How to do monthly book close on time, without late sitting?

Whenever I interview a senior resource for our F&A Outsourcing process, this is the standard question the person ask me reluctantly at the end of interview- "Sir, how much would be the late sitting during the closing process?".

Late working hours (including working on holidays) during monthly book closing is a general practice at most of the corporates. Everyone has become habitual of it, hence no one seems to be questioning this practice.

Are you able to relate this at your company?

Now tell me, how would it be for you and your team if you can completely avoid the late sitting without compromising the quality and timelines of monthly closing process?

I am sure you must be smiling with a little disbelief, right?

So sit back and read very carefully what I am going to share next. Your relationship with monthly book close is going to be transformed.

?Before that, let's first look at major reasons which result in late sitting:

1. Lack of planning which gets reflected in team member being on leave around closing dates, no checklist or incomplete checklist to monitor whether all the activities are being done on the agreed dates etc.
2. Delay in getting vital information from various departments.
3. Clash of closing dates with any other important activity i.e. preparation for IPO, audit etc.

I am sure you could also think of few more reasons which could be general or more specific in your case.

Now, I am going to share with you a fail safe 5 steps process which not only ensures zero late sitting but accurate and on time closing.

?Let's start!

Monthly closing checklist

This is the most simple, easy and highly effective step- only if followed diligently. In his bestseller "Checklist Manifesto", Dr. Atul Gawande (a renowned American Surgeon & Harvard Professor) explains that how even the most competent surgeon like him, operating without a checklist, can miss a critical step.

?In your monthly checklist, you should have minimum following columns:

1. Name of activity/task
2. Name of responsible person
3. Name of back up person (in case the responsible person is on leave)
4. Is this activity dependent or independent? If it is dependent, mention the reference of dependent activity.
5. Expected date of completion of activity

Plan at least one quarter in advance

The planning might take just 30 minutes but it can take care of lot of surprises around monthly closing period which could arise due to:

• Public holidays
• Weekends
• Leaves of team members
• Holidays in other country (applicable if you are reporting to someone who is based outside India)

Planning for the quarter helps everyone in the team to behave responsibly and they can’t take excuse that they were not aware or they just forgot.

One golden rule to remember- whenever and whatever you plan, always keep a buffer of 15-20% of your team's time to deal with unforeseen surprises which could arise due to:

• High volume of transactions on the cut off date
• IT issue
• Electricity issue etc.

?Step 3: Expectation setting with user departments.

This is a critical step for timely monthly closing because in some companies there is huge dependency of Finance department on other user departments for vendor bills or provision figures or capitalization etc.

Make it a practice that you get in touch with all the user departments (where you have dependency) in the middle of the month and run them through cut off dates agreed. Also remind them about pending information few days before the cut-off date.

Step 4: Respect the cut-off dates.

Not respecting the cut-off dates is one of the most common reason for late sitting during the monthly closing.

At many companies, F&A department accepts and processes the vendor invoices received after the cut-off date which takes away their attention from many small activities to be done to complete the monthly closing. This result in late sitting which could have been easily avoided if cut-off dates are respected.

Respecting the cut-off dates will also make user department responsible to submit the bills on time.

Step 5: Review, brainstorm and improve

Once the books are closed, please call upon a 30 minutes meeting with all of your team members and discuss what went right, what went wrong and how can you fix that before the next closing.

Believe me, this simple step will be a game changer for you. Improvement should be a continuous process, isn't it?

I hope you got value from this post.

I would love to hear if you have any other ideas which has contributed in timely book closing process.

Until then……….