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Top 5 Ways to Reduce Stress During Month-End Close

 

Top 5 Ways to Reduce Stress During Month-End Close

Month in and month out, it’s always a struggle to close those books. Whether you’re a business owner, CFO, controller or accounting staff member, if you’re like many, you’re dreading the first of the month. Working weekends and burning the midnight oil isn’t exactly what attracted you to this role. When was the last time you took a step back and asked yourself, “Is this the best way?” The following five tips may help you find a better way to make your month-end close work for you.

1. Get Planning
Believe it or not, it all starts with organization. If you can never find what you’re looking for, it’s going to be very difficult to improve other inefficiencies within your system. In a perfect world — a digital world — everything is just a few clicks away. If you find yourself digging through file cabinets for hours at a time, you should know there are better ways!

Do you have a month-end checklist? You wouldn’t trust a pilot who skips out on the pre-flight checklist, would you? It ensures that every task is being completed, in the order it needs to be completed, as quickly as possible. 

Vince Lombardi once said, “Practice does not make perfect. Only perfect practice makes perfect.” In other words, just completing the task isn’t going to make you necessarily better. Perfect your process to make it better. If you’ve been using the same process for the past 10 years, you could probably use a fresh look. Make it a game; assign a budget for each task and make it a goal to improve upon each. You’ll probably be amazed at how much time you save.

Consider timing as well. Are there any tasks that can be completed, or at least started, before month-end? Depending on its size and complexity, a single bank reconciliation can take half a day or more to complete. With online banking, there’s no reason why you can’t complete a “mini” bank reconciliation at some point during the month to save time at month-end. The same goes for credit card transactions.

Don’t forget to cross-train your staff. Emergencies happen, people get sick and you lose staff through turnover. Don’t let it slow you down. Have a plan. Heck, maybe your staff will even have some ideas on making your job easier! Just be open to questioning and constructive criticism. 

2. Materiality
First, let’s define materiality as: “The quality of being relevant or significant.” If your efforts are immaterial on a specific task, then what’s the point of even doing it, particularly on an interim basis?

For example, let’s say you or your team spends four hours a month on a nasty accrual, and your month-to-month adjustment is always less than $1,000. Perhaps you should consider whether that effort is worth it. What would happen if you ran with an estimate and trued it up quarterly or annually? If it’s an account with few transactions, and not very many dollars, you can likely reasonably estimate and move on. It also creates opportunities to automate more processes.

3. Automation
Technology is not new, but there is always new technology. If efficiency is important, I certainly hope you’re taking advantage of automatic monthly entries. These can be set up for anything from prepaids, depreciation, loan payments, monthly expense allocations and even monthly ACH transactions. If you’re fine with balances that aren’t 100% perfect every month (materiality), automating many of your month-end adjustments is a real possibility.

Many accounting systems now have the ability to update spreadsheets, given a change of parameters, with the click of a button. What may have been a monthly calculation or rework of formulas can now be updated quite quickly. Think about what that could do if you’re currently consolidating financial statements manually.

Is your accounting system working with other systems? Are your checking or credit card accounts synced to your system? In a digital currency world, transactions can be brought in and coded with the click of a few buttons. In addition to saving time on data input, it makes reconciling bank/credit card accounts a breeze and helps ensure consistency! In addition, some systems can even sync to credit card merchant services, and so credit card deposits, transaction fees and direct ACH payments are automatically posted. Just imagine the time savings! Depending on your industry, there’s probably more opportunities for system integration to make your lives easier.

4. Outsourcing
Delegate, delegate, delegate! Most accounting departments are relatively small. What can other departments do to help? If you have basic data entry to complete, is there anything that can be given to another staff member, perhaps a receptionist or administrative specialist? It might be something they even enjoy. 

On the sales side, is there anything that the sales department can assist with? They know their deals better than anyone, so perhaps they can assist with your unearned revenue calculation, or at least better organize the information you need.

And have you considered outside help? Your CPA is a great resource to help with month-end. This includes a variety of services, such as a bank reconciliation for separation of duties, fixed asset management, integration with a billing system and even the whole monthly financial statement preparation process.   

5. Communication
Do other departments within your organization understand the importance of the role they play in preparing financial statements? If not, it’s time to get them all on board. Your financials are an integral part of your company’s success. If you’re constantly waiting on information from other teams within your organization, there is room for improvement. Is there anything you can do to return the favor?

Let’s take a pause and think outside the box. Are the tasks you’re completing actually adding value to your business? Do you have a clear understanding from the users of the financials on what is expected? Too often, I see clients doing a lot of unnecessary or extra work. When I ask why, they often do not have an explanation, other than telling me, “That’s what we did last year.” At the end of the day, determine what’s important. If management doesn’t care for a certain task or number, you’re probably not adding much value internally by spending a substantial amount of time on it. On the flip side, you could look like a hero by staying engaged in what really matters!

Month-End Doesn’t Have to Be Stressful
Many employees dread the long hours and stress of the month-end close process. In many cases, you simply need to take a step back, reassess your situation and find time-saving opportunities within. While not everything above may apply to you, take a few ideas and find ways to reduce your stress levels through the month-end closing process. Start with one area and build to another. The answer may not be as simple as flipping a switch but rather a slow improvement over several months.

Author(s)

Nicholas Hammer
Nicholas M. Hammer, CPA
Senior Manager
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