Fast Close – speed up your month-end

Every company dreams of a faster month-end close – without the never-ending paper chase, waiting for returns, copying results, correcting errors and re-doing reports.How fast is your fast close?  Would you like it to be faster? For many years, the average month end close took 5-6 days after the period end. But as regulatory disclosure requirements increase along with the need for more data – even that seems to be unrealistic for most companies.We all know why it’s important to speed up the fast close process – not only will you be able to go home on time, but if you could shave two days off your usual month end process, you’ll have more time to analyse the results and consider changes that could or should be made to improve future performance.A faster close will help your company to assess its current position – and allow you to take action sooner, rather than later. Understanding past performance quickly is a key step in improving future performance.So, how could you speed up your month-end process?Let’s start by taking a close look at the fast close process and the activities involved.These are the typical steps for fast close that most companies go through each month:
  1. Prepare data – close ledger, create trial balance, summarise info common accounts, send to head office
  2. Check and convert submission – load summary accounts, validate opening balances, reconcile inter-company, convert to base currency
  3. Make adjustments – GAAP adjustment, eliminate inter-company, consolidate data, adjust for minority/joint venture
  4. Report and analyse - add comparative data, create year-to-date summaries, distribute reports/analyses
  5. Finalise and close – Tax and final adjustments, sign off and lock data, publish results and commentary
Each of these fast close steps takes time – and relies on human intervention. Every time someone in the chain doesn’t respond to an email in time or makes a mistake, you waste time.Often, if the steps haven’t been followed in the right order or mistakes have crept in, for example if one department forgot to give all their info and has to resubmit the data, then the consolidation process and adjustments will have to be repeated.It’s a never-ending, time-consuming and highly frustrating process – a bit like trying to fill a bucket with water, when it’s punctured with holes.How to streamline the processStreamlining these steps makes the process less painful and much faster and in our next few blogs we’ll share with you practical ways to streamline the process:1. Develop a formal fast close processThe first tip is simply to develop a formal close process to manage each step.Two thirds of companies that have a formal process significantly reduced the time, as well as finding the whole process to be more effective and consistent.Setting up a formal process for the fast close involves:
  • Documenting the individual steps in the process.  By doing this, it is easier to identify bottlenecks, eliminate redundant steps, or simply put them in a better order
  • Providing instructions for the different roles and responsibilities.  This will include escalation procedures to resolve issues that may arise during the close, and checklists to ensure each step is done correctly and in order.
  • Establishing a 5 quarter timetable of the close process so managers can plan ahead for holidays to ensure key people are present at the right time
  • Keeping an up-to-date list of contacts (as well as alternate contacts) of key people and subject experts who are either involved or support the close process to manage any workarounds.
Once a period has closed, the activities should be reviewed and changes made to the documented process for improvements that are then communicated.  The aim is to develop a culture of continuous improvement whereby the close process is made more efficient and faster.This sounds like a lot of work, but trust us, it’s well worth the effort and once it’s done and implemented will save you lots of sweat and tears every month.If you have any questions or tips on how to make your fast close faster, leave a comment below or get in touch. We’d love to hear from you.If you’ve found our advice useful – don’t miss our next blog post with more practical advice on speeding up the month end.CONTACT US to find out more about Financial Driver and how our Cloud-based financial budgeting, planning and forecasting solution help organisations like yours to solve financial headaches.Photo credit: David Castillo, Free Digital Photos.Net


This product has been added to your cart