Year-end close can be a pretty daunting process; you have 12 months’ worth of financials to review, organize, analyze, and report on. While it may not seem like the most desirable process, year-end close is a vital part of ensuring your business’s activities are accounted for properly. Doing so with an organized workflow (and the right tools for the job) enables quick access to imperative information that can facilitate a smooth transition from this year to next.
For a lot of people, December brings on a cheery season filled with friends and activities that bring loved ones closer together. For accounting and finance professionals, however, this month signals deadlines, stakeholders coming from the woodwork, and requests for reports that seem to be never ending. Before you know it, it’s a race against time to make sure all adjustments, accruals, and allocations are recorded. After all, it’s not until these tasks are complete that a thorough review process can begin—one in which numerous hours and resources will be spent looking for material mistakes, errors, and omissions.
Fortunately, the overwhelming process of compiling and completing year-end financials doesn’t have to be as bad as it’s been in prior years. This year—and in future years—you can set yourself up for success with a few tips (and the right tools).
How can you achieve this optimal year-end situation? Read on!
1. Start Early
One of the hardest parts of year-end close is the inevitable time crunch that comes along with it. Once the holidays end, your accounting team is tasked with wrapping up the entire last 12 months, issuing W-2s, and sending out 1099s. Of course, there are also year-end audits and January’s impending monthly close.
In a perfect world, your year-end planning should start a few months ahead of the new calendar. Around September, you should begin reviewing the timing of year-end holidays, confirming employees’ vacation schedules, and plotting your close timetable. During this planning process, you have to be hyper-focused on delivering efficient month-end closes as the calendar starts to come to an end. This foresight helps minimize the time crunch and gets things in order so the data can be readily reviewed when December 31 hits.
2. Improve and Implement Financial Controls
When you implement a financial management system, you’ll provide your team with a means to assess how your company is able to react to—and mitigate—risks. Auditors will inevitably review your systems to see if they’re operating properly; when they’re up to muster, it’ll only be necessary for them to test small sample sets of data, rather than large amounts of transactions.
3. Prepare a Closing Schedule
Figure out which dates and activities are important to ensuring your year-end close goes smoothly. Be sure to include reporting and data processing deadlines, as well as your fiscal close date.
Once you’re armed with this information, you can curate a calendar with target dates so you don’t miss any crucial deadlines.
4. Aim for Accuracy
Accuracy doesn’t necessarily equal perfection, but it’s still very difficult to achieve, particularly if you’re using outdated systems. Methodical business processes and workflows enable you to establish system that let you gather all the material information you need quickly, but if your platform of choice hasn’t been updated or improved upon over the years, you’ll surely find yourself swimming in a sea of inaccuracies.
On the other hand, if your organization does improve workflows and reorganize responsibilities over time, you’re on the right track. The question is: are you documenting those changes as you evolve your systems? If not, year-end close will likely be fraught with manual errors and added time needed to review the scope and information included in your year-end close.
Head off these struggles by putting an automated process in place that relies on technology to reduce manual data entry and reduce human error. This will facilitate a faster close that’s less dependent on your human capital.
5. Rely on a Master Checklist
It’s critical to have a robust and comprehensive close checklist that provides a step-by-step workflow so you can be sure nothing falls through the cracks. This checklist will help keep your close on track because it will establish who’s responsible for which duties and will set deadlines accordingly so everything runs smoothly and doesn’t pile up until the very end.
6. Leverage Technology to Optimize the Process
You might think an accounting software is too expensive of an investment, but have you thought about how much extra time and resources your team is spending when year-end rolls around each year?
You need to make sure you have solid policies and procedures in place, but you also need a great ERP system that can help ensure you have a smooth, seamless close. Every consolidation and close process that’s performed outside of an ERP is time-consuming, manual, and error-prone. And, of course, the more systems that need to come together—and the more teams you’re involving that use disparate systems—the more difficult the reconciliation process becomes.
To address this, invest in a sound financial management system that’s designed to facilitate greater visibility and make it easier to share information across the organization.
7. Connect with MIBAR
A solution like NetSuite builds efficient close processes from the ground up, ensuring the accuracy and timeliness of year-end financial reports. Built-in automated processes reduce manual data entry, minimize human error, and support a faster close, while period-close checklists and configurable task lists ensure workflows remain on track.
As a provider of superior knowledge of NetSuite’s platform, our team here at MIBAR can help you implement the features and functionality necessary to take your business from year-end woes to new year goals. Talk to our team to schedule a consultation!