Benefits of Streamlining Close, Consolidation and Reporting
Streamlining Close and Reporting
The financial closing cycle occurs every month, often the processes are repetitive. It is imperative to accurately record all accounting-related transactions every month. Timely closing the financial books allows organizations time to focus on other pressing matters. More importantly, faster closing means faster reporting to key stakeholders.
Some of the most effective ways to streamline month-end close are:
Prepare a checklist
Preparing a checklist/month-end timeline keeps you organized and allows you to see completed tasks. Set deadlines for posting, reconciliating, analyzing, consolidating, and reporting.
Overall, a checklist with deadlines improves efficiency and saves the company precious time and money.
Perform data analysis
Allow time for analyzing data for accuracy and integrity. Often companies spend more time on the mechanics of closing activities rather than the analysis of data. For example:
– Review procedures for reconciling amounts. Most companies reconcile monthly when many accounts can be reconciled weekly.
– Testing – many companies don’t perform this task because they rely on auditors. If testing is done prior to the audit, mistakes and adjustments can be made sooner.
Move financial data to the cloud
Employees spend a lot of time creating and sending individual spreadsheets. Often, these spreadsheets must be consolidated by management. Moving data to the cloud will save time and ensure reports are always up to date.
Always look for ways to improve processes. For example:
– After closing, the team can review JEs, close procedures, review data and offer solutions to findings. For example:
– Certain tasks may not be necessary
– Earlier cut-off for capital expenditures less than $20k (as an example)
– Weekly reconciliation of cash
– Book inter-co transactions 2 days after the close
– Post reclassifications less than $3k 2 days after close (as an example)
– Change the current workflow by which invoices and accruals are processed. The recommendation is to have the “business process owners” prepare and send to AP ALL invoices and accrual forms with the correct information for processing. AP will process all invoices up to the end of business on Thursday before the close. Invoices and accruals that are not processed by the end of business on Thursday before the close will be accrued on the Friday before the close.
Automating month-end close can reap several benefits by increasing efficiency, reducing errors, and increasing speed. If you want to automate more of your month-end close processes the best place to begin is with repeated tasks (AR/AP). Many accounting tasks are performed involving manual processes. These manual processes are often shared, updated, reshared, and updated again. All these problems may be eliminated by using modern accounting software.
Month-end close is a critical time of the month. If an employee is unavailable during close, this can cause delays and frustration. It is important to cross-train employees as an emergency may require employees to take time off during close.
Make sure the team follows the new close procedures. There will always be people requesting to stretch out the deadline. Automating and standardizing month-end processes will result in less procrastination.
In conclusion, streamlining your accounting processes doesn’t have to be stressful; you can improve efficiency and bring more value to your business by saving time. Arthur Lawrence can help your company simplify the process and give your team value-added support.
Also Read: The Future Of Artificial Intelligence In The Financial Services Industry