Does your company struggle to close its books at the end of each month? The month-end close requires accounting personnel to round up data from across the organization. This process can strain internal resources, potentially leading to delayed financial reporting, errors and even fraud. Here are some simple ways to streamline your company’s monthly closing process.
Develop a standardized process
Gathering accounting data involves many moving parts throughout the organization. To reduce the stress, aim for a consistent approach that applies standard operating procedures and robust checklists.
This minimizes the use of ad-hoc processes. It also helps ensure consistency when reporting financial data month after month.
Provide ample time for data analysis
Too often, the accounting department dedicates most of the time allocated to closing the books to the mechanics of the process. But spending some time analyzing the data for integrity and accuracy is critical. Examples of review procedures include:
- Reconciling amounts in a ledger to source documents (such as invoices, contracts or bank records),
- Testing a random sample of transactions for accuracy,
- Benchmarking monthly results against historical performance or industry standards, and
- Assigning multiple workers to perform the same tasks simultaneously.
Without adequate due diligence, the probability of errors (or fraud) in the financial statements increases. Failure to evaluate the data can result in more time being spent correcting errors that could have been caught with a simple review — before they were recorded in your financial records.
Encourage process improvements
Workers who are actively involved in closing out the books often may be best equipped to recognize trouble spots and bottlenecks. So, it’s important to adopt a continuous improvement mindset.
Consider brainstorming as a team. Then, assign responsibility for adopting changes to an employee with the follow-through capabilities and authority to drive change in your organization.
Be flexible with staffing
Often, accounting departments require certain specialized staff to be present during the month-end close. If an employee is unavailable, the department may be shorthanded and unable to complete critical tasks.
Implementing a cross-training program for key steps can help minimize frustration and delays. It may also help identify inefficiencies in the financial reporting process.
Consider automation
Your accounting department may rely on manual processes to extract, manipulate and report data. However, these processes create opportunities for human errors and fraud.
Fortunately, modern accounting software can automate certain routine, repeatable tasks, such as invoicing, accounts payable management and payroll administration. In some cases, you may need to upgrade your current accounting software to take full advantage of the power of automation.
Keep it simple
Closing the books doesn’t have to be a stressful, labor-intensive chore. We can help you simplify the process and give your accounting staff more time to focus on value-added tasks that take your company’s financial reporting to the next level.
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
