Closing the Books

person with calculator and ledger at desk

Month-end close for everyone in accounting can be a stressful time. From the people involved, documents needed, processes to follow, and books to reconcile, closing the books is a task that you might not be looking forward to. The good news is, there are some best practices that we can offer to help streamline your end-of-the-month routine, making it more efficient and less stressful.

Teamwork Makes the Dream Work

Start by taking a look at your team. Every person in your accounting department plays a crucial role in the success of your end-of-month closing. Ask yourself, is everyone on the team properly trained? Do they understand their tasks and goals? Most importantly, do they feel motivated and empowered?

You can help motivate your team in many ways. Setting daily deadlines to keep everyone on track is a good place to start because it removes any ambiguity when it comes to employees understanding their roles. But more importantly, find time to celebrate and acknowledge when employees hit milestones, conquer large projects, or just for sticking with the team during the good times and the bad. Days off and bonuses certainly help, too. But also, you can offer opportunities to cross train when it’s not so busy, so that as a group, you’ll gain different perspectives and understanding on the overall closing process.

Go with the [Right] Flow

What does your close process look like? First and foremost, you should absolutely have a structured procedure, preferably with a checklist document available to everyone on the team. This keeps things clear and organized not only for month’s end, but quarterly and year’s end, too. If your team doesn’t have a checklist, now would be a good time to come together and create one. Find out where the gaps are, if there’s any overlap, and then assign accordingly.

Be willing to adjust the checklist as needed, too. Times change. Departments change. Technology changes. Being willing and able to adapt as a team will help prevent your close from becoming inefficient and cumbersome.

Finally, might we suggest giving your team a “rest day” after that whole checklist is complete? Coming back to the idea of the team feeling motivated and empowered—knowing there is a light at the end of the close-out tunnel and something nice is waiting for them is sure to boost some spirits when stress is running high.

Document Management

For the most part, gone are the days of file boxes and manila folders as companies embrace digital folders instead. The problem is, if there’s no organization to this electronic filing system, your team can very quickly have a spaghetti bowl of information needing to be meticulously sorted through every month.

Creating an organized document hierarchy can provide your team with an easy to navigate, top-down approach to digital filing. For example, a structure may look like this:

“Entity > Year > Month > Process > Policies/Procedures/Supporting Docs/Reconciliations”

Having a periodic folder structure allows the team to easily view the monthly close, make the review process faster, and provide a central location for all related documents. Plus, it allows for repeat usage year after year.

Reconciliation: Excel and ERP (Enterprise Resource Planning)

Excel is widely known and widely used in the accounting industry. It’s safe to say that almost every accountant knows their way around Excel. But when it comes to the end of the month’s reconciliation, does Excel provide the most efficient options? Whereas it’s a familiar program that most accountants are comfortable with, it lacks the ability to automatically integrate input from disparate data silos, typically leaving one person in charge of manually managing it. ERP is an integrated suite of software applications that businesses can use to run almost every aspect of their organizations. Disparate systems often hinder data sharing, too. It’s hard to get what you need when you have to ask colleagues to run reports or wait for someone to come back from vacation to access a system. With a good ERP, access can be shared among all employees. Levels of data visibility can be controlled; of course—the CFO needs different data than the receptionist. But all employees have the opportunity to view many aspects of organization wide data. This enables shared, improved decision making and collaboration, reduces data silos, and makes it much easier for all to work towards finishing that close-out with ease and while reducing risk of errors.

Challenges and Opportunities

There are many challenges and opportunities available in the Closing of the Books process. Being aware of various challenges in each step of the analysis process can help you avoid or overcome them.

Data has always provided accountants with powerful information. Now, more than ever, with access to so many software tools to gather and utilize data, accountants can provide useful and valuable insights to benefit others. And with the right combination of employee satisfaction, clear and concise processes, document management, and reconciliation tools, your close outs can become a little less daunting and a little more efficient.

To learn more tips for Year End Close, read part 2!

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.