Best Practices for Closing the Books

By Tommy Kleinhans, CPA

The month-, quarter- and year-end close processes often create a bottleneck for companies of all sizes and all industries. Most financial executives do not have their numbers in time to meet their reporting requirements and steer their companies in the right direction. Instead, many rely on their pulse to make decisions, which could, in turn, become disastrous. Here are best practices controllers and accounting firms can implement in their companies and with their clients in order to focus more on key performance indicators (KPIs) and analysis:

STRATEGIES Month-end checklists

When a company has a manual that shows all procedures and tracks against the close deadline, it keeps all teams on the same page and avoids a lag in communication. This also can help decision makers determine where there are bottlenecks in the close process and whether they can be avoided.

Integrated technologies

When used for reconciliation, inventory and intercompany payable, receivable and payroll processes, integrated technologies can save companies an abundance of resources. Having the proper tech stack minimizes manual human error and maximizes optimization.

Roll-forwards

Rolling forward any Excel files, monthly journal entries or subledger reconciliations can usually be done prior to month-end since activity in the last week of the month can be minimal. Having a plan and noticing what part of the plan can be completed in advance can dramatically speed up close times and keep employee hours more constant.

TECH STACK Excel

This is the Swiss Army knife of accounting technology tools. Pivot tables, visualization graphs and formulas are a few of the many ways Excel can be used to improve month-end. However, be wary: Excel may not be ideal for larger companies with more diversified reporting requirements or for processes requiring more collaboration. Too much reliance on Excel files in a close process may lead to significant deficiencies during an integrated audit.

Microsoft Teams

Teams (microsoft.teams.com) is a great tool for not only video calls with a team but also for creating recurring checklists that can be assigned to specific members of the team and rolled forward from month to month. Screen recordings of recurring tasks can also make it much easier to onboard new team members.

Automation technology

Alteryx (alteryx.com) is a model-creating platform that helps collect, prepare and blend data. It’s a great tool to increase the speed for recurring tasks, reformat legacy system reports, automatically create allocations and customize a KPI report. Zapier (zapier.com) is a web-based platform that allows triggers to be set up across several platforms to increase automation in the close process. For example, a trigger in Zapier can be a positive number in a specific cell of a Microsoft Excel spreadsheet, and a flow can be created so a journal entry is automatically inputted in the financial reporting software (such as Netsuite or Quickbooks) and an email of the entry is automatically sent to the supervisor.

Reconciliation technology

Similar to the automation technology, Blackline (blackline.com) is a never-ending improvement software that can be used to centralize the financial close, inter-company reconciliation and accounts receivable automation processes. Blackline has capabilities such as integration with financial reporting software for reconciliation entries and makes the review process much simpler. Cadency (trintech.com/cadency) has capability to upload massive amounts of data to integrated ERP systems, automatically match advanced transactions and customize reviewer dashboards to control the status of month-end reconciliations.

Software integration

There is a plethora of choices when deciding which software to use for financial reporting, payroll, invoicing, receivables, inventory, KPIs and any other facets of a business. Determine the software integration that’s best for the business, develop a plan to implement each product’s integration capabilities and commit!

Having the proper strategies and technology in place to close a company’s books is vital for a successful process, but nothing is more important than having the proper training and adequate professionals. Software training leads to great habits, minimal confusion and autonomous collaboration. As persistent understaffing and greater pressures to report financial data increase in the accounting industry, accounting optimization and transformation is a viable solution.