threads, and slow discussions as teams wait for messages to be read and replied to. This issue may be even more frustrating for firms with teams working outside Australia, and across different time zones. 

To avoid communication problems, CFOs should ensure their accounting team’s communication infrastructure is as functional and versatile as possible. Choose close solutions that integrate instant messaging features, and enable real-time interactions over live documents. Ideally, solutions should be tailored to your company’s close needs, accommodating third-party integration options (Slack, Google Drive, etc.) and options to allow access for external parties, such as auditors. 

5) Automate Reconciliations 

Reconciliations are one of the most time-consuming components of the close – both at Year and Month-End. If you manage reconciliations via an Excel spreadsheet, employees might have to go through thousands of line items manually, often working with non-uniform, unformatted data, and having to cut and paste individual items between documents one by one. That level of complexity quickly becomes tedious, and typically increases the likelihood of human error at a critical stage of the close. 

Close software can significantly reduce reconciliations pressure by adding not only automated speed and accuracy to the process, but a range of useful functionalities. For example, accountants may be able to deploy standardised reconciliations forms or automated balancing forms that make ledger reviews easier, or apply an automatic tracking tool for faster tracking of historical reconciling items. Since Year-End reconciliations often involve a large volume of transactions, even minor process automation opportunities can deliver an impact.

Embrace Automation Potential

In a constantly changing regulatory landscape, and with a spectrum of peripheral operational factors to consider, the most effective way to optimise your close for employees (and for business) is to lean-in to automation – with close management software. 

Close software helps businesses target and eliminate close pain-points with automated accuracy and efficiency, but also provides opportunities to supercharge Year-End performance by reducing manual complexity and tedium, and ultimately facilitating the skills of accounting teams. FloQast Close and FloQast Reconciliation Management are designed exactly for that purpose – helping teams and individuals work smarter at Year End, freeing up valuable company time and resources, and ensuring that you start your new financial year as strong as possible. 

Learn how to transform your Year-End Close: get in touch with FloQast today.