Companies are going through year-end financial reporting. Just for fun, at cocktail parties and networking lunches, I ask executives and investors if they get the year-end results as quickly as they would like to get them. My unofficial survey says that most stakeholders are not receiving results timely.
Proactive organizations have “Day Zero” at the top of mind at the beginning of the month. If you don’t know what this means in terms of proactively managing your financial strategy, read on…
The truth is that almost every single employee in an organization can impact the ability of the accounting department to close timely, yet the company accountant may not be the best source to drive home that truth. The message from the top should convey respect for each professional’s time and support for more efficient month-end and year-end processes – where everyone focuses on funneling information in a manner to close the records effectively. The ultimate goal is to provide to the management team a Flash Report as soon as possible following month-end, followed by the official month end financials.
Day Zero refers to tasks your accounting and finance departments can complete prior to the end of the month to speed up the month end close. Decisions about the company require timely, accurate data – a smooth and timely month-end is vital.
Some “green eyeshade” accountants may balk at the idea that they can shorten the month-end process; however, the strategic finance professional digs into their process to find and tackle these tasks, as well as improving their process going forward.
Here are some examples of what I mean:
- Recording depreciation,
- Making standard monthly entries for amortization of intangibles, and
- Recording accruals of expense.
Once you have identified the pre-close tasks, create a Day Zero checklist with deadlines for each item. The finance manager should oversee that deadlines are being consistently met and if not, get to the root of the problem to correct the process. One solution may involve asking other departments to turn in their information based on a schedule you provide in advance.
Refining your month-end close process is an iterative process if you continually raise the bar to identify better ways to execute. Automating reconciliation and other process improvements contribute to shortening the cycle.
Document your processes with Standard Operating Procedures so that all team members have steps to follow should any one team member need backup. Keep your SOPs up-to-date through periodic review.
Spend time in the middle of the month following the month-end process to complete your review of the entire process. Engage your finance team and uncover those Day Zero tasks you can incorporate into your process. Everyone in the organization will benefit when leaders have more timely and accurate information with which to make decisions.
If you are disciplined and implement Day Zero and other month-end processes, you can provide a Flash Report of results to management as soon as Day 1 after month-end.
Barker Associates can facilitate a review of month-end processes with your team to ensure you have uncovered all the possible streamlining opportunities. Provide the best customer service to your management team possible – provide financial information and think strategically and become part of positive initiatives to move the entity forward and not the green-eyeshade accounting department about which everyone complains.