Closing the books can be a nightmare for finance leaders and accounting teams - a nightmare many have to repeat every single month. It’s not to be taken lightly either. It’s important to ensure all transactions have been recorded accurately and completely so the executive team, the board and investors can use the resulting financial data to make decisions.
A good way to tackle improving the close process is to take a step back and pinpoint the things that are dragging it down.
The first step in the month-end close process is gathering all of the relevant financial information. For companies with disparate systems and paper documents, hunting down all of the information they need can be time-consuming. If paper invoices, purchase orders, receipts and checks are all spread across various people’s desks, in filing cabinets, or in the mailroom, there is a risk of losing valuable information needed to be sure all transactions are recorded accurately.
Turning paper documents into digital files that are saved in a central location can make a big difference. Take the time to create a process for storing these records digitally, and make sure all of the appropriate employees have access and are trained to continue to bring in relevant documents throughout the billing/payment process. The upfront time investment to build a new process will pay off many times over in the long run.
Being able to close the books requires comparing data, likely housed in a variety of places, to be sure the transaction amounts line up and have been recorded correctly. Comparing data from paper documents, the accounting system, receipts and bank statements manually can be tiresome, but even more so if the numbers aren’t lining up and things are missing.
If you wait until the end of the month to record transactions and identify what is missing, you’ll have a much larger hill to climb. Take some time each week (or ideally every day) to be sure your general ledger is up to date and anything outstanding is being followed up on. If you get in the habit of tracking early and often, reconciliation will be faster and easier.
Through the reconciliation process, as gaps are identified, reaching out to individual managers in different departments to keep transactions moving forward can be a big hassle. It’s easy to lose track of requests for approval that were emailed weeks before and never responded to. Then there are always those invoices that materialize after you’ve finished your closing process, dragging it out even further. Colleagues in other departments may not really understand accounting processes or understand the urgency required for accurate reporting.
Determine a closing date and stick to it. Be sure there is a process outlined for transactions that happen after the closing date. Build relationships and open lines of communication with other departments and be sure they understand the processes you put in place.
If these challenges resonate with you, it may be time to consider automation. Technology can help remove many of the manual steps in the process that require human intervention. It can save your team time so they can focus on more valuable work that gives them greater job satisfaction. It can also minimize errors and improve accuracy.
Here are some of the ways automated accounts payable, accounts receivable and expense management can help:
If you’d like to learn more about BILL, the Baker Tilly Digital team can help.
BILL (NYSE: BILL) is a leader in financial automation software for small and midsize businesses (SMBs). As a champion of SMBs, we are dedicated to automating the future of finance so businesses can thrive. Hundreds of thousands of businesses trust BILL solutions to manage financial workflows, including payables, receivables, and spend and expense management. With BILL, businesses are connected to a network of millions of members, so they can pay or get paid faster. Through our automated solutions, we help SMBs simplify and control their finances, so they can confidently manage their businesses, and succeed on their terms. BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers. BILL is headquartered in San Jose, California. For more information, visit bill.com.