ProphixA fast year-end close is a good indication of your organization’s overall financial health and a sign that your processes and systems are accurate and efficient.
Do you find your year-end closing process to be a grueling ordeal or a series of predictable events? What if I told you could make year-end closings faster and easier?
A fast year-end close is a good indication of your organization’s overall financial health and a sign that your processes and systems are accurate and efficient. Also, an effective year-end closing process also saves time, allowing your finance team to focus on value-added activities.
If you’re open to speeding up your year-end close, consider these five steps:
1. Engage Audit Committees Early
Engaging auditors, both internal and external, early in the year-end close process will help avoid pitfalls and give your Office of Finance insight into the improvements that can be made to your systems. Auditors can also provide regular feedback throughout the implementation of a financial management system and can challenge staff on delays.
2. Improve and Implement Financial Controls
Implementing a financial management system will provide a means of assessing how your company is able to react to and mitigate risks. When auditors deem that your systems are operating properly, it will only be necessary to test small sample sets of data instead of large quantities of transactions.
3. Develop the Management Reporting Function
Establishing a system for producing regular management reports can make the year-end reporting process easier by allowing departments to track their resources and expenses throughout the year. Up-to-date management reports also allow departments to re-allocate and re-prioritize their resources to ensure corporate goals are met. This will not only benefit a faster close but more effective management.
4. Ensure Effective Project Management
Project planning should be part of the system used to manage and deliver year-end reports.
5. Leverage Technology to Optimize the Process
Your accounting or ERP software is an expensive investment, but is only as good as the data it contains and how easy it ease to leverage that data. Making sure you have good policies, and procedures on how to utilize your ERP is critical to ensuring a smoother close. However, most consolidations and close is performed outside of the ERP using time-consuming, manual accounting methods and error-prone spreadsheets. The complexity increases especially when more than one system is being used, loading data, and reviewing cells is involved.
To address this, it is highly recommended that you have a sound financial management system in place. Corporate Performance Management (CPM) software has been designed to allow for better visibility of divisional performance and make it easier to share information across the business.
CPM software allows users to create, edit, manage, and report all aspects of journal entries quickly and easily, such as intercompany eliminations and currency conversions. CPM software can also make it easy to apply credit and debit adjustments to support the financial consolidation process. Oh, and ensure your CPM solution is cloud-based, as this makes it ideal for working remotely, as it’s accessible to anyone on an internet-connected device. Centralized data, automation, and collaboration are accessible to all finance team members, regardless of where they’re working. This will help to significantly reduce the time it takes to close the books while expediting reporting.
Once you have achieved a faster year-end close, you can apply these principles to your year-end reporting, quarterly / month-end, annual budgeting, tax and audit preparation, product profitability analysis and quarter or mid-year forecasting.
To learn more about the benefits of a faster year-end close, read our whitepaper Achieve A Faster Year-End Close Now.
Ron Massicotte
