Have you started thinking about your month and year-end closing? This time of year, we turn our focus to the calendar year-end and start to plan the rest of our year. It might seem early to begin, but we’re operating in an environment that is not “business as usual”. Some questions you might start asking yourself to prepare include:
- How did your year-end close go last year?
- Were there any stubbing blocks along the way?
- Is your company prepared for year-end?
- How can you start prepping today to make year-end, tax planning, or an upcoming financial audit easier?
- Is your team prepared for the additional workload? If someone on your team left tomorrow, would you be able to handle the close and meet your deadlines??
What We’ve Learned from Clients About Year-End Close
We don’t see the “work world” returning to normal any time soon. Most clients come to us with similar problems. They’re not using cloud-based software. Their systems work but could be better. They aren’t documenting their processes well and their employees are not cross-trained. For many, it would be difficult to come back from losing an employee who plays a crucial role in the close process. Most month and year-end closing pain points come down to three key areas: software, systems, and staffing.
Solving Software Problems in the Close Process
There is still an overwhelming number of companies using on-premise software. One example of on-premise software is Quickbooks Desktop. Transitioning to software like Sage Intacct or Quickbooks Online can solve a lot of problems. Working on web-based software allows us to work more efficiently and effectively and do that work from anywhere. Beyond the remote work benefit, cloud-based technology integrates better with other systems like banking platforms, bill pay, payroll, and Point of Sales. This reduces the human touch on the close process, helping to reduce errors.
Cloud-based software may be slightly more expensive to set up and maintain than on-premise software, but it will reduce file storage needs and transform how your financial function operates. You’ll be able to get more done with fewer resources. It also makes it easier to share your financials with your tax professionals. Many companies are also discontinuing their desktop platforms and will no longer offer tech support for their retired programs.
You can have the best systems in the world, but if your people don’t know how to use them or don’t have clear directions, you can still find your financial records falling into disarray. Financial documentation isn’t new. We’ve always recommended companies document the who, what, where, and why of their financial processes.
But it’s more important than ever to keep up documentation. It does take a lot of time to create this documentation, but there is a lot of value in it. The reality is people leave companies and take their knowledge with them. If you document that knowledge, it stays within the company. It’s much easier to document while your employees are there, than to scramble when dealing with turnover. Process documentation allows for easier cross-training and emergency backfills.
The “Great Resignation” has not made our world any easier. We don’t see the tight labor market improving in the accounting world. Many experienced professionals retired earlier than expected due to the pandemic. We have also seen the continued trend of fewer college students going on to get certified as a CPA after completing their degrees. This is why process documentation and cross-training are so crucial to mitigating risk.
Next Steps to Improve Your Month and Year-End Close
These pain points are fixable. Improving your software, process documentation, and staffing is possible. We recommend being proactive about creating contingency plans to allow for continuous operations and improved financials. If you’d love to be prepared but don’t have the time, our outsourced accounting group can provide support during periods of transition. Get in touch with our team today to start discussing your financial goals and how we can support you with your month and year-end closing.