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Fast Close – Preparation is key

Fast Close – Preparation is key

In our previous post: Fast Close – speed up your month end, we looked at some generic tips for shaving time off your Fast Close process every month. In this post we’ll delve a bit deeper, aiming to give you concrete and practical ways to get there faster. As with many things, prepping for the task, even though it may seem onerous at the time, could really make a difference in how you approach the Fast Close. As you know there is a myriad of data to be collected before you can get to the next step of your formalized Fast Close process: Checking and converting submissions. (To see why you need a formalized process read our previous post) Prepare data: For organisations that are geographically spread, the first four steps of your process would typically take place at a remote location. These activities involve taking a ‘snap shot’ of the ledger at the end of the month for the location concerned. Local management would then check that all transactions have been included and convert/summarise them into a common ‘chart of accounts’ that Head Office can use to consolidate the returns. If a central general ledger is being used, or there is only one location, then the process would typically consist of creating and sending out a trial balance to each location/department. Local management would then check the values for completeness and let Head Office know if all is OK. Prepare data earlier: The earlier you can get your hands on the data you need to draw up the Fast Close, the sooner you can move onto the next step – this is a no-brainer. In reality much of the data being collected for month end reports will be known in advance or at least can be prepared or checked in advance. This includes:
  • Regular payments that go out during the month as well as some forms of income such as maintenance. These can all be collected, checked and agreed in advance, allowing managers to concentrate on variable items at the month-end.
  • To go with the above, some organisations collect ‘flash results’ a week or so before the month-end. This allows management to look for issues in the actual results to come and deal with them before the period closes.
  • If organisations are involved in intercompany transactions, then collecting these early will allow them to be matched before the period closes. Should any differences be found then the related parties can be informed so that when the final results are sent in, those mismatches have been dealt with.
Link submissions to the general ledger Much of the data to be reported at month-end will come from the organisation’s general ledger system. In fact it’s vital that monthly reports agree with the general ledger and that any adjustments between the two are properly authorised and can be traced. If the organisation has multiple general ledgers – i.e. remote sites have their own systems, or data is coming from multiple sources such as detailed sales data, then some form of mapping and summarisation will need to take place before data can be submitted for consolidation. To fulfill these requirements ensure:
  • The ‘common’ summary accounts to be consolidated are fully explained as to what they represent.
  • If using a central general ledger, then provide a ‘map’ that shows how individual detailed accounts are summarised to the accounts used for reporting
  • If remote sites have their own general ledger and/or supporting systems, then provide them with a template where they can map their ‘chart of accounts’ into the Head Office common accounts. This will allow management to check that data being consolidated is understood as to where it fits in the overall consolidated accounts
  • At the end of each month, capture and store the trial balance from the general ledger(s). Summarise these balances onto the ‘common’ accounts and then keep a record of any adjustments that are needed before submitting results to Head Office.
Doing the above will speed up the initial submission process. It also provides an audit trail of how results have been transformed from detailed transaction data that will help answer any queries quickly. To find out more about how to speed up your month end – contact us and don’t miss our following blog post.