Closing the books at the end of a particular period is fundamental in accounting. Learn about common procedures regarding month-end and quarterly...
How to Shorten the Month-end Closing Process
Closing the books monthly is no easy feat. Here are some ways to help your team cycle through the month-end close process efficiently.
Maintaining books, journals, and ledgers is a tedious endeavour for many entrepreneurs. But, it’s also a crucial one. Staying on top of these reports allows you to see how well your business is doing financially. That’s why closing your books each month is essential for sound business management.
How to Make the Month-end Closing Process Easier
Many accounting teams find closing books monthly a challenging process. It’s like doing a never-ending pile of tasks, especially if you have many transactions in a given month. Thankfully, the month-end closing process can be easier and smoother. Here are some ways to speed up your month-end process without running into problems.
1. Start with a month-end checklist
The month-end closing process involves accomplishing several steps, which can overwhelm your finance team when handling other critical tasks.
Creating a month-end process checklist lays down all the necessary tasks to complete, including the point person for each job. This holds your members accountable for their roles and makes them more engaged. A checklist also allows your team to stay on track and not miss out on any parts of the process that can lead to costly mistakes.
2. Continuously improve your SOPs
No two months are the same. There will be circumstances that can change how your members go about the month-end process. Continuously reviewing your SOPs can help your team pinpoint the problems that slow them down when closing books and address them.
Enlisting the help of your team members in creating better SOPs can also give more valuable insights into possible solutions. This ensures that you have contingencies to easily solve problems that come up without sacrificing work quality.
3. Keep immaculate records
Accurate data and proper judgement calls are crucial in closing books at the end of the month. This is where an organised system of record-keeping comes in handy.
Suppose you want to consolidate all transactions in a single database but have separate folders for specific categories.
An expense management software like Spenmo can help in this scenario. Equipped with an expense tracking feature, Spenmo helps businesses collect receipts and other expense data in one dashboard, giving business owners and finance teams control and visibility over the company’s payables.
4. Have a strict cut-off date
Setting a strict cut-off date is important as it avoids last minute additions that might only complicate the book closing process. Cut-off dates don’t just indicate the end of an accounting period. They also tell employees to file their invoices and reimbursements by those dates, allowing you to create timely reports.
Cut-off dates can also give your team ample time to crunch numbers and release pending payments. That’s why you need to set and communicate realistic deadlines to avoid delays.
5. Backup your files
Backing up files is one of the best practices in business finance. Moving things online and going paperless has its benefits. However, there are times when you encounter hiccups as you lose access to your data.
If you use a digital accounting software or other online programs, make sure to have an extra copy of your files stored in the cloud. This way, you can still do the month-end closing should your computer suddenly lose your files. You can even access these records remotely.
6. Integrate all your accounting software
Nowadays, it’s typical for accounting departments to utilise various types of specialised software. However, these systems are often siloed, hampering the speedy process of closing books.
An integrated accounting system can provide a seamless experience for your organisation. For example, you can integrate Spenmo with other accounting software such as Xero and Jurnal. This means you won’t have to keep switching between different apps when completing month-end tasks.
7. Use automation tools
Repetitive and menial tasks can slow down the month-end process. For example, adjusting entries can take a long time, especially if you deal with several transactions in a month. When this happens, your team might have limited attention for more critical tasks.
Digitalising your finance department by using an accounts payable automation software can unload tedious tasks off your team. This strategy can reduce human error and increase your team’s operational efficiency as they perform the month-end process.
All’s Well That Ends Well
Staying on top of your financials is crucial to ensuring your business’s health. However, you may find it challenging to maintain your books efficiently. Knowing the best course of action can help eliminate this problem, from creating a checklist to digitalising your finance team. This way, you can end the month with ease.
Consider using Spenmo to speed up and streamline your accounting processes. This end-to-end payables software creates a seamless payables experience for fast-growing companies by bringing internal spend management, automated bill payments, approval workflows, and accounting reconciliation into an integrated view. Using Spenmo lets you reduce the time spent reconciling expenses by 90%.
Book a demo today.