Year-end close often causes disruption and stress for accounting and finance teams. If you’re still suffering a headache from closing your year, these four symptoms might feel familiar. Read on to discover key practices that can help your team remedy the pain points and get things on track for this year.
Many accounting and finance teams begin trying to close the books for the preceding year in January, but they first need to close December and possibly additional months, as well. There are also quarterly activities to work through at this point, such as payroll taxes. Handling 1099s and W-2s also consumes a lot of time every January. You may even have to address accrued expenses or calculate deferred revenue at this point in the year. It all adds up and can seem overwhelming, as though there aren’t enough hours in the day.
Build a sustainable habit of closing and reconciling the books each month instead of pushing it back to handle at the end of the year. If you are already closing monthly, evaluate the time it takes and identify any opportunities to improve efficiency. Consider using online tools, or other sources of automation, to access your data in real-time instead of waiting for paper statements.
From mid-November until early January, most employees are trying to balance holiday celebrations and travel plans with work obligations. When everyone returns to the office in January, some of your team may be so busy catching up from their time away that they do not have the capacity to address tasks related to year-end close.
Get ahead of the lack of capacity by planning in advance and communicating clearly with your team. In fact, it’s not too early to start planning now. Schedule a meeting to discuss all the tasks involved in closing the year. Consider what might be moved to a different time of year. For example, if your organization is subject to audits, you can contact your auditor much earlier than December to determine what can be completed before year-end. Be sure to include time for the unexpected in your plan. Decide who will handle each task and document the entire process. Make sure everyone involved has a copy of the plan and understands their role. Follow up throughout the year to keep everyone on track.
Some finance and accounting teams spend a lot of time on tasks that are low priority, but labor-intensive. This leaves little bandwidth for important functions like analyzing key information and making strategic recommendations.
It’s not too early to start planning now.
Not all tasks, or all accounts, have the same importance to business operations. Evaluate where you and your team spend your time and adjust according to the organization’s priorities. Focus most of your team’s energy on providing critical information that can help management make timely, data-driven, operational decisions.
Examine tasks that don’t need to happen monthly, such as inventory reconciliations or asset capitalization. Question the status quo. Are you completing some processes more often than necessary? Are you expending more effort than necessary when completing any processes in your workflow? Can some tasks be automated or outsourced to free up time for higher-priority accounting functions?
Change can be uncomfortable. In many organizations, “that’s the way we’ve always done it” is an often-repeated phrase that keeps your team locked into inefficient processes and outdated tools that can’t support a modern accounting and finance function. Changes often require support from key decision-makers, and those whom your process affects, in your organization. You will need buy-in at all levels to succeed.
Establish key performance indicators for the accounting close and describe the challenges that currently exist. Help those in authority understand the overall contributions of the finance team, and how change can positively impact the bottom line. Explain that a swift and efficient year-end process can provide decision-makers with the most up-to-date financial information possible going into the new year. Finally, find a champion to help communicate the value of your proposed changes to non-accountants in leadership.
You may need to enlist help to carry out some of the actions presented here. P&N’s outsourced accounting professionals have a deep pool of resources, a range of technical knowledge, and decades of experience to assist clients both strategically and tactically. Our team can review and streamline processes, create and communicate a clear workflow, scale up capacity during busy times of year, and build and present a business case for change. If the year-end close always leaves your team burnt out and exhausted, contact us to discuss how we can help.