Most companies close their accounts in a ‘month end’ process where the results are tallied up and management accounts produced. Getting accurate and quick accounts is vital for managers as delays in getting this information means that it becomes less relevant as time goes on.

In this post, we show how to speed up your month end process and get your management accounts out quicker and with less stress.

The first task is to decide what you are going to present. This may seem a pretty simple step but it is surprising how many firms change their packs on a monthly basis. The problem here is that every time a finance function gets a different ad hoc request it takes longer to produce the data. Managers should get together with their FD, decide what information is important to the company and make sure that this is what is delivered on a monthly basis.

Choose your close day. Remember that you need to be thinking about working day rather than a calendar day. Don’t look to go from no close to a WD3 close in one fell swoop because that’s too aggressive. Think instead about say WD10 as a first step then move the day in as your systems and people get slicker.

Think about the things that you do during your close. Are they all needed? One of the classic areas that Six Sigma practitioners look at is reporting. Very often you find that people have evolved cottage industries producing reports at month end that no-one ever uses any more. Look at each report produced, find out who receives it, find out what they use it for and see if they can be served in a different way or at a different time.

Look at your systems. Are you using their reporting capabilities to their greatest extent? Could you organize your system or your chart of accounts in a different way that would make reporting quicker and more intuitive? Have a look at how many things get exported into excel and if there is a huge amount then you have a systemic problem. There are lots of products on the market that can help you by reporting directly from your databases or in extreme cases you can look to change your system entirely.

Next, take a look at your timelines and critical paths. Are users sitting waiting for information from other people? If so then you need to tackle the root cause. Similarly, if you have people that habitually produce information on the critical path that could be done before month end then look to move the time that the work gets done and look also to chunk tasks up so that some of the work can be done early and only the finishing completed during the month end process.

Communication is an important part of speeding up your month end. It is of no use an accounting manager having in his head that it would be nice to finish on WD3 and then not telling anyone. Get the entire team involved, tell them that it’s the target and ask them for their input into how the team an achieve this. It is also a useful technique to publicise this around the company. Firstly this will ensure that the aspiration becomes a real target but also signals to non-accounting colleagues that during month end other requests to the department may take longer.

Using accounting techniques to slim down the month end process will also help. Waiting for month end invoices to all come in can take a long time but using an effective accruals process cannot only retain accuracy but allow figures to be entered in good time. Using management estimates for things rather than trying to gain the nth degree of accuracy will reduce the time taken.

Standardize, standardize, standardize. Look to get all of your schedules and inputs into a standard format, not just from month to month but also across the different tasks. Making up a different schedule every month for the same thing takes up valuable time and can breed inaccuracy. In the same vein look at the formats of the schedules and reports you produce. As an example, if you have an accruals and prepayments schedules, make sure that the detail all runs along the first column and the dates run along the top. Keep all the methodology as far as possible the same so that users know what to expect and how to do it.

Finally look at your team. Often there are reasonable-sounding reasons for the close to be delayed like holidays and sickness but the truth is that in any team you are always going to have these sorts of issues. Look to multi-skill so that in cases of illness, the tasks of the affected team member can be shared out. Don’t allow people to book a holiday during month end and impress on them how important to the company this is.

Speeding up the month end close can help accounting departments focus on a common task and more importantly can give directors vitally important information in time to make quick and effective tactical decisions. The best finance teams are able to ally speed and accuracy and these tips should help your accounting function to achieve this.

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