ProphixBefore you know it, it will be time for the year-end close again.
It is a long process that brings along long hours, maybe also during the weekend, where you collect data, process it, validate and prepare reports.
It’s hard work that is not made easier by the many factors slowing down the year-end close process.
Here is a list of six challenges for a quick year-end close – and good tips to make it faster.
Challenge 1: Lack of training
When employees are not properly trained to use the systems and handle the processes, the year-end close slows down.
The better the employees know the solutions, the faster it goes.
Obviously, it is important to educate new employees, but you should also consider annual refreshers for everyone in the finance function. This helps to have everyone fully involved in the process.
Challenge 2: No support from top management
It is crucial that management backs up and prioritizes a quick year-end close to show everyone the importance of this process.
If this is not the case, the year-end close will only be seen as a waste of time. And if the year-end close is seen as a tedious, time-consuming and pointless task, employees may fail to submit data on time.
Challenge 3: Several different IT solutions
It is a disadvantage when multiple IT solutions are used in different departments. It takes valuable time away from strategic work when employees in the finance department need to handle and gather data from multiple sources.
Challenge 4: Inadequate solutions
Having to deal with several incompatible solutions adds a lot of manual work, which also slows down the year-end close. This is furthermore complicated when you are forced to log into several solutions to retrieve data that will be stored in a new system later on.
Challenge 5: Inadequate communication
When management fails to communicate clearly to the rest of the organization, it can also make the year-end close longer. Lack of communication is a bulletproof way to delay data being submitted from other departments. In other words: let every employee involved know the deadline and why this is important.
Challenge 6: Bad dialogue with auditors
If you do not have regular meetings or only rarely communicate with your accountant, you might not be able to deal with problematic issues before it is too late.
Benefits of a quick year-end close
A quick end of the year will first and foremost ease the manual workload for the office of finance so they will have more time for business development tasks.
A fast closing of the year also shows that the company takes its responsibility seriously to report its financial situation internally and externally.
Once the finance function has implemented proper techniques to perform a faster year-end close, the financial information becomes available sooner. This allows decision makers to make quick and informed decisions. It also provides a better opportunity to look ahead and plan for the future.
