5 Tips to Improve Your Month-End Close Process

With all that riding on the month-end close process, it’s also the most stressful time of the month. Chaos around the close causes employee burnout and churn. But it doesn’t have to be that bad. Here are five tips to make that process better.

1. Develop standard documented procedures.

In terms of importance, this is 11 out of 10. When everything is only in someone’s head, you depend on that person always being available to manage everything. What happens if that person suddenly falls ill, or has a family emergency? Or worse — what if they leave the company, and take all their knowledge with them?

With standard documented procedures, it’s easy for someone else to step up and do the work. Team members can actually take vacations around the first of the month and you eliminate the tribal knowledge that plagues accounting departments everywhere. Onboarding new team members is much easier if you can just point them to the documented procedure and help them get started. Your auditor will like that too.

Plus, when you do everything the same way (or better, as we’ll discuss later), you can be sure nothing is inadvertently forgotten. You know that the final numbers you get this month will be comparable to the numbers you got last month and to the ones you’ll get next month.

2. Create a collaborative checklist.

Accountants love checklists. They help us remember the stupid stuff so we can focus on the important stuff. Building a checklist in Excel is better than nothing, but the problem with that is visibility. It can be hard for everyone in an organization to see what the status of all the tasks is, so they can see what they need to do, or who’s waiting on them to complete a task.

There are a number of dynamic collaborative tools designed to make it possible for everyone to see what’s still outstanding. That alone can reduce dreaded (and mostly pointless) status update meetings. By using a collaborative tool that lets everyone see what tasks have been assigned to who and who has completed their part, you keep your team accountable to each other.

3. Constantly tweak your processes.

Every month, choose one process to improve. The best one to start with could be the last journal entry that gets made. Another good candidate is the most time-consuming activity. Work backwards in that process to identify the bottlenecks.

Are you waiting on information from someone outside of accounting? If so, when was that information received? Is there any way to light a fire under that person?

Are there things that can be streamlined or simplified? Can you replace a time-consuming calculation with an estimate, and still be materially correct? For example, if your payroll is bi-weekly, then every sixth month will have three payrolls. Maybe you can accrue one-sixth of an average payroll every month and reverse that in the sixth month without being materially different from actual.

Can you spread out the work? Are there journal entries that can be made mid-month instead of waiting for the end of the month? Encourage your team to be innovative, and to always be thinking of better ways to do things.

There will always be a tradeoff between speed and accuracy. The need for accuracy depends on the type of close. Quarter-end and year-end closes need to be more accurate, so they will take longer. But speed can also increase stress on your team, so it’s important to find a balance.

4. Build a powerful team.

A solid team that understands the importance of the close is essential. Then, everyone performing their tasks will understand that they’re part of something bigger than themselves: they’re building a cathedral, not just placing heavy stone blocks to build a wall.

Standard procedures and collaborative checklists ensure that everyone knows what’s expected of them, and when they need to complete their tasks. Cross-train people in different roles, and you’ll always be able to get the work done — this will appeal to employees, who suddenly become more valuable.

Oh, and don’t limit your team to just the people sitting in the accounting department. Build relationships with people across the company, especially the ones you need information from. Help them understand the importance of getting you the information quickly and how that information impacts the company as a whole. Ask for that information as early as possible, and give them a concrete deadline.

5. Leverage automation and technology.

By using as much technology as possible, you get away from error-prone, time-consuming manual processes. Instead of building yet another spreadsheet, look to your accounting system to see if there’s a better report you can run. Using technology rather than updating a spreadsheet can give you speed and data accuracy. Besides leveraging your accounting system, look for tech tools that can help automate complex areas like lease accounting or revenue recognition.

Adding tech tools and automation can also let you scale without adding headcount. And it can also impact the kinds of people you need on your team. Maybe you’ll need fewer entry-level people, and more tech-savvy accountants, who might not come from the standard Big 4 pedigree.

Just imagine what it would be like if you had even one extra day a month for strategic work. Or if your team wasn’t stressed beyond redemption every month.