Simple steps for a smooth month-end close: Meet your deadlines and avoid time pressures
Simple steps for a smooth month-end close: Meet your deadlines and avoid time pressures
If you are feeling the pressure of deadlines every month when doing the month-end close, it is probably because you don’t have the right procedure. When you stress about the month-end close, you don’t have time to dive deep into your data or deliver in-depth financial insights for your management or board.
If this monthly routine sounds familiar, this is the guide for you!
Here we have gathered expert advice from CFOs & Financial Controllers on how to optimize your month-end close working process. A few simple steps can turn the month-end close from a hassle to an easy, quick reporting process where your gain time for highlighting interesting results to management.
First things first – let us look at the root of your problem and why month-end close is often stressful.
The month-end close pressure in a nutshell
Month-end close is a reoccurring event for finance professionals, so why does it always seem like the finance department is pressed for time with this task?
The answer to this question lies within the way finance professionals work today. We must start thinking differently about our workflows. The way you build up your workflow is a part of the solution to avoid a stressed process when making the month-end close.
The number one reason that you and your team might be pressed for time when doing the month-end close can be because you’re waiting until the end of the month to start. Instead of preparing things for the month-end close throughout the month, you are doing everything at the end of the month.
Of course, you can only do some things at the end of the month. As a Financial Controller or Finance Manager you can only begin your work once the bookkeeper has done his or her part and all balances are ready. However, if you have most things ready before you can pull the balances, you can avoid the time pressure.
There are so many things you can do beforehand to speed up the reporting process. For instance, you can:
- Prepare the management reports
- Write to subsidiaries if there will be any significant changes
- Make sure your tools for analyzing are updated
Being prepared ahead of time requires a procedure for how you are doing your month-end close. Perhaps you already have a procedure today, but then ask yourself: “Is it working the best way possible?”
If your answer is not a clear and resounding “YES”, then now is the time to build a better procedure.
To help you build an optimal monthly reporting process, we lay out 3 foundational steps for building a new and improved month-end close process.
If you take the steps below into account in your future monthly reporting the month-end close will be an easy task to fulfill where time pressure is not a big issue.
3 steps towards a month-end close with no time pressure
1. Create a solid preparation plan:
The most important thing to do to avoid time pressure when doing the monthly reporting in a group is to make sure you have a plan for the entire procedure so that everyone within the team knows what their tasks and deadlines are. Everyone needs to be onboard on this plan, so it is vital that you create a timeline that shows exactly when tasks should begin, time estimates for completion, and deadlines for each task. Deadlines are a crucial tool to avoid stress and time pressure since this is the foundation and the framework of good preparation. Get as much done in advance so that you will only need to wrap up the monthly report with the latest result rather than to start from scratch on the month-end close at the end of the month.
2. Automate manual tasks:
Consider automating some manual processes in your workflow. If you have software and systems in place that can take relieve your workload, you are guaranteed faster, simpler, and more accurate monthly reporting. For example, suppose you have an invoice system for approving expenses or software for doing financial consolidation automatically; these will improve your work quality, ease your workload, and give you more time. With additional time, you can dive into your data and find key results that you would like to explain to the management, thereby helping them to understand the business better and improve decision-making for the entire group.
3. Get the right employees in place:
Finally, it is important that you put the right players into the right places. Having a solid plan for preparing the month-end close and the most modern finance software does not help you if you don’t have the right employees in place.
Make sure that you have a team that covers the different skills needed for the reporting procedure. Not everyone has to be tech-savvy or good at handling financial consolidation or minority interests. However, everyone needs to be skilled at an aspect of reporting to contribute to the final result. Last but not least, it is crucial that everyone within the team is on board the month-end procedure, so there’s no stalling by someone who has a different agenda. Everyone within the team should agree with the entire process of doing the month-end close. Don’t just assume that the team understands the procedure the same way but make sure you communicate the procedure explicitly, so everyone is on the same page.
Now, all that’s left for you to do is implement these changes in your workflow and procedure for the month-end close. Changing methods, routines, and behavior is not always easy. However, it can be if you utilize basic knowledge of human behavior and the triggers that make us take action outside of our normal routine. In professional terms, it is called nudging.
How nudging can help you to implement your optimized month-end procedure
Nudging is well known in the sales and marketing business but can be used in any situation where you like to see a behavioral change from your coworkers and employees. For example, when you want to implement a new working process or reporting procedure.
The concept of nudging covers the cognitive and psychological method of successfully and quickly creating a change in certain behavior. Nudging means guidance and ensures the right decision is an easy one to make. The technique is based on human instinct. So, when guiding your colleagues to make the right decision – like deciding to follow a new monthly reporting procedure, you should consider how to make the right decision the easy one to choose.
When wanting to implement new methods and routines into the finance department be aware of the daily routines in your finance function today and learn from these. Look at how you can ensure that any new procedure integrates well with existing ones and consider how you can optimize the routines you already have at place in your finance department.
Learn more about how you optimize your monthly reporting here.
Authors:
Lianne Gatti, Country Manager for UKI, Konsolidator
