Month-end can be a very stressful time for internal bookkeepers, accountants and even management. Creditors and management are eager to see the latest financial information – with important decisions hanging in the balance. What happens when upstream stakeholders are anxious? Your accounting department can feel the stress. While some accountants just accept that month-end closings will be a stressful time, others have seen process improvements take the pressure out of the situation.
Developing a better process for your month-end closings will improve your accuracy, reduce required man hours, and generally make your life easier. Not to mention helping your management by providing them with the timely information they need to make good decisions.
Is your month-end a headache or just another day at the office? If you answered “headache” here are a few suggestions to help you improve your process and your outlook on month-end closings.
- Evaluate and simplify the information you are collecting
Over time, many organizations see their chart of accounts swell. The result is often that information is being recorded in painstaking detail that does not bring any value to management. This can cause an increase in required work as well as a greater opportunity for mistakes to be made. If you haven’t evaluated your chart of accounts recently, you may benefit from taking a fresh look at how you are tracking your financial information. There might be a simpler path that gets you to a better, more efficient result.
- Fine-tune your ongoing data entry
Many month-end headaches are caused by mistakes made during the month. What might have taken one person five minutes to do correctly the first time, later takes a couple of hours from multiple people to correct. Poor data entry throughout the month creates a tremendous burden on the month-end process. Accounting professionals often find themselves looking for missing expenses, searching for expenses that have been entered multiple times, or correcting items that were coded or categorized incorrectly. If your monthly closing process is showing signs of a problem, you may benefit from reviewing your recording procedures – retraining your staff with an emphasis on getting things right the first time and putting some checks in place that will find mistakes before it’s time to close the month.
- Improve your month-end routine
While improvements to your chart of accounts, your processes, and your quality control standards will set you up for a successful close of the month, your actual closing process may provide an opportunity for improvement as well. It is not uncommon for month-end processes to include many steps which do not add value and do not improve the quality or accuracy of the information you are providing. First, be sure you have a good month-end checklist in place. This shouldn’t just reside inside the head of your accounting team either. A good process, and one that can be improved, must be written down and defined in a way that any experienced professional can follow it. If you don’t have a written month-end checklist, create one. Once you have created your list, take a critical look at it. Question each and every step – look for loops in your process or steps that simply do not provide any value at all.
- Ask for outside help
Your accounting information should have a positive effect on your business. It should not be a headache and it should not be a waiting game or a guessing game. If your accounting team is struggling to develop the process or the people to provide timely month-end closings, don’t hesitate to ask for outside help. Spending some time up front with experienced accountants can save you a lot of time and stress down the road. A good accountant will work to understand the data that you receive, the information that you need, and the people and systems that will ultimately pull it all together.