A yearly financial close can be a laborious process that accounting and finance departments dread. It requires tracking down information from other departments, ensuring financials are accurate, and identifying/correcting errors. However, a financial close is only as hard as the business makes it. Having processes and procedures in place from the start will help minimize the time it takes to finalize a close. Here are a few steps that a company can take to help save time, reduce errors and increase the efficiency of their financial close.
Divide and Conquer. To start a successful financial close, the steps required should be clearly listed with their required deadlines. The list should also indicate who within the company is responsible for the completion of these steps tasks and they should be held accountable for seeing them through to the end. This is one of the easiest ways that a company can position itself for a smooth financial close.
Far too often do accounting leaders assume people on their team know what they need to do for a close and when it needs to be done. Doing this brings an informal approach to the process which opens up room for errors and delays.
Establish Regular Account Reconciliation. A fundamental part of a financial close is reconciling all accounts within the general ledger (GL). The GL is the place where a company's transactions are posted year over year and account reconciliation is part of the accounting process that helps ensure the transactions are recorded accurately.
While it is an easy way to identify errors, many companies only reconcile on a monthly basis, or sometimes quarterly. The lesser the frequency of reconciliation is, the longer of a delay there is in potentially finding errors. It increases the effort required to close the books and lacks efficiency. Reconciling the GL accounts on a weekly basis and automating the process will save time and possible headaches at the end of the year. Having the ability to spot errors sooner and resolve them while they are still "fresh" will pay off during the financial close.
Minimize Manual Data Entry. Accuracy is one of the most important aspects of an accounting department, yet many accounting departments are still entering invoices, payments, and other data manually. With every keystroke comes the chance for an error. Making the switch to accounting software that can import transactions and other data will help minimize the possibility of these errors occurring. Additionally, if a company has accounting software in place, they want to be sure to use it to the best of its ability. Having records, transactions, and other accounting data spread out among different places leave room for inaccuracies, documents getting lost, and will cause delays for a financial close.
Improve Access to Information. Waiting on information from other departments is a common setback for a financial close. In order to close the books at the end of the year, the accounting department needs information such as inventory levels, total sales amounts, and more. This could require gathering information from departments like sales, project management, shipping, or anyone else that affects revenue and cash flow for the company.
Unless the accounting staff has access to the systems where this is stored, they must rely heavily on those other departments for providing the required information for a financial close. Utilizing a comprehensive software like NetSuite can provide the tools needed to keep all records centralized so that data is accessible when needed. Having a system like this in place cuts down the time needed to gather information for a financial close and ensures a higher level of accuracy for these records.
Automation of Company Processes. More subsidiaries within a company that utilizes a form of automation that is compatible with others make the entire process much smoother. NetSuite financial management helps accelerate a financial close by automating manual tasks across a company, reducing the reliance on spreadsheets, and improving the flow of information across the organization. Keeping employees and departments on the same page, with access across the board to necessary information is crucial to a faster financial close. Not to mention promotes a higher rate of accuracy and efficiency.
NetSuite's comprehensive business management platform integrates accounting, sales, shipping, and other departments, providing a single source of data that eliminates the frustrations and delays that can be experienced during a financial close. These capabilities give companies the tools they need to accelerate the close process by helping ensure tasks are completed accurately and on time. For more information on how NetSuite can help your company, or if you are interested in getting the outsourced help to satisfy your accounting needs, reach out to AccountingDepartment.com today.