Year-end close is often stressful for accounting and finance teams. The mountain of tasks can quickly disrupt daily operations, and your team is probably still reeling from the chaos of “crunch time” even as spring approaches. Read on to discover essential practices that can help you identify impactful changes, remedy the pain points, and get things on track for this year.
From mid-November until early January, most employees try balancing holiday celebrations and travel plans with work obligations. When everyone returns to the office in the new year, some of your team may be so busy catching up from their time away that they lack the capacity to address tasks related to year-end close.
It's not too early to start planning now. Schedule a team meeting to discuss all the tasks involved in closing the year. Consider what projects could shift 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 to address 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. Ensure everyone involved has a copy of the plan and understands their role. Follow up throughout the year to keep everyone on track.
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Consider using cloud-based tools and automation to access data in real-time.
Many accounting and finance teams try to close the books for the preceding year in January, only to find that they first need to close December (and sometimes even November). There are also quarterly activities to work through, 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 the task 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. Finally, consider using cloud-based tools and automation to access your data in real-time instead of waiting for paper statements.
Some finance and accounting teams spend a lot of time on low-priority but labor-intensive tasks. This leaves little bandwidth for essential functions like analyzing key information and making strategic recommendations.
Not all tasks, or all accounts, have the same importance to business operations. Evaluate where you and your team spend time and adjust according to the organization's priorities. Focus most of your team's energy on providing critical information to 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 employees throughout your organization. You will need buy-in at all levels to succeed, so consider these key steps:
You may need 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 the 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.