10 ways to speed up month-end

If you’re going to create a finance function that is fast enough for the 21st Century, you need to complete month-end accounts in 5 days or less. Here are 10 ways to speed things up:

1. Get the team onside: If they are, they will make positive change happen. If not, they will prevent it. Your people need to understand why it’s a good idea to run month-end quickly = because it frees them up to support the business in other, even more valuable ways. Find out how they feel.  You may need to reassure them that there are not going to be redundancies or calm other fears they have. Sell them a vision. This will take time & energy – make sure you prioritise listening & discussing. We accountants tend to underestimate how important this is. You won’t get there without it.

2. Break down the month-end into a clear sequence of tasks. This will enable identification of shortcuts and agile working. The team will edit and re-order tasks over time in a series of iterative steps to meet the goal of month-end reporting in less than 5 days. A clear picture of the tasks involved will help engage people in the process restructure.

3. Automate bank feeds and reconciliations. This is fairly standard with most accounting packages these days, but it is an important step to take if not already implemented. Automation speeds things up and eliminates keying errors.

4. Close slow moving accounts before month-end. In most businesses, you should be able to close Fixed Assets and calculate depreciation well in advance of the month-end.

5. Close accounts payable, accounts receivable and WIP balances on the last day of the month. Earlier if possible. With good intelligence from key customers and suppliers (by speaking to your sales & procurement teams) you should be able to work out what’s happening on the last few days of the month in advance. This will help you estimate accruals accurately enough for a fast shut down.

6. Reconcile other accounts early & often. It’s like tidying your room. If you reconcile accounts regularly, you’ll find that they don’t get into such a mess.

7. Complete payment runs a week before month-end. If you avoid payment runs from tying up resources who should be preparing for month-end then you’ll close faster. Why not do your payment run mid-month?

8. Don’t let inter-company entries rock the boat. If you insist on inter-company balances being reconciled mid-month and limit entries at month-end to intra-group profit elimination you will close quicker. Inter-companies often hold things up.

9. Only investigate year-to-date variances. Reporting on monthly variances is largely a waste time as you are emphasising timing differences, which will not be as important as understanding performance trends.

10. Prune the chart of accounts. The fewer accounts you have, the fewer ways there are to make erroneous accounting entries. Your chart of accounts should have less than 100 GL accounts. Only have buckets for material items: no P&L account should represent <1% of turnover.

And a final piece of advice = Don’t compromise on quality, in fact improve it!! It is important that errors don’t creep in as a result of speeding up. But if you define acceptable levels of error on key balances, & continuously improve processes, there is no reason why quality will not rise.

Bellevue Partners would be happy to discuss how we could you speed up your month-end. If you have a question or want a free consultation please get in touch.

If you would like to read more about this sort of stuff take a look at David Parmenter’s blog: full of great content.