Faster. Better. Stronger. Tips for Closing the Books

You may be thinking to yourself, “Why is closing the books so important? And why is fast better than slow?”

Let’s explore a couple of reasons below:

  1. Vital decision-making information is derived from accurate financial information. Being able to concentrate on KPIs that drive business strategy is an advantage for the company. If the data is difficult to access, there is no chance to get those metrics quickly; course correct and avert a crisis.

  2. A slow close is an indicator that your process is cumbersome (manual effort and spreadsheet chaos) and if it is, you are probably expending more effort than necessary. Bottom line? A slow close will increase G&A costs, sometimes significantly.

  3. “We have always done it this way, why change?” We hear this over and over and it is just not a mindset continuous improvement. This stance will hold the finance and accounting teams back and ultimately hinder the overall business.

  4. If the close is slow, your underlying functions may also be very slow, like billing, cashflow, and accounts payable. Cash is the lifeblood of every business and you want to make sure all of your accounting functions are performing as well as possible.

It’s All About People, Processes, and Tools!

10 Steps to a Better, Faster Close

  1.  Agree that there is problem. The organization must all come to terms with the issues at hand. Once you admit the problem, it is time to make a case for change.

  2. Decide to fix the problem. Now that you have admitted there is an issue and you have made a case to fix it, it is time for the executives to make the decision to accelerate the accounting close. When they say GO, it is time to get started.

  3. Form a team with the vital stakeholders and explore ideas for continuous improvement. This team will investigate, solve, build, or recommend possible solutions.

  4. Benchmark yourself against peer companies. See how long their closing processes take. Is there an opportunity to gain a competitive edge if you are more efficient?

  5. Make a plan. A detailed plan will be needed to help coordinate. What? Who? When? We suggest having a meeting cadence with the team, as well as the sponsors or execs. The scope of the overall project will drive the meeting and coordination needs.

  6. Create policies and procedures that fit your business. A policy is a guiding principle used to set direction in an organization or department. A procedure is the series of steps to be followed as a consistent and repetitive approach to accomplish a particular end-result. It’s important to document your procedures to ensure your actual practices conform to your policies. Just because you have policies and procedures in place does not mean they are applicable to your organization today, or that people are using them.

  7. Select the right tool for your organization. This is critical. Selecting the wrong tool can be very costly to implement and—even worse—costly to maintain. A tool won’t necessarily solve your problems, but it’s an important enabler for those new polices, procedures, and practices.

  8. Make sure you have the right people in the right jobs. If there are changes that need to be made, make them. You may have a very talented engineer doing accounting. But if he’s not so great at debits and credits, move him to where his talents can be better utilized.

  9. Now that you have new policies/procedures, a tool that fits your needs, and the right people in the right roles, it’s time to enable your people. A training plan is part of the ongoing activities. Since this comes at the end, it’s tempting to skimp on this and save money but trust me — it will cost you down the road.

  10. Establish KPIs for the accounting close and other financial functions, calculate them consistently, and be alert for trends…good or bad. And remember that KPIs are about more than just measurement and accountability. KPIs also ensure the contribution made by the finance and accounting team to the overall business goals is visible and valued. Use those KPIs to make continuous improvement an integral part of your processes, and make the accounting team a valued and vital part of the business.

Ready to stop the spreadsheet chaos and Improve Your Closing Process? Let us help you find the right solution