Happy Holidays! It is that time of year again. The daylight hours are getting shorter and nights are getting longer. We have more family obligations and seemingly endless time commitments. On top of all this, every business with a calendar year-end must close its books and prepare annual financial statements now.
What are some of the major indicators of areas for improvement in closing procedures?
Improvement Indicators
- Your Accounting department resembles a fire-drill during the closing process
- All other accounting activity shuts down during the closing period
- Closing process exceeds five days
- Disconnected business and financial systems
- Inability to report Key Performance Indicators (KPI) correctly and timely
- Reports are created in spreadsheets
- Documents are created or stored on an employee’s personal computer
- Information is late, difficult to understand, overly complex or unreliable
- Differences exist between internal and external financial reports
- Multiple, nonstandard or overly complex Chart of Accounts
- Difficulty in identifying potential surprises far enough in advance to prevent them
- Excessive audit adjustments
What gets measured gets done. Create benchmarks for process refinements that clearly define success for your team. What types of improvements are you looking for? How would they increase performance levels, raise effectiveness and shorten time requirements?
Improvement Strategies
We have found that it is important to institute a culture of making continuous upgrades to your closing procedures. For example, involve your employees in improving the process. When more people take ownership, there is greater accountability in the project. Discuss what worked and what did not work. Make sure managers monitor each section of the closing process with their focus on increasing efficiency and effectiveness. Innovation and reinvention are essential to this process.
It is always best to emphasize transparency. The more open you are about the personnel required and the systems that must be followed the more commitment you will receive from your staff. We believe greater transparency always yields more collaboration.
Improvement Checklist
- Adopt best Accounting practices
- Establish clear and regular closing procedure communication
- Document clear accountability for all the closing tasks
- Enforce all critical deadlines
- Use accruals to shorten the closing time requirements
- Eliminate or minimize manual data entry
- Install Enterprise Resource Planning (ERP) management systems
- Invest in new information technology systems wherever possible
- Share information across a single and unified accounting and financial system
- Cross-train staff and document all processes
- Create templates for recurring reports
- Minimize journal entries during the closing process
- Develop and monitor closing performance metrics
How We Can Help You
Pacific Crest Group provides professional services that keep your business focused on your critical objectives. We provide strategic Accounting and Human Resource (HR) services created specifically to help you meet your goals. Through exemplary customer service, clearly defined policies and procedures as well as a forward looking perspective, we provide the outsourced solutions your business needs to grow. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed to maximize all of your business opportunities.