Want to make your End of Year Close less of a drama?

EoY close can strike a chord of fear in the souls of even the most stalwart and experienced accounting and finance teams. Here's why:

1. So little time, so much work, never enough people! End-of-year closing traditionally means a much higher than usual workload for those involved and finding others to take over everyday accounting team tasks is a problem when you are resource-challenged. For those organisations that lack resources to work on a continuous close process, or who are stuck with manual processes, legacy batch systems and paper documents, EoY can be a nightmare. The negative impact on accounting staff is significant. It contributes to the likelihood of errors as workers might (purposely or otherwise) omit important steps just to get EoY close over and done with.
2. Speed rules! The financial close process requires a fine balancing act between getting the job done fast and getting it done right. So, the more quickly your accounting team can access key financial data, the faster they can close the books.
3. Where on earth is that invoice, receipt, or data? Misplaced paper receipts (for employee expenses) and supplier invoices can cause significant delays in expense reconciliation and other tasks. And the same goes for poor-quality or missing data. Duplicated data, unrecorded payments, simple typos, or miscalculations, and finding and resolving incorrect or incomplete data cost the business extra time and effort.
4. Humans are… only human. We all make mistakes. And even the most organised person can struggle with processing large piles of paperwork when faced with high-pressure deadlines and repetitive tasks. But unfortunately, even a small data entry error or a misplaced document can result in costly consequences. And the more manual data entry required, the higher the risk of mistakes.
5. Then we have manual data entry. Spreadsheets are still the mainstay of many accounting professionals, yet, entering data by hand isn't just time-consuming, it’s error prone.
6. Inefficient and time-wasting communications. Ask any accountant or accounts team member what it's like to chase employees for missing documentation or explain specific transactions. It seems simple, but it never is in a busy business with high volumes of transactions.
7. Data, data, everywhere! When your data is spread across multiple systems, it's more challenging to track down all the information needed for EoY close and ensure that all transactions - from every department — are accurately recorded in a single place.
8. Double the trouble. If you run multiple operating entities, integrating data from each at head office level is even trickier and more time-consuming. As well as different locations running their own version of the same software, they can often run completely different solutions altogether. And the greater the number of local instances, the more chance of integration issues due to inconsistent charts of accounts and other formatting disparities. If you are an international company with multiple locations worldwide and operating in different time zones (and currencies), the challenges can escalate. The likelihood of error goes up, the number of closing issues increases, and your accounts team's efficiency goes down. None of which bode well for the on-time delivery of your consolidated financial statements.
9. A scattered or hybrid team. Like so many others, your accounts and financial teams are likely to have been pandemic-impacted. Remote teams have become the norm over the last few years – and have faced the challenges of collaborating, learning to map out processes and applying solid security practices.

We're glad you asked! Here's how you can do things better:

1. Identify bottlenecks and inefficiencies — and how to overcome them. Perhaps it's as simple as directing employees and suppliers to submit expenses and invoices in an electronic format that allows them to be imported directly into your accounting system!
2. Standardise, standardise, standardise! Create and maintain standard operating procedures (SOPs) that document the perfect EoY close. This will help streamline processes, save time, and ensure all the steps in the financial close process are aligned and optimised for fewer errors and easier access to information. As part of an SOP, allocate tasks and set deadlines to expedite information supply to a waiting team!
3. Share information across the business. To complete EoY close, your accounting team need data from all business departments: sales, shipping, procurement, marketing, human resources. And they can't afford to wait for someone else to provide it. So, it's critical to enable them (with correct authorisation) to have direct access to the systems where the information they need is stored.
4. Start as you mean to go on. Document everything comprehensively every month — starting with better journal entries. Create a checklist to ensure that journal entries include the type of transaction, the date executed, amount, a brief description, a journal number identifier, and any other relevant information needed for the EoY close.
5. Move away from paper! Minimise data-entry errors by avoiding paper and spreadsheets. Instead, insist on electronic invoicing and feeding data directly into your accounting system so it can automatically calculate depreciation and allocations.
6. Adopt a continuous accounting approach. Distribute the EoY close workload over the months, rather than the eight or so weeks before you close off. For example, embedding responsibilities like posting journal entries and reconciling accounts into day-to-day activities help to keep the general ledger up to date and reduce the EoY workload.
7. Invest in better business accounting software. Perhaps now is the time to consider moving to a cloud-based ERP (such as NetSuite) to gain complete control and visibility over your core accounting processes, while managing revenue recognition, accounts receivable, accounts payable, and bank reconciliation?
8. Eliminate monotonous manual (and error-prone) tasks. Instead, turn tedious tasks into repeatable hands-off functions with the business process automation built into modern ERPs.
9. Improve the reconciliation process! A great ERP can automatically align data from discrete sources, spreadsheets, and systems, and proactively detect errors so they can be rectified as quickly as possible.
10. Provide the EoY team with one source of the truth (yes, you need an ERP). Save time and slash error rates by providing integrated, accurate, real-time data from across the business. An ERP can enable all departments to work from the same up-to-date data sources.
11. Don't let multi-country, multi-entity become a problem! If your business spans entities and countries, choose an ERP that manages multi-book accounting to enable real-time consolidation, automatic currency conversion and the ability to apply multiple accounting standards, tax rules and revenue and expense schedules. Streamline the close process by eliminating manual adjustments and time-consuming consolidation processes to deliver timely, more accurate reporting and less stress on accounting personnel!

Ageing or inadequate accounting technology, combined with poor businesses processes, can create a nightmare scenario for your accounts or financial team — and the business.

If the time has come to consciously improve how you approach EoY close, then you'll be delighted with how much easier a modern cloud-based ERP can make the entire task. Your business will not only reduce the EoY cost (and employee stress) but produce more accurate and timely outcomes. And you'll never have to feel fear when facing auditors or explain to stakeholders and shareholders why there was a retrospective and embarrassing update to your financials.

So, you and your business can start the new financial year with your reputation intact.