A perennial financial planning goal for CFOs and controllers each year is to shorten how long it takes to close the month. Free up resources? You bet! If each person on your team had another 8 hours a month, I bet you’ve got a wish list of projects right now that you’d love to have them dig into.
Step 1: Identify Your Motivator
Before you dig too deep into the metrics, you’ll want to really zone in on why you want to close sooner. The more precise you are about the reason, the better you’ll be able to articulate it to your team.
- Are significant mistakes getting carried forward into the next month because they just weren’t noticed until after close?
- Are you meeting filing deadlines by the skin of your teeth? Is it the printing schedule, tax filings, or your 10-K reporting? Or all of the above?
- Does having a small team mean restricting which balance sheet accounts you’re able to review at month end?
Step 2: Conduct a Review
It’s not just about getting done sooner. It’s about making sure you have enough time to complete the financial close activities, give sufficient time to the business owners to review the numbers, and for you to produce the reports that you need to run your business. Here are a few metrics to consider:
- Find your bottlenecks. Track the completion times of each activity then zero in on what looks out of sync. Are the accruals not being done earlier because of a backlog in A/P? Was the consolidation delayed because you didn’t receive timely reports from an overseas office?
- Consider the current close deadlines. If the duration of time from the end of the reporting period to when the financial statements are issued were to be shortened, would something suffer?
- Check the number of adjusting entries that were made. Are the main problems from posting mistakes or is it due to coding errors by a team member using an old chart of accounts?
Step 3: Implement the Financial Close Solution.
Now that you’ve identified the key time-consumers during close, it’s time to put some changes into action so you can see real results.
- Prepare and review the close schedule as early in the month as possible to get your team all on the same page.
- Communicate your timeline to all department heads so they take ownership of their revenue goals and expenses throughout the month. It’ll also encourage them to be timely in providing the data and operational reports your team needs to close the books.
- Consider daily or weekly balancing for A/R receipts, A/P checks, and invoicing if you’re not already doing them.
- Don’t sacrifice accuracy for speed. Meeting those deadlines is critical but doing so with bad data is worse.
- Use technology to encourage collaboration and streamline the work. Consider what you’ve got and acquire what you need.
If you’re using Budget Maestro and Analytics Maestro, you can pull in up-to-the-minute data during your financial close to isolate unusual fluctuations, missed accruals, and unexpected discrepancies between the budget and actuals. There’s no need to wait until after close to find these things during the reconciliation process.
You can drill down on the totals to identify the specific offending line item. Operations will appreciate the help is pointing them right to what needs to be looked at. Review your Cash Flow against your projections too. You might find that a deposit receipt got processed at the bank but misfiled in the office and missed getting recorded in the G/L.
What can you do to make your financial close more efficient without compromising accuracy?
If you would like to see how budget maestro can help you with a quicker close, join us for a live webinar on Thursday, February 11, 2016 2:00 PM EST/11:00 AM PST. Click here to register.
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.