June 28, 2019 (Updated March 7th, 2023)
Attention all finance teams: end the month-end pain
Do you watch the days ticking forward full of dread, knowing the month-end process is soon to begin again? With processing times spanning anything from a speedy 3 days, to a more lengthy 20, you’re never long finished before the whole thing starts again.
Despite living in a modern world of technology and efficiency hacks – many of us feel we have not truly mastered the month-end process. We fall into the tiresome act of chasing up department heads and following twisty paper trails in order to source numbers. But the more time spent chasing, the less time there is for squeezing real value from the numbers in front of you.
In our modern techy world, the amount of legwork still being done by finance professionals seems ludicrous to say the least. Increasingly, organizations are looking for new ways to streamline processes and keep track of moving parts.
So if you want to take the pain out of the month-end close, follow these tips to spend less time tracking invoices, and more time analysing the figures that matter:
1) Set a goal and stick to it
Goals and KPIs are integral to business because they provide both direction and a means of measuring progress; without them, companies lose their way. While setting benchmarks for the month-end close can be difficult due to the variables in business size, type and expenditure – as a general rule of thumb, capping the time spent closing at 5 days is a good one.
Doing this requires discipline, you need to know who is handling what and have one central place where all action is tracked. That means making sure all departments provide the information by the time you require it. It’s recommendable to use a tool to help you do this; using a software tool, such as Ayoa, is great because you can keep track of work in Task Boards and make sure deadlines are being met by setting due dates. The addition of instant messenger takes the pain out of chasing and makes instant communication far easier – especially for teams which are spread out across multiple locations.
2) Maintain flexibility in your team
Have you ever had an employee request holiday when you’re simply too busy to grant it, or, been thrown off course by a team member’s sudden absence due to sickness? Events like these commonly disrupt the closing process. When staff are in fixed, rigid roles they are unable to adapt when the situation demands it. Because of this, cross-training staff is a must for teams aiming to be flexible and agile; doing so means employees have a variety of capabilities, and one sudden case of the flu doesn’t have to imbalance the whole workflow.
3) Redefine the month-end as a project
The way we perceive things impacts the way we tackle them. It’s worth treating the month-end as a project – meaning you have 12 projects a year to get done. Like any other project, you’ll need to sort tasks into resources required, tasks to be completed, and accurately segment all other moving parts.
Again, software is your best bet for this. You’re already following enough paper-trails, don’t exacerbate the problem by adding more paper to them. While we all love a good spreadsheet, we have to recognize they do come with certain limitations. Using one software tool throughout the team simplifies the whole process. For example, in Ayoa, you can create, and then replicate, a template which can be used each and every month. This means you have a consistent framework to section work into. So you never miss a deadline and always meet your goals.
4) Consider materiality
When calculating accruals and estimates, it’s key to keep materiality in mind. It goes without saying that finding a simple and effective method for estimating accruals saves time. There is a trade-off between the accuracy of the information and the timeliness of delivery. Even if you secure information which is 100% accurate, if it’s taken you 30 days after the month-end to secure it, then its value is nullified. Striking a balance between being accurate but also timely will far better aid informed decision-making than anything else.
5) Keep improving your processes: improvement is a journey, not a destination!
Have you heard the word kaizen before? It’s a Sino-Japanese word; in a business context, it refers to the act of continual improvement. This concept is one which must be a priority for companies and teams trying to maintain growth.
The month-end close project shouldn’t be something you simply cross off your list at the end of every month. Instead, it should be a process that continually evolves, just as your business activities change over time. Maintain the right mindset within your finance team; the month-end shouldn’t be seen primarily as the collection and reporting of information – the most important step is the insight you gather from analysing that information. If you don’t take action on the data in front of you, you may as well have not collected that data in the first place.
6) Don’t fall into the robot trap
As technology advances, the potential to automate becomes almost endless – whether that’s linking bank feeds directly into cloud-based software, or, automating the coding of transactions. Of course, these things exist to make our lives easier, but don’t take a backseat just yet. Automating systems is a great way of saving time, but never an excuse for becoming complacent.
Having automation in place, can even become a barrier to innovation as it stops you looking past the process you’ve put in place. It’s important to create time to ensure you are actively analysing and renewing systems, as well as getting the most out of the information and data in front of you.
7) Collaborate and communicate
To defeat ‘the last mile’ and close with success every month, you need everyone pulling in the same direction. That goes beyond just the finance team and stretches to include all departments.
Sometimes, things need to be chased up efficiently and with ease; while walking between department may get your steps up for the day, it’s also time-consuming, and for remote companies it’s simply not possible. Ayoa includes Instant Messenger for seamless and efficient communication. With ‘sent’ and ‘received’ tabs in Ayoa Chat, delegation is clear and no tasks get swallowed up or forgotten. Changing to use a single SaaS tool across departments centralizes workflows and keeps everyone on the same page.
Clarity and understanding is another pillar of best practice when it comes to efficient and timely closing. Make sure all stakeholders understand the importance of a speedy end of month process; if they are aware of the negative knock-on effects caused by a blocked pipeline, they are far more likely to respect the process and be amenable when help is needed. Setting these rules as precedent removes potential blockers before they have a chance to occur – so you and your team are ready for any unforeseen issues.
Ready to take the pain out of the month-end close? Get more info on how Ayoa can make your life easier, by visiting this page for further tips, tricks and information.
Caragh Medlicott
Caragh Medlicott is a freelance writer and interim Editor of Wales Arts Review. After graduating with a First-Class Honours degree in English Literature and an MA in Creative Writing from Cardiff University she began a full-time writing career in Wales. She is the author of several published short stories and was shortlisted for the Lunate 500 award in December 2020, and a finalist in Narrative’s 30 Below competition in 2021. She is a regular contributor to BBC Wales' The Review Show.