Are you prepared for more growth and profitability? Part 3

So far, we have looked at the amount of manual journal entries we are doing as well as how we are keeping up with compliance. Now let’s take a look at this week’s question.

Q3 – How long does it take to close your books? What’s holding things up?

The best measure of efficiency of your accounting team is how quickly and accurately they close the books. We saw some of this in part one when we talked about the number of manual journal entries made at month end. If you have automated some of this work you should be seeing an increase in the speed and accuracy of the close process.

A faster, accurate close allows for the ability to think ahead. Timely data is key to being able to see and make changes necessary to move forward. This extra time allows for more analysis of your results as well. 

Here are some suggestions to improve the timing and accuracy of your close;

Detailed Closing Checklist

Make this a detailed but simple checklist of all items required to close your books each month. Watch as the items get checked off to see where the bottlenecks are. This will allow you to make the adjustments necessary to alleviate those bottlenecks. It could be by focusing more help on those areas, automation or whatever means are needed to get the work moving quicker.

Flash Reports

Sometimes creating a flash report on key areas will buy you time to finish your close. Some key areas to focus the flash report on can include; revenue, AP, AR, DSO, cash balances, etc. Customize this one sheet report to the needs of your executives, bank, or investors. A flash report gives the executives some information to work with so that they can plan ahead while you finish the rest of the close.

Automation

As we discussed in part one of this series, automation is critical not only to speed up the close but it also decreases the errors in the data. Auditors also have a greater comfort level with an automated process over a manual process.

Know your Forecast

Knowing the forecast enables each team member to better spot problems or errors. This gives the Controller the ability to investigate these anomalies and make corrections or have a ready explanation for the difference prior to the books being closed.

Key Takeaway – Create a close process that measures your progress.

Now, you have a better understanding of what’s working and what’s not working in your close process.

Part four of this series we will dive into your use of excel.