An accurate and tight-knit month-end close process is essential for maintaining the optimal financial health of an organization. Indicating the current revenue, debts, profits and accounts payable,Accurate closing puts precise financial information into the hands of leadership to ensure quick analysis and smarter decision making.
Yet businesses- small, medium and large struggle to efficiently close the books at the month’s end owing to multiple reasons that include:
1.Manual accounting process: Manual accounting process is the leading cause of inaccurate data entry that leads to errors and oversights during the month-end closing process. This reduces visibility and increases and extends the time spent in month-end closing.
2.Disjointed accounting process: Month-end closing process relies heavily on emails, spreadsheets, phone calls, in-person meetings and more which when not integrated effectively take more time than usual leading to process delays.
3.Reactivity: When manual accounting processes, data entry errors, disjointed accounting processes meet short deadlines, mistakes are bound to happen and the rush makes it difficult to verify and resolve them.
4.Lack of standard month-end closing process: Not having a month-end closing process makes a firm vulnerable to the new challenges that keep coming up every month and extends the time taken to accomplish the process.
Faster Month-End Closing Process – More Time for Strategic Insights
While above are the common reasons, more often than not they all come together to deliver a delayed or inaccurate month-end closing process. According to accounting experts at Back Office Accountants, on average it may take up to 10 days for more than 25% of the business to get their monthly books done. And this inaccurate reporting with higher turnaround time usually reduces the time at hand and even muddle the decision-making ability of strategic leadership. So if you are a business that is encountering similar problems with your month-end closing process, then this blog is for you.
5 Simple Tips for Accurate & Faster Month-End Close Process:
The easiest way to streamline & sharpen your month-end closing process is to follow a set of key best practices that ensures smooth and faster sailing into the month-end. So in this blog here we identify a few best practices in a month-end closing process that can help you improve the accuracy and speed of your month-end closing process. Read on:
1.Build a standard month-end checklist: The easiest & efficient way to ensure a smooth month-end checklist is to set a standard checklist to track information, reduce redundancies and minimize errors.
Recording all incoming cash, reviewing Accounts Payable, reconciling all accounts, not letting go of petty cash, and reviewing the assets is the 5-step simple checklist we often follow at Back Office Accountants. However, every business is different with its own set of revenue streams & procedures and thus may need a customizable checklist for their closing process. In case you need help with a checklist, you can quickly contact our remote accounting experts at Back Office Accountants here.
2.Identify and address the dependency problems: The most common roadblock faced by accounting departments for the faster month-end closing process is the inter-dependencies that suck up both time and efforts. Given the data has to collect and parlayed for processing the dependency is mandatory and so is making them efficient for a faster closing. So identify these dependencies, prepare a checklist of deadlines for information retrieval from these dependencies. Communicate these deadlines to the stakeholders and set gentle reminders with follow-ups whenever the need arises.
3.Minimize Manual Process – Leverage Technology &Expertise: Since the month-end closing involves gathering information from many moving parts of the organization, tools can be readily leveraged to increase the efficiency of the process. Especially automation of manual processes like invoice data scanning, recurring calculations saved time and improved accuracy for all our clients at Back Office Accountants. So having the right set of automation stools bring-in the much-needed speed and intelligent automation for repetitive manual processes.
4.Make time for data analysis: Though faster closing is important it is of not much use if the reports are riddled with inaccuracies. Data integrity and accuracy is paramount for precise reports which are why data analysis and verification is important. To ensure this, at Back Office Accountants, our accounting experts:
1.Assign multiple resources to make sure of information veracity.
2.Perform random sample tests for verification.
3.Reconcile the ledger amounts with source documents.
4.Quantify the performance, compare it with the industry benchmarks for optimization goals.
5.Work backwards and conduct a month-end post-mortem: Now that you have set your checklists, estimate the time for putting together information. This helps you to track the work backwards from the target date you have set in order to estimate the right time to start the process.
You can further improve this process by conducting a post-mortem after a close to evaluate the performance of the process you have been adopting all this while. This diagnosis will shed light on the shortcomings and challenges that were holding you back from your deadlines and process efficiencies.
Ensure Faster & Accurate Month-end Close Process with Back Office Accountants:
That said not every accounting department is blessed with accounting tools, expertise and resources to ensure accurate and timely month-end closing. If you are a business that needs a precise closing every month but are falling short of accomplishing one, our accounting experts at Back Office Accountants can sure kind a lend help hand. As a remote accounting firm, we have been consistently providing complete accounting support with our full-service back-office accounting services and we can help you deliver a faster and accurate month-end close process too. You can contact us here: https://www.backofficeaccountants.com/