5 tips to improve your month end close process
The month end close process is made up of tasks like account reconciliation, journal entries and financial reporting all necessary for achieving an accurate picture of business performance and ensuring compliance. It relies on a multitude of people, technology and processes, as a result, organizations are challenged by inconsistent data and processes and a lack of standardization. Manual accounting processes involving spreadsheets, emails, phone calls, and in-person meetings can lead to errors, and are not sustainable in the long run.
The month end close process is sometimes lengthy, with finance teams devoting enormous time and energy to what should be a streamlined operation. APQC’s General Accounting Open Standards Benchmarking survey found that 25% said they need 10 or more calendar days to perform the monthly end close process. When fewer days are devoted to the month-end close process, more days can be spent delivering more strategic insights to business leaders.
It can be difficult to know when the month end close process is facing difficulties and it may seem easier to do nothing and stick with their current situation even if it is tedious and stressful. In this blog, we identify some of the ways you can improve your month end close process.
Challenges that occur during the month end close process
According to Deloitte, “the close process is often run by institutional memory rather than clear and specific protocols. Different people involved in the process “just know how things get done”— and have done it that way for years.” Some finance teams have no process in place at all they have a routine and stick to it. This is a far cry from an efficient month end close. They need to deliver more insight to business leaders and stakeholders - not just at the end of the month, but on a continuous basis. Here are some of the challenges finance teams need to overcome to make the month end close process more efficient:
- Manual data entry
- Endless simple errors that cost everyone time and money
- Missing receipts and other necessary documents
- Unidentifiable payments
- Predictable and repeatable questions from your team
- Use of outdated software
- Resistance to change
Five ways to make improvements to your month end close process:
Automation can benefit the month end close process in many ways including bringing more operational efficiency, transparency, and speed. But all too often tasks are delayed simply because key person dependancy or due to competing priorities. To bring more automation into your month end close processes, the best place to start is often with mundane, repetitive tasks. For example, today’s rebate accounting tasks are largely be handled by manual spreadsheets, which are shared, updated, re-shared, and re-updated this can all be solved with rebate management software.
- Move away from disparate systems
If you are using the wrong platform for storing data, using too many disparate systems, or trying to work around a platform doing something it’s not designed to do, your month end close could be delayed. Trying to integrate several disparate systems and make them compatible with each other is not always possible and can cause serious errors which finance teams are left to decipher and figure out.
It’s difficult to deliver real-time data with disparate systems, which is where standardization comes into play. Once you can marry the technology to the process, finance moves closer to the continual close, in which data is updated routinely and readily available—whenever decisions call for it.
- Back up your data
Besides making sure your accounting systems are fully equipped and up to date, one more delay in the month end process can come from not having your data saved or backed up. A rule of thumb to always keep in mind is that every transaction or important figure needs to be kept safe in the cloud or in a system that does not lose this valuable information. It’s also good practice to ensure your online storage is backed up regularly and everything is safe. Losing important data can cause tremendous errors in the figures that need to be accurate.
- Access real time data
Speed and accuracy are a constant challenge for those involved in the month end close process. Many organizations are seeking information at an accelerated pace. But they also need to be able to trust the data they’re acting on.
Many finance teams find that they only have access to accurate data at the end of the month, due to data not being uploaded into the system in time. Finance teams shouldn’t have to wait until month-end for access to numbers, especially since business decisions don’t wait until the end of the month. If that’s the only time key stakeholders can access to data, they’ll simply make decisions without having all the data-based facts they need.
- Be more organized
Accounting is a profession that runs on operational efficiency. Data and files should be highly organized and up to date, everything should be recorded, either in folders or in the cloud. Having unorganized records or data misplaced can cause errors, things can be misplaced or worse thrown out, which causes more delays in getting the month end close completed as quickly as possible.
Have a streamlined and accurate month end close process
Mistakes are inevitable for everyone, but there are times like the month end close when mistakes can be costly. Streamlining the month end close process means you no longer have to rely on the time consuming, manual processes, or risk using inaccurate data.
Make the switch today to an automated rebate management system to ensure your finance team get the most accurate data as possible and can access this data efficiently and timely. With Enable you can accelerate your month end accounts and be on the way to profitable growth.