4 Best Practices for a Better Month-End Close in the New Year
For the longest time, the close was seen as a necessity — an evil process that required long hours and something that everyone agreed could probably be done better. But how?
But over the last two years, accounting leaders began to fully understand the role that consistent, accurate, and timely reports like the close could have on the overall business. As a result, that question teams had been putting off for so long: “How can I make my month-end close more efficient and less horrible?” became urgent.
With that in mind, let’s take a look at how accounting departments can achieve a faster month-end close without busting the budget.
Why the Month-End Close is So Painful
Due to clunky communication processes, most organizations suffer from a lack of transparency and poor documentation. This problem happens naturally as organizations grow, which is why it’s so common. As a result, team members typically have visibility only into their small piece of the close.
This is often complicated by the fact that documents are shared haphazardly across a disorganized local network drive. Procedures aren’t documented, and because everyone is so busy, no one is sure who needs what information anyway.
For most accountants, the close means long, hard hours in the office and frequent restatements. As a result, many accountants report increased stress during the close.
Best Practices to Reduce Stress
Given how negatively a month-end close process can impact employees, it’s a small wonder that it can be completely overhauled if organizations implement just four best practices.
Use a Collaborative Month-End Close Checklist
A close checklist that tracks employees’ responsibilities and their progress will keep everyone aware of how their work fits into the bigger picture. Each team member will know when their work needs to be completed and offer leaders insight into potential bottlenecks.
Standardize Reconciliation Templates and Folder Structure
Speed up reconciliations, review, training, and auditor PBC requests by using a standardized reconciliation template. This offers team members a way to plug their work into a template and avoid redundancies. Ensure that anyone in the organization can locate documents quickly and easily by establishing a consistent folder structure.
Reevaluate Your Talent Mix
With technology becoming more foundational to accounting and finance processes, you need people on your team who can use technology to its fullest potential. Consider hiring tech-savvy accountants who might not possess the traditional pedigree a GAAP expert CPA might.
Take Advantage of Cloud Accounting Technology
Using a cloud platform will make the close process less stressful and more efficient. Teams can access documents more quickly while working on documents simultaneously. This will create a level of transparency while eliminating the age-old problem of not being able to access a document when its owner is out of the office or leaves the organization.
Getting started is as easy as creating a shared Microsoft Excel checklist in your cloud storage provider, and rolling it forward each month. Even better than relying on Excel alone, which has limitations when it comes to workflow, is to use a close management software solution to track all checklist items, reconciliations, and review notes.
Life is Better with a Streamlined Close Process
A more efficient close process has benefits to your business, as well as to your team members. On average, teams using technology to streamline their month-end process typically shave three days off their close. Accounting and finance leaders that take advantage of cloud technology have better insight into the close process, are more confident in the close, manage less-stressed employees, and onboard new hires faster.