Accounting might lack the thrills of race car driving, the endurance of long-distance running, and the sheer audacity of an astronaut, but that in no way means it's a static, humdrum profession. In fact, accounting is reliant upon speed and immediacy for accurate, insightful financials.
This notion is perfectly embodied by the straightforward but abundantly important process of closing the books. As every member of the accounting tribe will attest, income statements, balance sheets, and cash flows might seem lifeless and sedate at first glance but a lion roars at their heart.
Yes, that might be another instance of your friends at Embark infusing a bit of hyperbole to prove a point but, we'd bet a hard-earned dollar that the point was in fact made. Suffice it to say, a few tips on closing your books faster without sacrificing an ounce of quality will always be a welcome concept. And luckily for you, that's exactly what Embark aims to provide with this latest soliloquy of accounting goodness.
Get All the Information You Need in Time
As you likely already know, one of the biggest challenges to closing the books is simply making sure you have all the needed information in time. Of course, different industries have different constraints – oil and gas, for example, requires the information to come from the fields themselves. No matter your industry, however, assembling a process that provides you the timely information you need is critical in avoiding any delays with the financials.
Effective communication concerning deadlines is one of the most obvious necessities to expedite this process but, unfortunately, is often lacking. To avoid delays, your management team always needs to be on the same page, consistently communicating with their teams about the deadlines. As a rule of thumb, management should set a date they want to see their internal team’s financials, and then work backwards from that date to create a definitive timeline.
Furthermore, any manual steps along the way can severely threaten the timeliness of the information. At Embark, we've seen this firsthand as even the most seemingly insignificant manual components of the process run the risk of slowing down the books, burning finite time and resources by chasing down information.
Automate the Process
Coincidently, manual steps within the process conveniently brings us to our next tip – automation is your financial BFF. Embark used to live in the accounting stone ages, manually reviewing expense entries, until we saw the technologically-driven light and now can't imagine life any other way. While we use the Abacus app to have teams label the entries, Expensify and Concur are also very good at expense tracking.
Whatever software you find best, automating the process helps you take a gigantic leap towards getting the information from teams in a timely and error-free fashion so that you can quickly and efficiently close the books. Likewise, such systems are also very beneficial in providing managers a convenient and concise way to review all entries in a single place, void of the mistakes inherent to manual procedures simply by eliminating the opportunity for human error.
Once you're up and running, make certain to have someone close to day-to-day operations review the expenses as they come in. Team managers should also vet that information from their people rather than relying on the CFO because, well, that's just the smart way to go about it. Don't poke the bear unless it's absolutely unavoidable.
Utilize a Month-Cap and Checklist
Finally, once communication procedures and automated systems are in place, tie a pretty little bow around everything by creating a monthly-close checklist. That way, especially if you're in a rush to close the books, you can simply run down the items on the checklist to make certain nothing has slipped through the cracks.
While the particulars of such a list – once again – will vary by industry, they should generally include a completeness check that ensures all information is in, month-end entries, reconciliations, and reviews. In essence, your checklist will provide an ever important sniff test – make sure all of your numbers smell right before proceeding.