In a survey that asked 2,300 organizations about their month-end close, the bottom 25% needed 10+ days to finish, while the top 25% needed 5 days or less.
So where do you fit on that spectrum? No matter what position you occupy, every accountant wants (and probably needs) to find ways of improving the time and labor-intensive close process that ends each month. At the very least, ensure you’re following these five best practices:
- Create a Consensus – The CFO may have a different understanding of how the close works compared to the accountants actually conducting the work. Improving everything starts by ensuring that everyone invested in the month-end close agrees on how it proceeds and where the strengths and weaknesses lie.
- Identify Who’s Accountable – Even though companies close the books monthly, some have yet to define and document a single owner for each individual process. Eliminate confusion and redundancy by identifying who’s accountable for what. If you must assign duties to someone new, make sure they have the tools and knowledge to handle that task.
- Prioritize Transparency – There shouldn’t be any uncertainty involved with the month-end close. Everyone must understand their individual responsibility and how that fits into the whole. Users should also be able to track the progress of the current close process. For all those reasons, processes and workflows should be highly visible to all stakeholders.
- Demand Documentation – The month-end close is really a process of documentation. However, if this documentation isn’t complete, accurate, and consistent, the close goes off the rails. Standardization is a key driver of efficiency. Avoid issues by systematically recording information while building an audit trail into that information.
- Insist on Continuous Improvement – No close is perfect. It can always improve in terms of speed, accuracy, autonomy, or strategic value. Take that attitude to heart, and strive to always be looking for points of friction to smooth out and opportunities to capitalize on. However, you choose to improve, make sure to benchmark your efforts using key performance indicators.
Honesty – The Best Practice of All
You need to be honest about what’s working with the month-end close and what’s not. Just as importantly, you need to be honest about your capacity for implementing best practices. Knowing how to perfect the month-end close helps immensely, but it doesn’t make the work involved any easier. Truthfully, many businesses that want to institute best practices simply lack the time, technology, or staff to achieve best-in-class accounting.
Instead of optimizing your own practices, consider outsourcing them. Each month you have talented, methodical and insightful staff made up of educated accountants ensuring you have a clean and efficient close.
Best of all, someone else handles the heavy lifting, including whatever it takes to consistently perfect the process. In that way, outsourcing transforms the month-end close and, by extension, the entire accounting department.
If you’re ready to join the top quarter of all companies, SSF can help. Contact us to explore all that we offer.