If you work in finance, you’re probably aware that accounting departments drown in repetitive tasks and non-value add activities at the end of each month. If your department struggles with manual account reconciliations and time-consuming closing activities, you’re not alone.
Closing the books can be a tough job, especially if your team isn’t super experienced with month-end close best practices. Inefficiencies in time or process may also affect the output or delay the activities that go along with it. It can even deplete energy and disrupt the workflow of your team. And once morale dips low, the quality of work follows suit. This can be particularly dangerous considering the importance of accurate financial reporting as the lifeblood of a business.
Some challenges that finance professionals encounter when closing books include:
- Increasingly complex accounting standards
- Dependency on information channels outside accounting departments
- Use of obsolete software
- Straying from the usual process
- Fixing things that don’t need any changes at all
- Lack of motivation to make process improvements
Such challenges are why it’s important to forge ahead in changing the status quo. Integrating month-end close best practices can ensure speedier closing while maintaining the quality of everything it covers. These four month-end close best practices can help you and your team achieve success at month-end:
Assemble a power team
A company’s greatest resource is their employees. The key to successfully completing month-end close is having a well-rounded accounting department. There is always room for training and learning in accounting—just make sure there is a leader who can steer the ship and guide more junior members of the task force. Before choosing members of the power team, research their work ethic. You can’t push one member to interact with others if there’s no self-initiative. It may also affect the workflow of other members as well.
Conduct a review of potential members and decide. Some qualities you may consider include proactiveness, communication skills and a positive attitude. Procure a power team and champions of the process that will contribute to a more efficient and effective month-end close!
Build a project charter
Want to build a detailed project charter but don’t know where to start? Let’s begin with the purpose of one. A project charter should outline team goals broken down into objectives which ensures a vision of incorporating month-end close best practices into the actual month-end close. Having the goal of the team documented helps with direction in times of confusion.
To kick off a project charter, consider the most important goals of the team. Only objectives that align with the process should be included. Connect objectives with each other and organize them so there is a coherent flow. Failure to do so could mean the team’s performance may be affected.
Streamline the month-end process
Streamlining the month-end process is a pivotal step in achieving a more efficient and effective close. By optimizing your workflow and eliminating unnecessary bottlenecks, you can significantly reduce the time and effort required for the month-end close. One key strategy to streamline the process is to establish clear timelines and deadlines for each task, ensuring that everyone on the team knows their responsibilities and when they need to deliver.
Additionally, consider creating standardized templates and checklists for routine tasks like reconciliations and journal entries. These templates not only reduce the chances of errors but also speed up the execution of these critical activities. Emphasize the importance of clear communication within the team, promoting collaboration and swift issue resolution.
By streamlining the month-end process, you can achieve a more efficient and accurate close, boosting team morale and enabling them to allocate their time and expertise to higher-value tasks that contribute to the overall success of the organization. Another option to shave time and complication off your close is to invest in software specifically designed for streamlining the month-end close, such as SkyStem.
Consider automation
Once the power team is in place and the process has been streamlined, you can do away with a lot of manual and non-value add administrative activities by implementing automation around the month-end close. This allows everyone to be on the same page and provides real-time insight into the process.
Repetitive work is a perfect candidate for automation and reconciliations that are non-fluctuating should be done by a computer instead of an employee. When work like this can come off the team’s plate, they’re free to pursue more strategic work, like flux analysis. Furthermore, cloud-based platforms enable real-time data sharing and collaboration, eliminating the need for manual data transfers and ensuring that everyone is working with the most up-to-date information.
Consider a solution like SkyStem’s ART which eliminates 90% of manual month-end close tasks with features such as balance sheet reconciliation automation.
In conclusion, streamlining the month-end close process is not just a matter of convenience; it’s a strategic imperative for any finance department aiming to maximize efficiency and productivity. The challenges and complexities faced during the close can be daunting, but with the implementation of best practices, these challenges can be transformed into opportunities for improvement.
By fostering a culture of continuous improvement and innovation within your accounting department, you can ensure that your team remains agile and adaptable in the face of evolving accounting standards and business needs. This, in turn, not only accelerates the month-end close but also enhances the quality and accuracy of financial reporting.
As you and your team embark on the journey to optimize the month-end close, remember that it’s a collaborative effort. Each member’s proactive approach, effective communication, and positive attitude are integral to the success of the power team and the overall efficiency of the process. So, empower your team, set clear goals, and automate where possible—your finance department will thank you for it.
