Is your company plagued with that ever dreadful lengthy month-end close? Is it taking weeks to get the books closed and financial reporting out to management? How can you improve your month-end close process, close earlier, prepare timely financials, and give management the time they need to make the right business decisions necessary to stay competitive?
Well, here are five things you can do to radically reduce the length of your month-end close:
- Comprise a comprehensive listing of all month-end close tasks, third-party reports/documents and accounting entries necessary for preparing monthly recurring journal entries (RJEs).
- Create a standard numbering system for all recurring month-end close journals.
- Maintain a list of recurring journal entries, tasks and reconciliations in a SaaS application.
- Build custom ERP reports and data sets for quick reporting and Excel modeling, and maximize ERP functionality to eliminate some Excel or manual processes.
- Develop Excel models that automate the preparation of monthly journal entries, account reconciliations and the preparation of the standard monthly reporting package including all management and departmental reporting (if not generated in ERP system).
Let’s dig into each of the five items:
1. Comprise a listing of all month-end close tasks, third-party reports/documents and journal entries.
Comprising a comprehensive listing of all month-end close tasks, procedures, third-party reports/documents and accounting entries allows for quick preparation and process of journal entries at month-end. In addition, knowing exactly the reports needed from third parties and receiving them by the agreed-upon due date allows for journals to be prepared and processed timely. A comprehensive listing allows the Accounting Manager to track the process of the month-end close and provide accurate updates to management.
2. Create a standard numbering system for all recurring month-end close journals.
During the month-end close process, a series of recurring journal entries are recorded. Usually these journals are maintained on a list however they may not be in any particular order. Determining if all RJEs were indeed recorded can be a time-consuming task when there isn’t a process in place to achieve completeness. Utilizing a standard numbering system for recurring journal entries solves this problem as well as adds additional benefits when using an ERP system, such as NetSuite, that has search capabilities. RJE numbers can be designed as best suited for the company. An example of a recurring journal entry number can be structured as RJE-1001-1219, explained as follows:
- RJE: Recurring Journal Entry
- 10: GL account reference (i.e., Cash)
- 01: JE number for this GL account (i.e., first RJE for Cash)
- 12: Month
- 19: Year
For completeness, once all recurring journal entries have been recorded, a customized report can be run from the ERP system detailing all journals recorded in the month. This report can be compared against the list of recurring journal entries to quickly determine if any RJEs have not been recorded. The added benefit of utilizing a standardized numbering system with an ERP system that has search capabilities allows for quickly determining how many specific journals have been recorded during the year without needing to refer to a list of system generated JE numbers. Using NetSuite as an example, previous months journal entries can be easily found by typing the RJE number in the search bar. After the journal is found, a copy of that journal is made, edited for the current month, and saved with the current month RJE number – a quick way to book journals!
3. Maintain a list of recurring journal entries, tasks and reconciliations in a SaaS application.
Using a SaaS management application can efficiently manage the list of recurring journal entries, tasks, and reconciliations creating efficiency and easy access by all Accounting team members anywhere and at any time. This allows for easy tracking, easy review, and the ability to quickly determine completeness.
4. Build custom ERP reports and data sets for reporting / Excel modeling, and maximize ERP functionality.
Creating custom ERP financial reports and data sets allows for quick turnaround of certain financial information at month end and during the close. In addition, creating custom data sets in the accounting ERP system, which are downloaded during the month-end close to be used with the RJE and Reconciliation models, allows for RJEs to be calculated quickly and uploaded into the ERP system for processing. Maximizing ERP functionality (i.e., PO module, allocations, consolidations, etc.) reduces the volume of Excel or manual driven processes and dramatically saves time during the month-end close.
5. Develop Excel models to automate month-end close processes.
To maximize efficiency and reduce the time it takes to close the books at month-end, eliminating redundancy will produce the best results. Developing Excel models that automate the preparation of monthly journal entries, account reconciliations, and the preparation of the standard monthly reporting package including all management and departmental reporting will do just that! Building Excel models that automatically calculate month-end recurring journals eliminates the need to perform the same lengthy steps every month. This can take journal entry and reconciliation preparation down from hours to minutes, significantly saving time during the month end close. These models would utilize custom built ERP reports and data sets as well as third-party reports mentioned above to produce the calculations processed by the many formulas pre-built in these models. It’s a paste data / calculate / generate output / upload data to ERP system methodology which saves time! Less time calculating more time analyzing!
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About the Author
Gabriel has more than 20 years of accounting, audit, finance and financial systems experience across the technology, manufacturing, and consumer products industries with both private and public companies. Gabriel started his career with PwC’s audit practice specializing in technology and led several pre-IPO startup audits and S-1 filing reviews during the dot-com boom. In addition to a career at PwC, Gabriel continued his audit experience at KPMG Israel focusing on the technology, consumer products, and defense industries gaining valuable international work experience. In the private sector, Gabriel has significant startup company experience having built and managed accounting operations as a Corporate Controller for several companies including having managed a successful IPO, acquisitions, financial reporting, implementations of ERP and SaaS applications, and led domestic and international accounting teams. Gabriel holds a BA in Business Economics from the University of California, Los Angeles.
Categorized in: Financial Reporting & Accounting