5 Ways to Improve the Closing Process

5 Ways to Improve the Closing Process

Do you dread month-end close every period? Are you looking for ways to improve the closing process? Most controllers are goal-oriented and want to be able to issue financial statements as promptly as possible. This helps in being able to identify any accounting issues early on rather than at year-end. Despite its necessity, month-end close can feel like a frenzy at times. In this blog, we will discuss five ways to reduce the stress of the closing process through analysis, proactive actions, and using technology to your advantage.

Task Interdependency Analysis

Examine all closing steps in a timeline to determine which tasks are delaying the close and which can be done simultaneously. It may be possible to shift the timing of a number of closing activities to expedite the issuing of financial statements. With tight scheduling and the appropriate teams, many activities can be condensed into shorter time periods. The controller may need to function as the project manager, overseeing the schedule and delegating tasks to the appropriate personnel.

Complete Activities Early

Anything that can be done early, should be. Procrastination only builds up the stress of month-end. Some activities that would be beneficial to complete early include correcting errors, bank reconciliations, accrual adjustments, and commission calculations. Some tasks must wait until the core closing period at month-end, but starting early will allow the accounting team to apply the appropriate attentiveness rather than rushing through at the end of the month.

Standardize Where Possible

Implement identical accounting procedures, business processes, and policies in all locations. A shared chart of accounts for all locations makes the mapping of General Ledger much simpler. Journal templates can be used to standardize journal entries. These standardizations are core characteristics of enterprise resource planning (ERP) software such as Dynamics 365 Finance or Business Central, which are designed to simplify the closing process as everyone is trained on a single system and procedures can be tailored to that system.

Electronic Reporting

Most ERP systems provide the ability to generate financial statements with the click of a button. Sometimes these reports are not sufficient and accountants spend time collecting data from various systems, calculating the required information, and formatting the report. Custom reports can be created with the help of a developer so that the report does not need to be generated manually each cycle. The reports can then be disseminated electronically as well.

Use Automation

Technology can significantly improve the efficiency of the closing process. ERP systems provide some built in automation such as the ability to automatically track and eliminate intercompany transactions. An ERP system also makes it much easier to produce consolidated financial statements. ERPs contain electronic workflow systems that help control the flow of documents and can even expedite the process. For example, rules can be set up to automatically approve documents under a set dollar amount. Escalation rules can also be defined if a response is not given in time. Many organizations customize their ERP solution to expand automation capabilities and enhance the basic functionality.

Using these five tips can help accelerate the closing process and reduce the stress at month-end. The aim is for continuous improvement over time. As Oliver Cromwell said, “He who stops being better stops being good.” Even the most perfect system will be challenged as other areas within a business change and grow. Thus, an ongoing review of the closing process for areas of improvement is necessary.

Undertaking an analysis of your financial processes to look for areas of improvement can be a daunting task. Rand Group’s financial professionals can combine their knowledge of a wide breadth of ERP systems and accounting expertise with an analysis of your current business processes to discover ways to improve your closing processes. For more information, contact Rand Group today.

– Software Delivered as Promised. No Surprises.

Latest Posts